Sept 23-29.
20171 FocusM
Local healthcare insurance players
envision health plan premiums to
rise 12-15% per year
When to opt
for a standalone
medical plan
Good option for pure medical protection
Look at the value of each plan and be strategic
about insurance planning at different life stages
by
LimSiewMay
ALAYSIANS are
M fortunate to be able
to choose between
private and public
healthcare should
our health take a toll on us. We
are also lucky that while we have
to endure long waiting lines at
our public health facilities, we
are generally assured of quality
healthcare, (See Income+ Issue 2.49:
A tale ottso healthcare systems)
FA Advisory Sdn Bhd senior
financial consultant Liau Chee Hui
acknowledges that government
hospitals are good alternatives.
"If you buy a Ideally,tax-paying citizens should
standalone make good use of public healthcare
facilities. "Aslong as you can stand
medical ~Ian the long queues, public hospitals
and you i:lon't
can be a good choice, especially
for those who live nearby to one.
pay your You can enjoy quality medical
~remium by the
treatment," he says.
That said, industry players
i:leadline, _lour believe itis wise to have some form
of medical insurance to cushion
policy wilrla,-se any unexpected financial blow due
Immediately:' to an illness, regardless ofwhether
you are counting on private or
-Foo public healthcare.
Medical insurance comes in
two forms - a no-frills standalone
medical plan, and a medical rider
attached to a life policy such as
an investment-linked plan (ILP).
The former covers hospitalisation
and surgical expenses, while the
latter also does that, in add i tion to
paying a lump sum in the event of
death and/or total and permanent
disablement.
"Medical insurance gives you
the option - you can choose to seek
treatment from private hospitals.
Family members without medical
insurance may need to borrow
money when they go to a private
hospital ifthey can't bear with the
longer waiting period at a public
hospital," suggests Luke Roho,
co-founder of ilsanding.com, a
platform offering independent
insurance information and educa-
tion. His view is that if you cannot
afford a medical plan attached to
a life insurance, consider opting
for a cheaper alternative - a stan-
dalone medical insurance.
F"mancialburden
Roho recognises that a costly life
insurance plan may add to the
financial burden of the average
salaried Malaysian. According to
Khazanah Institute Research's
report last year, our average
monthly household income in
2014 was RM6,141with a median
household income of R1\1[4,585.
"Ifyour purpose is to get cov-
ered for your health only, then a
standalone medical plan is the first
step. Ifyou are also worried about
what will happen to your family
after your death, get a medical
rider and attach it to a life insur-
ance plan," recommends Roho. "It
really depends on your financial
state. For instance, if you cannot
afford to pay RM2,000 a year for a
medical rider plus life insurance, a
standalone medical plan that costs
RNh50a year gives you access to a
private hospital," he says.
Foo Pek Heong, a life and gen-
eral insurance practitioner, agrees
that those with budget constraints
income+
123RF
can go for a standalone medical
plan. "It's better to have something
rather than nothing," she says.
A medical rider attached to an
ILP tends to be more expensive
than a standalone medical plan,
especially foryounger policyhold-
ers. "Consumers (who purchase
a medical rider) pay more the
moment they start the policy,
as part of the money is used for
investment, and they also have
a life cover. But for a standalone
medical plan, you pay according
to your age. Depending on your
age, this plan can be cheaper.
However, if you buy a standalone
medical plan and you don't pay
your premium by the deadline,
your policy will lapse immediately.
Unlike the medical rider attached
to an ILP,there is no cash value to
cushion this," she cautions.
Similarly, Sam Tang, general
manager of healthcare and
wealth management provider
MXM International Sdn Bhd,
believes that everyone must get
a medical insurance while they
are still young and healthy. "Treat
medical insurance premiums as
part of healthcare maintenance
expenses, just like your monthly
commitments for WiFi, Astro
or mobile phone," he says. He
believes that health premiwn is a
form of savings by policyholders.
Should any unforeseen events
happen, it serves as an emergency
medical fund, he adds.
Rather than relying on our
public healthcare system, Tang
believes that having a medical
If your purpose insurance is a better risk manage-
menttool in the long run. "The cost
is to get covered of medical treatment is not cheap
for your health and will never be due to medical
inflation. The government is not
only, then a
in a position to provide long-term
standalone healthcare subsidies. Therefore,
transferring the responsibility
medical plan is from the public to private sector
may be the only solution," he says.
the first step:' Local healthcare insurance
-Roho players envision health plan
premiums to rise 12-15%per year,
citing higher incidences of chronic
and lifestyle diseases like diabetes
and obesity.
How to decide
So what should a policyholder
do? When choosing between a
standalone medical plan and a
medical rider, one way is to assess
your financial habits. FAAdvisory's
Liau points out that premiums for
both plans are not fixed as they are
subiectto reviews and increments
in future.
"U' a person has proper finan-
cial planning, and the discipline
to invest the premium difference
Treat medical between a standalone medical
Insurance plan and an ILPwith medical rider,
then a standalone medical plan
premiums as part may be more suitable," he says. By
contrast, if a person doesn't have
of healthcare the discipline to save and invest
maintenance regularly, an ILP may be a better
option as it is a form of forced
expenses, savings/investment. The plan,
he adds, could help the person
just like your invest the additional premium to
monthly offset future increment in health
premiums.
commitments As shown in Table 1, the
for WiFi, Astro or premium difference between a
standalone medical plan and a
mobile phone:' medical rider is quite substantial
- Tang until the policyholder turns 60.
A 45-year-old policyholder who
opts for a standalone medical plan
Co..ntinues P.32
 Income+ FocusM I Sept 23-29.2017

How premiums differ

Typesof plans Medicalriderattached to an Standalonemedicalplan (RM)
(fromthe same insurancecompany) investment-linkedplan(RM)
Expiry age (years) 100
Dailyroom and board 200
Annual limit 1.25mil
Lifetime limit Not applicable
Outpatient cancer treatment 937.500 per lifetime
Outpatient kidney diagnosis
Co-insurance
Not applicable
Deductible
Industry players believe it is wise to have some form of medical Yearly premium 4.596 Changes according to attained age*'"
insurance to cushion any unexpected financial blow like an illness Future premium waiver upon 36 critical illnesses Yes No
Age 45 (Male) 4.596* (annual premium) 1.643.53 (annual premium)
50 4.596* 2.130.07

Pay slightly more for 55

60
65
4.596*
4.596*
4.596*
2.619.79
3.492.83
5.884.59

lower deductibles 70
75
4.596*
4.596*
11.740.56
14.958.88
80 4.596* 19.367.26
85 4.596* 23.922.08
From P.31 The key is to look at how much Projectedcash value High Low
with the same medical coverage value you derive from a plan, and
10years 25.000 20.000
pays an annual premium of only be strategic abou t insurance
RMl,643 as opposed to RM4,596 planning at different life stages. 15years 43.000 29.000
for a medical rider, saving some "Say I am a ao-something male
-- --- --
20 years 58.000 30.000
RM3,000 a year. policyholder. The best plan would -- -
25 years 55.000 17.000 Not applicable
For those with budget cost me a monthly premium of --
constraints and who are older, only RM100 or RlVh,600 a year. 30 years 35.000 (Need to top
circumvent the dilemma of paying (see Table 2 - comprehensive plan up premium
as cash value
high premiums by buying more (A))," he says.
might have
affordable basic medical plans "It's very affordable for me been o, hence
with lower annual and Ii fetime now considering I am getting an unableto
benefits, rather than a compre- annual limit of RM1.2 mil a year sustain the
hensive medical plans with high with no lifetime limit. I don't have policy) I
or no annual or lifetime limit, Liau to worry about co-insurance
Notes:'Premiumisnotguaranteed.subjecttoreview.Policyholder
issuggestedto increaseRMso/month
everyfiveyearstobettercope
recommends. (See Table 2) and deductible, as my insurer withmedicalinflation
He says to enjoy lower pre- will pay 100% of my medical Projectedannualpremium.
subjecttoreview
mium, one should go 101' a medical and hospitalisation expenses.
plan with a deductible, which is This gives me a lot more value Source:LiauCheeHUi.seniorfinancialconsultantat FAAdvisory
SdnBhd
a portion of medical expenses Ul~U1the second plan (basic plan
borne by the policyholder upfront, with co-insurance (B, when the Table 2
Deductibles, he adds, are typically premium difference is only 20% or
available for standalone medical RIvI200-300 a year," Liau explains. Comparison of three yearly renewable standalone medical plans
plans, not medical riders. They What happens when the
come in various amounts, such annual premium difference Typesof plans Comprehensive Basicplanwith Basicplanwith
