Why the Rich Don’t Buy Insurance and Unit Trusts

Not all insurance products and unit trusts are created equal. The writer wonders why most people at the top don’t believe in them.

—

Why did Warren Buffet buy an insurance company?

Because _______________.

I just returned from a harrowing experience at this local insurance company and a morning of blank faces and passive responses to my torrent of questions.

Why have I been paying S$7,000 per year and getting all these optimistic updates on fund performance, and after 10 years I end up losing more than 40 percent of my premiums?

Investment-linked what?

You see, I had blindly signed the papers when my mom suggested I buy a bunch of investment-linked products over a decade ago, and had paid scant attention to it until urged by an insurance adviser recently.

The realisation that I have been paying very, very expensive premiums over 10 years does not sit well with me and some introspection was required.

That amount that I had paid could have well gone into a life policy such as a universal life option, buying me the same coverage for a fixed payment with loan of 70 percent.

If we assume that an annual universal life premium of S$120,000 buys S$1 million cover for someone aged 30, my paid premiums could have gone to buying whole life coverage until I was 110 instead! (Note: This is probably for international insurance firms and not the local companies that insist on ripping folks off with their simply exorbitant premiums that they force some local banks to fund)

The blank faced staff gave me a scornful look and said if I continued paying I would reap the rewards from it too! Yes, if I had an IQ of 50 maybe.

If I continue paying another 10 years, I would perhaps break even.

Why don’t the rich folks buy these products? Why don’t the private banks sell unit trusts?

Because these are the black box priced deals that the public has no chance of fighting against. No transparency and no restitution (don’t even think of going to court).

Private bankers themselves only ever buy term life and medical policies leaving the investment bit out. Investments are separate. And all these articles in the papers telling people that insurance is the way to go for retirement. I just recently discovered that “financial planner” is just another word for insurance agent.

It makes me worried.

Because Warren Buffet knows how profitable it is.

https://www.drwealth.com/2014/12/22/why-the-rich-dont-buy-insurance-and-unit-trusts/?utm_medium=DISPLAY&utm_source=OUTBRAIN&utm_campaign=INVMT

The Anatomy of Health Insurance (Graphic)

Singapore Medical Insurance Programme - MediShield

Reforming MediShield to be truly national ― Jeremy Lim

MARCH 27, 2013

MARCH 27 ― Every now and then, Singaporeans come across a media report of a medical bill in the hundreds of thousands of dollars, and everyone seems to know someone struggling financially after a prolonged illness.

In fact, the late Dr Balaji Sadasivan, previously a junior minister in the Health Ministry, while undergoing treatment for cancer commented: “Cancer treatment can be very, very expensive. This is something our health system will have to deal with. It is not surprising if some patients have to sell their house (sic).”

In dealing with the financials of catastrophic illness, Singaporeans are likely most concerned about two issues: The uncertainty of illness severity with an attendant massive hospital bill, and their share of the bill.

On the former, Health Minister Gan Kim Yong has correctly identified that expanding risk pooling is fundamental.

It does not make sense for every Singaporean to try and save for a hospitalisation episode that may never materialise (half of all heart-related deaths are sudden); and besides, most Singaporeans will never be able to save enough to pay fully for a complex and long-drawn illness.

MediShield is the bedrock insurance programme intended to protect against the financial consequences of medical catastrophes. It is the only health insurance scheme created by an Act of Parliament and must be national.

However, MediShield has three limitations that prevent it from being truly national: Exclusion of pre-existing conditions from coverage, non-eligibility upon reaching 90 years of age; and sharp premium increases with age.

How can we revamp MediShield to assure that it is truly inclusive or national and covers every Singaporean?

Three changes are worth exploring. Firstly, expand MediShield to include all Singaporeans regardless of age or pre-existing illnesses.

This is a monumental decision and truly fundamental as it reframes MediShield from being a scheme run on commercial principles (albeit as a non-profit scheme), to one that is founded on social principles.

The current premium calculations are in age bands, excluding Singaporeans with pre-existing illnesses. For a national programme, it is preferable to spread risk across all age groups and all risk groups.

This would result in younger and healthier policy holders paying more, but would prevent premiums for the elderly (who have healthcare bills four times larger than their younger counterparts) from skyrocketing — and, just as importantly, enabling those with prior cancer, heart disease and the like to have affordable insurance.

