If you take a closer look at the risk of health issues and the rising costs of hospitalisation and medical care, ensuring that you and your loved ones are covered by a comprehensive medical insurance plan is as important as ever.
Ex-Health Minister Datuk Seri Dr S. Subramaniam shared in 2016 that over a third of Malaysians were directly paying for medical services using their own money, an excessive figure that can lead to financial catastrophe. “Malaysia has high out-of-pocket health payments due to the small number of people who have health insurance or medical benefits at work,” he added in an article in the Malay Mail on 2 June 2016.
As public hospitals are over-utilised in most areas especially cities, investing in a health insurance plan for you and your family is critical to avoid landing yourself in a difficult financial position while still ensuring you receive the medical care and attention that you need.
Before you decide on a medical card, here are 5 factors to consider to help you make the right decision:
1. The difference between a standalone medical card vs a rider
A medical card can be structured or sold as a standalone medical card or as a rider. A standalone medical card works as a term insurance, the coverage is activated every year as long as you pay the premium. As for a rider, it is bundled with an investment policy as an extra feature.
For a standalone, the cost of insurance (premium) increases every year due to the increase of medical costs according to Malaysia’s medical inflation rate. However, if you buy an investment policy with medical coverage as a rider, you are actually paying a higher premium during the first few years (depending on company) to cover the higher medical premium for your coverage period in the future.
This is why your policy premium does not increase every year despite the medical inflation rate. The amount of the extra premium paid during the first few years will be used to cover the higher medical costs in the future. Throughout the tenure period, at least 46% of the premium left after deducting your insurance charges (medical, critical illness and life) will be injected into the company’s fund for investment purpose.
For example, at 50 years old, the cost of your medical card is RM 2,500 a year. Instead of having to pay RM 2,500 a year, you are still paying RM 2,000 since the first year of medical insurance coverage because the extra RM 500 cost of the medical card has already been covered by the extra premium you paid in the previous years.
2. Comprehensive policies offer more benefits
Today, an investment policy linked with a rider such as medical card, life insurance and critical illness are usually introduced to consumers as a comprehensive insurance policy. Unlike a standalone medical card, a comprehensive policy with investment-linked features may gain cash value over time and the policy will not be terminated easily.
If you opt for a standalone medical card, coverage will cease once you stop paying the premium. As for a comprehensive insurance policy, the medical card will continue to insure the policy holder as the extra premium paid still covers the cost of the medical insurance.
3. Know your financial appetite and the value of the policy
As we’ve seen so far, it makes more sense to buy a comprehensive policy linked with riders (than a standalone medical insurance) as it offers convenience and better coverage. However, plans may differ depending on the insurance company.
Understand these 4 basic factors before buying an insurance policy from any provider:
- Annual and lifetime limit - This is the first factor to consider when reviewing your medical insurance options because it determines the amount of medical insurance you are entitled to.
- Age limit - Some older policies that were purchased at least three years ago may insure you up until 70 years old. However, the newer medical insurance products have extended the age limit up to 90 years old.
- Panel hospitals - Different insurance companies provide various hospital operators and coverage in various panel hospitals.
- Alternative treatments & second opinions from doctors - Some insurance companies such as Allianz include alternative treatments like Chinese medicine and acupuncture in their coverage policy. There are also insurance companies which will cover only one checkup from the doctor when you are hospitalised. Thus, you need to clarify these with your insurance agent before getting your medical card.
4. Medical insurance can only cover hospital expenses
The high hospital bills, unpaid leave, lack of income replacement, medicine and supplement costs, and newer treatment that are not recognised by insurance companies have been neglected by the public and the financial damages can be severe, according to an insurance agent.
“Medical costs and income replacement are the two main things young adults need to take seriously. It is wise to review your insurance every three years to see whether the coverage is still relevant (inflation and other economic indicators as well as new factors), new technology that could indicate increasing costs,” she adds.
To ensure you are insured from additional risks apart from the high hospital bills, an adequate critical illness and life insurance coverage is important too.
5. Your company’s medical insurance is not enough
Though some companies may provide medical insurance for their employees as part of their employment benefits package, the policy may not be comprehensive enough to cover all costs.
You would also need to think long-term, what would happen if you decide to leave the company? You will no longer be insured under the company’s medical insurance policy and you would most likely need to pay a higher premium to get a medical card depending on your age.
Medical costs are on the rise and whether you are a student, a young executive or manager, we would all feel the pinch. By investing in the right medical insurance or getting a trustworthy personal loan, you can avoid falling into financial debt or difficulty and be comforted by the fact that your insurance will help you should you have any health issues.
Medical insurance aside, here are some other types of insurance you may not know you need: