Medical Insurance Benefits

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very medical insurance policy represents a contract between the policyowner and the insurer. Such a contract is subject to terms and conditions which both the insurer and the policyowner must comply. The most important responsibility of the policyowner is that when he applies for the policy contract he must ensure that all the answers given in the application form are true to the best of his knowledge. Once the contract is in effect, he only needs to keep the insurer informed, if there are significant changes to his circumstances, for example his occupation.

The insurer on the other hand must honour all the terms and conditions of the policy contract. All insurers are licensed by Bank Negara Malaysia (BNM) and policyowners must know and believe that insurers must pay out all valid claims. There are several mechanisms in the industry that ensure protection to policyowners such as the Insurance Mediation Bureau, Complaints Department of Insurance Companies, Customer Service Bureau (CSB) in BNM as well as Laman Informasi Nasihat & Khidmat (BNMLINK).

When buying medical insurance, policy owners must understand that not all expenses are payable by the insurer. Most polices pay only if the insured person is hospitalised or has to go through surgical or similar procedures. Of course, in the case of treatment for accidents, the insured person can claim for expenses for treatment even if he not hospitalised. Most importantly, policy owners must ask and understand clearly what are those expenses that cannot be claimed form the insurer. Pre-existing illnesses or medical conditions are usually excluded from the policy contract. Policy owners must further look at the brochure or policy document and inquire about the list of items under the heading of “Exclusions”.

In Malaysia, because of BNM guidelines, there are many similar terms and conditions in the medical polices issued by all the insurers. However, the following are specific features to look out for

i)       Annual Premiums – this will depend on the age as well as the gender of the insured person.

ii)      Co-insurance – whether the policy owner is required to pay part of the claim eg. 10% of the expenses.

iii)     Annual Limits – this is the maximum amount that may be claimed in any one ‘policy year’.

iv)     Lifetime Limits – the maximum that may be claimed over the years. After this amount is reached, the insurer will no longer renew the policy contract.          

BNM guidelines compel insurers to renew all medical insurance polices up to the age as specified in the contract. In Malaysia, these maximum ages are usually between 70 to 85 years of the insured life. Premiums are usually “age banded” i.e. the amount will be the same for every 5 years as represented by the insurer. However, the insurer is allowed to increase the premiums by means of “loading” or “health extra”, if the claims experience of the insurer is high. If a insurer intends to increase the overall premiums in a specific medical plan offered to the public, it must obtain the approval of BNM.

In the future articles on this subject, we shall discuss common “Exclusions” found in medical insurance contracts as well as difficulties that policy owners may face when making claims from insurers.