12 Common Medical and Health Insurance Jargons Explained
Did you know that the insurance penetration rate in Malaysia currently hovers at only 56% with just 32% having more than one policy? While many Malaysians are well aware of escalating medical costs, there are still many without any insurance coverage.
Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020 has set an insurance penetration rate of 75% come 2020 (Wawasan 2020, anyone?) for every segment of society, regardless of income to be adequately protected.
Factors such as affordability (or the lack of it) and inaccessibility play an active part in determining current and future insurance penetration rates.
However, we still need to take a step back and understand the basics of insurance to understand some of the struggles faced by those looking to get insured.
There are various companies out there offering a full suite of insurance products to suit an individual’s every need and requirement. Nevertheless, insurance is a subject that’s not always easily understood and you will likely encounter many terms and words used that may come across as complicated or downright confusing to us laymen.
Plainly speaking, when you have an insurance policy in place, you will not need to dig into your own savings or borrow money to overcome health difficulties. Many are not aware of the importance of policies such as a medical plan or life insurance until disaster has struck.
Let GoBear step up here and help shed some light on the health and medical insurance jargons that matter. After all, to understand your health insurance or medical plan, you need a good basic knowledge of the insurance terms that get bandied around.
Of course, keep in mind that different healthcare providers retain different scopes of coverage and definitions.
A monthly cost that you – the consumer – need to bear, by paying the insurance company even if you did not visit the doctor or use any of the benefits.
Think of this like a monthly video streaming service fee. For instance, after you’ve signed up for Netflix, you will be charged the monthly fee even if you do not tune in to watch it.
You might also come across the term annualised premium, which is the monthly premium multiplied by 12. With some insurers, you’ll enjoy more savings when you choose the annual premium payment mode over the choice of monthly premiums.
Lifetime and Annual limits
A lifetime limit is the maximum amount claimable from your insurer during the person’s lifetime. Pay due attention to individual lifetime maximums as this may differ from plans that comes with family coverage.
Medical plans such as ManuHealth Elite as well as AXA eMedic both come with no lifetime limits.
In contrast, an annual limit is the maximum amount that you can claim from your insurer in a year.
ManuHealth Elite, for instance, has an annual limit of RM2.2 million under its MHE Signature plan.
Standalone vs Rider
A standalone medical plan behaves like a term insurance where you will be covered as long as you pay your premium. Standalone medical insurance such as AXA eMedic offers simple online application with quick approval, and without any medical examination required.
It’s a relatively simple and cost-effective solution that appeals to a wide segment of the population looking to get some form of medical coverage. Do keep in mind that for standalone medical plans, the cost of the insurance premium is likely to increase every year due to Malaysia’s medical inflation rate, among other reasons.
A rider, on the other hand, comes coupled with an investment policy as an added feature. Policies such as ILPs (Investment-linked insurance products) gives you the option of adding medical cover as one of its options. For instance, ManuHealth Elite by Manulife can be bought as a rider on top of its life insurance policy.
When you purchase medical cover as a rider, you will normally pay a higher premium during the first few years as it will be used to cover the expected higher medical expenses incurred in the future.
Here’s an example:
The cost of a medical card rider for a 55-year-old from insurer X is RM2,900 a year. However, if you signed up for this insurance policy when you were younger, say when you were 35, you will only be paying at the rate of you were quoted at 35 years of age - when you're 55.
So if you paid RM2,500 a year for your medical card rider, you will still be paying RM2,500 at 55 years of age because the extra RM400 has already been taken care of by the extra premium you paid in the early years.
A deductible is the amount of money you have to pay out of your own pocket before your actual coverage begins. Keep in mind that your health insurance company will only cover costs that are above your deductible.
For instance, let’s say you subscribed for a medical plan that has a deductible of RM1,000. If your hospital bill comes up to RM3,000, you’ll need to pay the RM1,000 yourself before your healthcare provider picks up the remaining RM2,000.
The benefit of having a deductible usually translates to cheaper health insurance (or other insurance product) premiums; your monthly premium with a deductible will cost less than a monthly premium without a deductible.
For example, AXA eMedic offers two plans under its medical card: one without a deductible, and one with RM1,000 deductible.
