A survey conducted by Aon, a British insurance company, has indicated that medical costs in Malaysia have been rising consistently since 2016. The inflation rate within the medical sector in 2018 was 13.2%, which is a 0.6% increase from a year before. Malaysians have spent RM19,570 million of their salary/ savings on medical bills, triple the figure since 1997. 

Despite the facts stated above, most millennials are not equipped with medical insurance. Feeling youthful and at their prime, this may not pose as a necessity. Besides that, many feel intimidated by the mere idea of obtaining an insurance scheme due to the overwhelming variety of plans available, coupled with a lack of understanding of how insurance premiums work.

Understanding how insurance premium is determined

When applying for an insurance plan, various information such as one’s current medical condition and familial disease will need to be provided. An actuary will then estimate the chances of the individual making a claim on their policy. With the information that the insurance provider has in hand, the probability of his/her mortality at a certain age can then be determined. The higher the frequency of insurance claims, the higher the insurance premium that needs to be paid. 

Although it is tempting to hide any pre-existing medical condition in fear of high insurance premium or application rejections, it is a very risky action as the insurance provider has all the rights to deny your claim if you omit any important details about yourself.

The younger, the better?

The general population of adults at the age of 20-35 have relatively robust health, for example, is capable of recovering from a night out’s drinking festivities with relative ease. In short, they are most likely to have minor or near to zero medical condition. Therefore, the insurance premium charged will also be lower as the premium payable is assessed according to one’s current medical condition. For comparison purposes, insurance premium paid by a 50-year-old single individual will be significantly higher by 80% as compared to a 25-year-old single individual. 

When a person has finally decided to sign up for a health insurance plan, there will be a waiting period of 30 days to 120 days before they can start making his/ her claims. The waiting period is set between the health insurance provider and the policyholder, for which no coverage will be available and no claims can be made for that fixed amount of time. This acts as a protection for the insurance provider, by preventing the policyholder from making claims against a pre-existing medical condition or making claims immediately after obtaining a plan. 

Knowing that all medical insurance policies come with a waiting period, you would want to have a health insurance plan while you are young and healthy as unexpected incidents may happen in the future. It will be a bummer if you are prevented from making any claims due to the waiting period that was agreed upon in the insurance agreement. 

This or That? 

Now that you have a basic understanding of how health insurance works, let us go deeper in-depth to make sure that you are well-versed enough to differentiate the plans offered by one insurance provider from the other. 

All insurance providers offer different benefits, depending on their chosen selling point(s) and the customers that they are targeting. Some of the benefits that act as a major differentiator between the various plans available in the market are the annual and lifetime limit, inpatient and outpatient treatments, besides hospital room of choice and the limitations on the intensive care unit.

Benefits Explanation
Annual Limit Fixed claimable amount each year 
Lifetime Limit Total claimable amount within the policy period 
Inpatient Treatments The cost incurred when one is admitted to the hospital.

Eg: surgery, hospital supplies and services, anaesthesia and specialist consultation

Outpatient Treatments The cost incurred when treatment is done without staying in the hospital.

Eg: kidney dialysis, diagnostic test and cancer treatment

Hospital Room Benefit limit for a hospital stay

Eg: claimable amount limited to only RM 100 per night

Intensive Care Unit  Benefit limit for confinement in an intensive care unit

Although insurance premiums require financial commitments, it is important to realize that you may still end up having to fork out money to pay for your own medical treatment, especially if you signed up for the cost-sharing insurance payment scheme. The amount payable by policyholders in such a scheme is conditional on the pre-set fixed claimable amount, the percentage claimable agreed upon, or the medical condition that you are being treated for. For example, if one’s pre-set fixed claimable amount is RM1,000 but the medical treatment amounted to RM3,000, the policyholder will be liable for the remaining payment of RM2,000. In essence, a fully-insured plan insures one against the full amount of his/her medical fees (subjecting to benefit limits) whereas in cost-sharing plans one will be bound to pay a fixed or variable amount before the benefits come into effect.

To determine which plan will suit you better, you need to backtrack your past medical expenses. If you rarely visit the doctor, it will be savvier for you to obtain the cost-sharing plan instead of the fully-insured plan, as premium for the latter will be comparatively higher. 

How well do you want to be serviced?

Hopefully, at this point, you already have a better idea of the kind of insurance policy that commensurate your current/ past medical condition and financial capabilities. The final factor to consider is whether you should obtain the plan directly from an insurer or an agent. 

The difference between these two options is the level of service that you expect to receive during the tedious claiming process. Obtaining a plan directly from an insurance provider will definitely cost less as you do not have to account for the commission cost of an agent. However, you will need to handle possible issues related to claims by yourself, instead of delegating the work to an agent.

Medical insurance is one of those things that would often be deemed negligible. The thought of buying an insurance plan could be as daunting as it is important. Millennials should not “escape” from it but instead, take a proactive stance to find out more about it and consider its usefulness towards their lives.

Grab a good deal while you still can, young man!

Writer: Lim Yue Jia

Reviewer: Vikky Beh

Editor: Iman Tan

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