Guide to Proper Medical Coverage

“Hold yourself together, Annie. Bryan is going to be okay!” This is Bryan’s second heart bypass surgery. The last 5 years have been really tough for Annie not just physically from taking care of Bryan, but financially as well. Although Bryan has a medical card, it only covers hospitalization bills. Annie wasn’t expecting that the follow-up treatments to cost a bomb! Both their savings were already used up for medical treatments and family expenses. Bryan was the only income provider while Annie takes care of their kids. Now, Annie has to seek help from their relatives while asking for donations through newspaper postings.

We often hear these unfortunate events and then we think that these people do not own any insurance. But no, most of them DO have insurance and in fact, some of the victims are big bosses who are paying more than RM100,000  for insurance premium annually. Why pay so much when they still face the common problems of insufficient claim or the inability to claim for certain medical risk?

This is mainly because most Malaysians are not well-educated with the knowledge of proper risk management planning when buying an insurance plan. We often trust an insurance agent for what is being proposed but most importantly, did the agent properly analyze our existing portfolio and propose a planning according to our need? Or was it for his/her own benefit?

In this article, we will share with you the 3 fundamental aspects to be taken in a proper medical coverage planning. Failure to meet any of these aspects will get yourself into a lot of unnecessary trouble that can be avoided.

Hospitalization Expenses

This is a plan that takes care of all our hospitalization bills. This is one planning that majority of the Malaysians will consider or have already done. And most people would stop here, like Annie and Bryan. Do review your medical card’s annual and lifetime limit from time to time with your financial advisor.

Solution: A medical card with high or unlimited annual & lifetime limit

Post Hospitalization Expenses

Many will often overlook this factor, assuming that follow-up treatments will only be a small amount. Truth is, some follow-up treatments could be far more costly than the surgery itself and some can last a lifetime.

Apart from that, you must not overlook income replacement as a big part of outpatient expenses. Well, not unless your other half is loaded! Below are the common unavoidable expenses you shouldn’t ignore when determining the amount needed to be replaced:

1. Living Expenses Do you have someone that can support you financially?
2. Debts (Mortgage, car loan, business loan etc) No banks will let you off your debts!
3. Family Expenses Who pays the bills at home if you lose your income stream?
4. Children’s Education  Can you ensure you’re healthy until your children have all graduated?

Solution: A plan with 36 Critical Illness coverage and if budget permits, do get it with Early 36 Critical Illness. We will talk more on the differences between these two coverage in another post.

Inflation Planning

Most Malaysians never consider this factor until an unfortunate event happens. If our cost of living increases exponentially, what about medical costs? My family is a clear example whereby my dad’s insurance was already 20 years old when he was diagnosed with stroke. In the end, we could only cover one third of his total medical bill and it was already too late to regret.

According to theStar, our average medical cost inflation climbs at about 15% in Malaysia. Table shows the range of treatment cost for specified illnesses in Malaysia reported in the year 2015.

[Source]

For instance, cancer treatment costs averagely around RM 159,000 and you own an insurance that insures you 300,000. More than enough isn’t it? But what happens 10, 20, 30 years to come with 15% medical inflation?

Solution: 

1) To include 15% inflation rate in the coverage you aim to be insured
2) To do a timely review and top-up your coverage every few years
3) To get an insurance plan with increasing coverage to narrow the inflation gap

Purchasing insurance is not like grocery shopping. Always get a full analysis of your existing coverage before purchasing a new one to avoid redundant planning. You don’t have to be rich to be fully insured, you just have to fulfill the 3 aspects above for a balanced and proper risk management planning. Simple as that 🙂 See you in the next post!

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