COVERING MEDICAL COST

By LAALITHA HUNT (laalhunt@thestar.com.my)

Only 15% of Malaysians have some form of medical insurance according to a Bank Negara report

PRIVATE school teacher Peter Chin, who is in his late 30s, was not at all interested in purchasing medical insurance cover for himself as he was in the pink of health and exercised regularly.
However, his wife convinced him to obtain a medical card, which covers hospitalisation and surgical costs as well as a critical illness plan, which normally pays you a lump sum when you are diagnosed with a critical illness such as heart attack or stroke.
The following year, Chin was admitted to a private hospital when he suffered unbearable chest pains. It turned out that his arteries were blocked in four places and he was required to have heart surgery, which cost RM70,000.
He was truly grateful as his insurance company immediately paid for the surgery and bore the related hospital costs. He was also paid a hefty sum due to his critical illness.
In a way, Chin is lucky. Only 15% of Malaysians have some form of medical insurance, and 84% of those having medical insurance are below the age of 45, says a Bank Negara report.
General Insurance Association of Malaysia reported that medical insurance generated close to RM485mil in gross premiums in 2007, which represented only about 5% of the general insurance market.
According to Great Eastern Life Assurance (M) Bhd executive vice president and chief marketing officer Loke Kah Meng, many people feel safe in the knowledge that their employers provide medical benefits.
“However, the coverage may be subject to low benefit limits and will usually only be provided up to the ages of 55-60, after which one then retires. In addition, family members may also not be covered by the employer,” he points out.
However, Loke says growth in the medical insurance sector has been very encouraging, averaging at least 15% per annum over the last few years, with expectation of continued strong growth going forward.
“This is indicative of the greater awareness among individuals, employers and corporations of the need for medical insurance protection as an effective and affordable means of financing medical costs,” he says.
According to Syarikat Takaful Malaysia Bhd general manager Khalid Salleh, based on net income, one should set aside up to 15% for life and medical insurance coverage.
“To be cost-effective, one should buy ‘medical riders’, which could be added to one’s basic policy to provide an even more extensive insurance coverage at a small fee,” he adds.
Besides that, Khalid points out that the insured is also allowed tax deductions for medical insurance premiums by up to RM3,000 per annum from their personal taxable income.
Khalid advises that for small children as well as adults, a comprehensive healthcare protection should ideally have a hospitalisation and surgical insurance as well as a critical illness plan.
“For adults, there should be add-ons for disability income plan designed to cover one’s day-to-day expenses in the event one is unable to work due to an accident or illness,” he says.
Khalid adds that besides sufficient coverage for ordinary admissions, one should minimally be covered against the 36 critical illnesses.
“Even when a child is admitted for suspected dengue at an average private hospital and after conducting the routine diagnostics checks, it can set one back RM2,000 to RM3,000. Major surgeries can run into hundreds of thousands,” he notes.
Meanwhile, MyFP Services Sdn Bhd financial planner and managing director Robert Foo says one should assess one’s situation and needs when considering to purchase medical insurance.
“If you have enough wealth, then there may not be a need for any insurance. I mean, how much health insurance does Bill Gates need anyway. This is just an extreme example but you get my point,” he says.
Foo argues that if one is financially independent, they would be able to afford their own medical bills.
“But for the majority of people, it is good to have some health insurance, but it should be considered on a case-to-case basis,” Foo says.