Not to be confused with the deductible, co-insurance is a percentage of a medical charge that you’ll pay while the rest of the cost will be carried by your medical plan. In other words, it’s a form of cost-sharing, where you split the bill between yourself and the insurance company.
Co-insurance is set in percentages; a 30% co-insurance sharing costs means that you will pay 30% of your medical bill while 70% will be borne by the medical plan.
Here’s an example of how co-insurance works with a deductible:
Let’s say you have
A hospital bill: RM2,000
-> Hospital bill: RM1,500
20% co-insurance of hospital bill = RM300 (total bill you pay)
The insurer pays the remaining RM1,200
A medical illness or injury that you have previously sustained before you start a new health care plan can be considered as a pre-existing condition; also, you would have received treatment or diagnoses for such conditions previously.
Normally, these conditions and illnesses would be excluded from coverage by your insurance company. When comparing which medical or health plan is best suited to you, do check with your insurance company on the details of the pre-existing conditions. Common examples include diabetes, cancer, mental health issues, and more.
| See also: Are You Ready for Your First Online Medical Card? |
Type of care provided that does not require hospitalisation or staying overnight at the hospital. This usually includes treatments such as dialysis, physical therapy, certain surgeries, and at times even chemotherapy.
Selected out-patient treatments can provide patients with more freedom and maintain other commitments they may have for their families, work, school, or any other important activities.
When comparing medical or health insurance plans, do factor in which out-patient treatments you might require for your well-being.
Qualifying or Waiting period
Set by the healthcare provider, this is defined as a period of time which must pass before specific coverages (or all) can begin. Different conditions and coverages have different waiting periods and subsequently different rules.
The majority of health insurance companies set an initial qualifying or waiting period of between 30 and 90 days, so that any illness which afflicts the individual during this time won’t be covered. This term was put in place to discourage those who were just diagnosed with a serious disease to take up a medical plan.
Moreover, there are also waiting periods for pre-existing conditions as well as those in maternity. Both come with different lengths of waiting periods.
A grace period is asset amount of time after the premium is due for a policyholder to make their premium payment without the coverage lapsing. This grace period can vary depending on the insurer and the type of policy at stake. As long as the insurance grace period is in effect, the insurer will be responsible for the services rendered to the policyholder.
Here’s an example of how the grace period works:
Ali has a medical plan with a policy premium due date set on 31st June, where he is required to pay the premium to enjoy coverage for an additional year. He decides to make an online bank transfer, but was unaware that the transaction failed to complete, only to realise his mistake three days later on 3rd July.
The following day, he needed to visit the hospital for his physiotherapy session. If the policy did not have a grace period, the insurer would have considered his medical policy to have lapsed on 1st July and not provide him with the coverage he needed. With a grace period that extended to at least 3rd July, his policy would’ve ensured that he received the treatment as required.
Most medical and health plans in Malaysia have a grace period of one month; AXA eMedic medical card offers a grace period of 31 days whereas ManuHealth Elite imposes 30 days instead.
Free look or cooling-off period
Buying a life insurance policy is a big and important decision for you and your family. However, it does come with a free look period. During this period – usually 15 days – you have the option of cancelling your policy without getting penalised. The free look period begins from the time you receive the policy.
This benefit offers you additional time to review the policy that you have purchased and receive a full refund of payment made (usually minus any medical examination expenses incurred).
If after purchasing this policy, you realise that it does not best serve your needs, you can notify your company representative on your intention to cancel it.
Takaful is a Shariah-compliant co-operative system of reimbursement or repayment in case of loss, designed to be an alternative to conventional insurance.
Certain insurers in Malaysia offer similar medical plans, where one is based on takaful and conventional versions. For instance, AIA has a conventional comprehensive medical plan called A-Plus Med, whereas its takaful version is called A-Plus Med-i
Investment-linked Product (ILP)
An ILP is a two-in-one insurance policy that combines both investment and protection. Your premiums will be allocated towards an investment fund of your choice (where the benefits will depend on how well the fund performs), whereas the protection portion usually includes death benefit, total and permanent disability (TPD), and critical illness.
ILP is a term you’re more likely to encounter when considering medical cover as a rider, as mentioned above.
Make no mistake, all insurance companies would like you to fully appreciate and understand all the benefits and charges involved. As a consumer, you also need to play your part and be well-informed of the agreement you’re signing up for.