Medical Insurance Options

While medical care and treatment at government hospitals are generally affordable, the average Malaysian will oftentimes choose to seek care from private hospitals, as service and care are perceived to be better, and the waiting time much shorter.

However, medical cost has been ascending at a rate exceeding 12 per cent per annum – making the cost of seeking treatment at such facilities a little out of reach for some. Getting medical insurance has therefore become essential.

As it stands, the insurance penetration rate in Malaysia is currently around 41 per cent, which makes it crucial for Malaysians to be better informed on the need to get protection.

Before deciding on the kind of coverage needed, it is a good idea to understand the basics of insurance to have a clearer picture. With so much industry-specific jargon floating around, the concept of insurance and the mechanics that go behind it may be a little hard to grasp for most people.

To help you along, we’ve listed some key terms that you will encounter in your quest to find an insurance coverage that’s best suited to your needs.

Medical Card - Generally, an individual medical insurance coverage offers a medical card facility for hospital admission.

The types of coverage vary with the products which may range from comprehensive to budget cover and includes expenses for surgeries, room and board, in-hospital related fees (operating theatre, hospital supplies and services, anesthetist, pre- and post-hospitalisation fees, among others).

The medical card provides you with insurance coverage. Upon presenting the card, the hospital will contact and inform the insurance company of your admission, diagnosis and prescribed treatment. The insurance company will then review and, upon confirmation of eligible coverage, issue a guarantee letter to the hospital for the expected expenses.

This card often saves the need for paying large deposits and filing your claim after you’ve settled the bill. For non-emergency cases, you can save time and hassle by obtaining your hospital guarantee from the insurer/takaful operator a few days ahead of admission.

Meanwhile, for medical coverage provided by employers, most people make the mistake of thinking they don’t need to purchase additional health insurance as they believe they are already “covered”. What they don’t realise is the coverage provided by their employer may be restricted (in terms of limit and in-patient care). In this instance, it would be wise to get additional health insurance to “top up” any additional costs that may be incurred.

Panel hospital - The medical card that you sign up for comes with a list of participating hospitals. You need to use the hospitals on the panel to enjoy the insurance guarantee facility.

Premiums = This is the payment made to the insurance company that the consumer needs to bear, regardless of whether he/she has visited the doctor’s office or used any of the benefits offered by the insurance company. Insurance premiums can be done monthly, quarterly or yearly. Depending on the insurer, the annual premium payment option may give you better savings in the long run.

Using the accompanying table as an example, here are a couple of scenarios on the types of schemes available for two young adults with no pre-existing conditions:

A 25-year-old man who signs up for the zero deductible MHE150 plan can expect to pay a monthly premium of RM89.50. This policy has an annual limit of RM1 million and no lifetime limit.

Meanwhile, a 29-year-old woman who opts for the MHE150 plan with RM500 deductible has the same coverage but pays a slightly lower premium of about RM78 a month or RM937 annually.

Lifetime and Annual limits - This is the maximum amount claimable from your insurer during your lifetime as long as your policy is still inforce with the company. Once your lifetime limit is exhausted, any further medical costs will no longer be covered. The amount of lifetime maximum limits may differ, depending on the plan/insurer chosen. Annual limit, on the other hand, is the maximum amount (as stated in your selected plan) you are entitled to claim for one policy year.

Deductible - This is the amount of money you have to pay out of your own pocket before your actual coverage begins. Your insurance company will only cover costs that are above your deductible.

For example, most plans today come with the option of either a zero or RM500 deductible. A zero deductible plan means you pay nothing in the event that you are admitted to hospital; the total cost will be borne by the insurer.

Meanwhile, with a RM500 deductible, you only need to pay RM500 of your total bill while the balance is paid by the insurer.

The benefit of having a deductible means that your health insurance is cheaper – your monthly premium with a deductible will cost 10-20 per cent less than one without.

Standalone vs Rider - A standalone medical plan behaves like a term insurance in that you are covered as long as you pay your premium. On the other hand, a medical insurance rider comes attached to a basic life insurance policy, most commonly an investment-linked policy (ILP). The cost of a medical rider attached to an ILP is generally lower than a standalone plan. However, your total cost is higher given the additional life insurance protection afforded with the ILP.

Guaranteed Renewal - As long as your policy is paid on time and you want to continue with the insurance, the insurance company is obligated to renew the policy (provided the lifetime claim limit has not been exceeded and you have not reached the maximum eligible age for coverage).

Non-Guaranteed Renewal - This simply means your policy is renewed on a yearly basis, subject to the insurer’s approval. For instance, if you are struck by an illness that is likely to recur in the future, the insurer may decide not to renew your policy. When you shop around for new insurance, you’d have to disclose your pre-existing condition. This will lead to higher premiums or in some cases that particular illness may even be excluded from coverage. For these reasons, policies that are non-guaranteed renewable are less costly.

Buying medical insurance can seem complicating and daunting. The advice of a professional advisor is often needed, however the better informed you are, the better purchase decisions you will make.