Medical Insurance

Every Malaysian is entitled to state healthcare services in public hospitals but the high demand has forced many to seek private but expensive healthcare. A visit to a private hospital can set you back an arm and a leg. A local daily recently reported that a family had to pay almost RM60,000 in medical expenses for their 87-year-old mother who was in hospital for 35 days during which she was also in the critical care unit for a week. There was no surgery.

A recent amendment to the Private Healthcare Facilities and Services Act 1998 has also led to a 200% rise in consultation fees at private hospitals. A visit to a specialist can now cost RM80 to RM235 while a medical examination costs RM50 to RM230. This will force many more to seek treatment at public hospitals or rely on their medical insurance policies to cover expenses.

The primary objective of taking out a health insurance policy is to defray escalating medical costs. Insurance companies have traditionally focused on coverage for permanent disability and death and later began providing coverage for 36 critical illnesses that include cancer and heart disease.

Most life insurance companies and those that offer both general and life insurance now also include health and medical coverage in their policies. Under such policies, the insured is entitled to hospitalisation and surgery as well as medical care for any of 36 critical illnesses. All he needs to do is produce a medical card provided by the insurer. The insured can be paid a lump sum of money or a specific amount of money on a daily basis while in hospital.

Most policyholders do not bother to read what is in their insurance policy documents despite the fact that the terms and conditions attached form the cornerstone of the health and medical insurance plan they have purchased. As a result, they only realise the limits of their coverage when they are admitted to the hospital or when they are in the doctor’s room, by which time it is too late. For instance, a man was recently diagnosed with prostate cancer and needed radiotherapy and hormonal treatment, regarded as outpatient treatment, that cost RM33,000. To his shock, his insurance covered only RM10,000 for outpatient treatment.

Malaysian Insurance Institute (MII) advises policyholders to fully understand the terms of their coverage. “It is also highly important that the policyholder makes available to the insurance agent full details of the insured person’s personal and family medical history, lifestyle and habits as these are important in determining the protection requirements,” MII adds.

In the example cited, it is clear that its coverage for outpatient treatment for cancer is limited to RM10,000 for a lifetime. Unfortunately for the policyholder, the same insurance company had, in 2009, introduced a similar health insurance coverage for outpatient cancer treatment that offered medical coverage of up to RM116,000 for the same premium.

Why was the policyholder not aware of the terms and conditions of his insurance plan? One of the main grouses is that insurance policy documents and brochures contain too much jargon. Bank Negara attempted to make insurance policies more easily understood by the layman by issuing a guideline on product transparency in 2009. In line with this guideline, all sales material has to be in layman’s language and must be presented in a clear and concise manner.

MII views insurance as a complex product that contains technical terms that cannot be altered despite the companies’ efforts to simplify the wordings for their offerings. “It is the responsibility of the agent to explain clearly what each technical term means so that customers understand. This is also another reason why personalised meetings or the face-to-face approach are a must when buying a life insurance policy,” it says.

Bank Negara, together with insurance and takaful (insurance based on Islamic principles) service providers, are also actively promoting greater consumer understanding of insurance contracts through its dedicated website: www.insuranceinfo.com.my. Going by the example given, it is clear that the agent plays a vital role in ensuring the policyholder understands the terms and is aware of the exact quantum of the pay-out should a misfortune strike.

MII agrees that insurance agents are not that well regarded. This probably stems from the fact that in the past, agents were usually not highly educated, and lacked knowledge and awareness. Added to that was the absence of stringent rules and regulations. “However, Bank Negara and insurance associations have introduced various standards, rules and guidelines that ensure insurance agents play their roles professionally and with integrity,” MII adds.

To get a licence, an agent is required to pass the Pre-Contract Examination for Insurance Agents as well as the Certificate Examination in Investment-Linked Life Insurance. Only then will he be registered with either the General Insurance Association of Malaysia, the Life Insurance Association of Malaysia or both. Agents are also required to undergo professional development training annually. Investing in medical insurance is prudent to prepare for medical emergencies especially with the escalating cost of healthcare.

However, before committing to any health plan it is also wise to carefully choose a policy to avoid having to part with more money despite paying a hefty monthly premium. Consumer has the right to obtain pertinent information of any insurance plan proposed by the agent through a question and answer session and if at any point the person is unsatisfied with the explanation, a second opinion should be sought.