as RM5,000, RM1O,OOO to as high widens significantly at age 70, plan (A)(RM) co-insurance(B)(RM) deductible (C) (RM)
as RM60,000. Policyholders are with the comprehensive one at Room and board per day 200 300 400
generally advised to pay slightly about RMn,ooo, and another at
Annual limit 1.2mil 150.000 240.000
higher premiums for lower Rl\16,500? "In this case, I will opt
deductibles to limit their uplront for a plan with a deductible if my Lifetime limit No limit Not applicable 1.2mil
cash payments. health condition still allows me Co-insurance Not applicable 20% if there is an Not applicable
to buy a new medical plan," he upgrade of room and
MitigatinJl financial explains. board
impact ofhospitalisation Similarly, an employee who Deductible Not applicable Not applicable 15.000 per disability
Those of advanced age can also enjoys group insurance as one of Last entry age (years) 70 70 70
opt for a basic medical plan with his employment benefits can also
a deductible, and go to a govern- opt for a standalone medical plan Guaranteed renewable Yes. renewable till age 98 Yes. renewable for the Yes.renewable till
ment hospital in the event of any next 100 years. starting age 99
with a deductible, says Liau. This from 2016
medical emergencies. This way, will afford him an inexpensive
you still have a medical card to private medical insurance, Should Annualpremium Male Female Male Female Male Female
mitigate the financial impact of any misfortune sLrike, he can use Agel 1.402 1.134 791 791 353 353
hospitalisation, Liau says. the group insurance to pay for 10 871.3 791 791 275 275
997.5
"Assuming you're 70 years his hospitalisation expenses, and
old. You don't have to buy a RM1.2 cover the balance with his stan- 20 1.070.60 1.102,40 786 786 250 272
mil annual limit plan and pay a dalone medical plan if the limi tis 30 1.123.60 1.162.85 882 882 268 295
-- -- - ---
premium of about RM1O,OOO a insufficient. ~ 40 1.646 1.632 1.322 1.322 323 364
year (see Table 2 - comprehensive
plan (A)). Under this plan, you 50 2.355 2.649 2.078 2.078 432 476
would have paid a premium of 60 4.871 4.821 3.892 3.892 802 722
RM100,000 after 10 years. You can 70 10.961 10.851 6.524 6.524 1.632 1.576
save all this money for health care
80 20.552 20.348 13.591 13.591 4.514 4.234
prevention instead.
"My advice is to go for the Note:Thiscomparisonisforquickreferenceonly.Pleaserefertotheproductdisclosuresheetandinsurancepolicyfordetails.aswellastheprecise
third option (basic plan with a terms.conditionsanddefinitions.
deductible (C instead, so the
first RM15,000 can come out from Source:LiauCheeHui.seniorfinancialconsultantat FAAdvisory
SdnBhd
your pocket, and you can save and
investthe difference in premium,
Even if something were to happen
in 10 years, your maximumliabil-
As.lon~as you can stand the long queues,
ity would be only RM15,000," he public liospltals can be a good choice, especially
explains. At RNI9,000 a year, the
premium difference between the
for those who live nearby to one. You can enjoy
two plans is significant, he says. quality medical treatment:' - Lla u