Malaysia Critical Illness Insurance Coverage
Blog Series Title: The Malaysia Insurance Planning Guide
It’s very common that confusion arises whenever the topic of medical insurance is discussed. The average policyholders are usually not informed about what exactly their “medical insurance” benefits are until they actually visited the doctor. So, to avoid this from happening to you, I am going to clear up the air once and for all- what exactly is medical insurance and what coverages are you entitled to.
Medical insurance is a broad term to define any insurance coverage that allows you to claim medical compensation from the insurance company whenever you fulfil the conditions specified in the contract. Generally, a flu bout or a fever will not allow you to claim any compensation, and those claims usually falls under your own company’s medical benefit, if you have one.
Major insurance Companies offer the following medical insurance products:
1) Medical & Hospitalisation Card
I have covered this benefit here: Malaysia Medical & Hospitalization Insurance Explained. To sum it up, this is a plan that works like a credit card. Say you sign up a package that gives you RM 300,000 lifetime limit, the limit will be deducted with every claims you make. However, this card only covers for the medical and hospitalisation expenses. It doesn’t cover any diagnosis of major illnesses.
2) Critical Illnesses
Now, this product is somewhat like a roulette with a choice of 36 terminal illnesses. Hit either one, and you will be “rewarded” with the total jackpot sum. Say if your critical illnesses policy has a coverage of RM 500,000, that’s the full ballpark amount you will be compensated the moment you are diagnosed with any of the 36 terminal illnesses. There’s no installments or deferred payments, you should get a cheque with the full amount of your coverage. If your critical illnesses policy is only assured up to RM 25,000, that’s too bad. Depending on the jackpot illness you hit, it’s barely going to be enough, but RM 25,000 is all you are going to get to get you through, if you get through at all :-P
With the “Medical Insurance” definition laid out, I hope you are no longer confused what medical insurance benefits you have. The two policies above are not the same, but you usually can buy them as a single package, which is very common with an investment-linked policy. You can also purchase them separately- one policy for the medical card benefit and another policy for critical illnesses coverage.
Okie, let’s move on to the critical illnesses coverage. In Malaysia, the critical illnesses coverage comes in 3 dozens- that’s 36 illnesses. I have no idea why is that so, but the internal surveys probably shows that most insurance agents can only memorize up to 36 illnesses.
So, what are these 36 critical illnesses? And what do they cover? To explain each and every 36 illnesses, I suggest you download this critical illnesses booklet I’ve compiled which is in the second edition at this point of writing, You would understand much more clearly what a critical illnesses policy can and cannot do for you.
Here?? a quick run through on the existing 36 major critical illnesses protection offered by the insurance companies in Malaysia.
(1) Heart Attack
(3) Coronary Artery Disease Requiring Surgery
(5) Kidney Failure
(6) Fulminant Viral Hepatitis
(7) Major Organ Transplant
(8) Paralysis /Paraplegia
(9) Multiple Sclerosis
(10) Primary Pulmonary Arterial Hypertension
(12) Heart Valve Replacement
(13) Loss of Hearing / Deafness
(14) Surgery to Aorta
(15) Loss of Speech
(16) Alzheimer’s Disease / Irreversible Organic Degenerative Brain Disorders
(17) Major Burns
(19) Terminal Illness
(20) Motor Neurone Disease
(21) AIDS Due To Blood Transfusion
(22) Parkinson’s Disease
(23) Chronic Liver Disease
(24) Chronic Lung Disease
(25) Major Head Trauma
(26) Aplastic Anaemia
(27) Muscular Dystrophy
(28) Benign Brain Tumor
(31) Brain Surgery
(32) Bacterial Meningitis
(33) Other Serious Coronary Artery Disease
(34) Apallic Syndrome
(35) AIDS Cover of Medical Staff
(36) Full Blown AIDS
Quite a list, eh?
If you ask me, how much critical illnesses protection should you be covered with? Now, that?? a very intelligent question, frankly because not many people has the answer. Of course, the insurance agent would like you to believe you should have the maximum coverage for the obviouss reasons (ka-ching!), which is close to about RM 1 million. RM 1 million is as much risk that an insurance company in Malaysia would take to protect a single individual.
Actually, my approach to that question is rather straightforward.
Let?? say God came into your dream tonight and convinced you that you are going down with one of the critical illness tomorrow.
Unfortunately after you woke up, you realized that God did not tell you which illnesses you are going to get, not a very good God, but at least He told you before hand, unlike your neighbor who had a stroke and went away just like that without a sen to claim from his insurance.
The next thing you did was to call up your insurance agent and told her to come into your house right away. While waiting for her, you continue to guess which illnesses God will strike you with today. You realized since there?? no way you can find out, you might as well cover yourself with as much protection as you can.
Finally, your agent arrives, and after telling her your premonitions, she immediately ask you to sign on the critical illness insurance application form, at the same time checking to see if you?? just went coo-coo (a contract signed with a non-sober person is not valid).
You deliberated for a while and asked quietly in your head, ??hat if God is playing a trick on me? If I used up all my money to top up my critical illness policy, and if it happens to be a trick God is playing with me, I would have no money to continue paying the policy next month!”?
Once again, you are stuck in a dilemma and you finally decided that the best way is to top up as much as you can financially afford while not having to make too much a change in your family?? existing lifestyle. Also, if God was serious, you have to make sure that your existing coverage would provide adequate fund for the following:
1) Expenses during your stay in the hospital.
2) 1-2 years expenses incurred by your household in the case of you not being able to work
3) Your boss is most likely going to give you “permanent leave”. How would that affect your existing cash flow, your loans and various other financial commitments.
4) Post-hospitalization treatment expenses. Don?? expect to be able to jump around and start kicking ass the minute you are out of the hospital. It’s not called CRITICAL illness for no reason. Chances are your post-hospitalization expenses might be as costly as your hospital bills.
Finally, after much deliberation, you topped up your critical illness policy to an amount you are comfortable with- one that can take care of your illnesses and family expenses (if God was serious), and one that wouldn?? tax you to the point you have to downgrade your lifestyle too much (if God was just kidding).
After all, you realized, with adequate critical illness coverage, you get better sleep at night, and even if God was kidding, your critical illness policy would still amount to quite a bit of savings when you decided to terminate it many years later.
So, with that, I hope I have ‘answered’? the question on how much you should be covered. As you can see from the story illustrated above, everyone?? critical illness protection is different. Although treatments for a few of the major illnesses requires up to RM 150,000, it can sometimes be very difficult for a fresh graduate with salary barely above RM 1,500 to afford such a high protection.
However, all hope is not lost. One can always choose to upgrade their critical illnesses policy from time to time to balance it with their existing commitments. Although most of us don?? dream of God telling us about when we are getting a stroke or a heart attack, statistics published by the government, healthcare industry and insurance industry is quite enough to tell us that critical illnesses do not discriminate.
Most critical illnesses strikes at the most inopportune time, and it?? really up to you how you want to play this game of probability. My advice is, other than having an adequate critical illnesses fund, one should always keep a healthy lifestyle, you know, the standard drill the doctor always tell you- eat more fruits, drink more water, smoke less, drink less, exercise more??la??la??r
Next, I am going to cover on Endowment Plans, where we’ll look at how insurance can be used to protect and plan for your future savings.