Secondly, ensure all Singaporeans can afford to pay the premiums. Premiums may still be higher for the very elderly or those with substantial pre-existing illnesses, and government funding for those who cannot afford to pay their own premiums has to come in.

Thirdly, limit the individual’s risk of medical bankruptcy by imposing a cap on what patients have to pay as their share of the total bill. How this quantum is worked out needs to be transparent, though.

The cap will need to be means-tested in keeping with the government’s philosophy of targeting subsidies, but patients need to know before the fact how the cap is determined and what they are expected to pay.

A point to note: Setting caps on what patients pay does not remove the financial risks in and of themselves. It just means someone else — in this case, the government — has to bear the risk. This will have downstream consequences: The government assuming the risks really means taxpayers carry the can.

Social activists advocating for “peace of mind” for all are really asking for the government to do more AND for taxpayers to fund these measures. Is this a price Singaporeans are prepared to pay for a better Singapore? I certainly hope so.

Minister Gan also highlighted the risks of over-servicing and over-consumption. These are genuine concerns. It would be naive to depend on the “nobility” of individual healthcare professionals who are paid at least in part on a “fee-for-service” model, and equally naive to expect patients to deliberately constrain themselves for the good of society.

What can be done then? Some suggestions build on self-regulation as a professional community, a privilege society extends to doctors.

The Singapore Medical Council is the watchdog for professional misconduct and egregious ethical breaches but what about overall clinical standards of practice? Singapore has a College of Family Physicians for general practitioners and family physicians, and an Academy of Medicine for specialists. These professional bodies can step up to the plate.

Developing clinical practice guidelines and coupling rigorous auditing processes to them to identify errant over-servicing doctors would be a good start.

The government’s electronic medical records system has been in the works for almost a decade now and when fully mature, can enable audits and recognition of negative outliers.

Public hospitals already have departmental structures where doctors in the same speciality peer-review each other’s cases, appropriateness of treatment and outcomes.

These could be built upon by government mandate enabling the college and academy to take these governance practices nationally.

Robust audits will be necessary to assure the government that risks of abuse of insurance schemes can be mitigated, and these can be built up progressively.

The challenges are formidable but the reward, a truly national MediShield makes it worthwhile.

On a trip to Taiwan last year, a young Taiwanese remarked to me: “The NHI (Taiwan’s National Health Insurance) makes me proud to be Taiwanese!” Years from now, what will Singaporeans say? ― Today

* Jeremy Lim has held senior executive positions in both the public and private healthcare sectors. He is writing a book on the Singapore health system.

http://www.themalaysianinsider.com/sideviews/article/reforming-medishield-to-be-truly-national-jeremy-lim/

Investor's Checklist: Health Care

Developing drugs is time-consuming, costly, and there are no guarantees of success.  Look for companies with long patent lives and full pipelines to spread the development risk.

Drug companies whose products target large patient populations or significant unmet needs have a better chance of paying off.

Make sure you have a big margin of safety for pharmaceutical companies with mega blockbuster drugs that make up a large percentage of sales.  Any unexpected development can send cash flow, and the stock price, reeling.

Unless you have a deep understanding of the technology, don't invest in biotech startups.  Payoffs could be large, but the cash flows are so far out and uncertain that it's easier to lose your shirt than win big.

Don't overlook the medical device industry, which is full of firms with wide economic moats.

Cash is king for firms that rely on development (pharmaceuticals, biotechnology, and medical devices).  Make sure firms have enough cash or cash from operations to get through the next development cycle.

Keep an eye on the government.  Any drastic changes in Medicare/Medicaid spending or regulatory requirements can have a deep impact on pricing throughout the sector.

Managed care organizations that spread risk - whether through a high mix of fee-based business, product diversification, strong underwriting, or minimal government accounts - will provide more sustainable returns.  

Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey


Read also:
Investor's Checklist: A Guided Tour of the Market...

Hospital patients 'overtreated and overcharged’

Hospital fraud is becoming a serious concern in Britain, but expats need to be even more careful

By Peter Pallot

9:32AM GMT 23 Jan 2012

Suspicions that five private hospital groups in Britain are operating a money-spinning cartel have prompted an investigation by theCompetition Commission.

The inquiry follows a damning report last month by the Office of Fair Trading (OFT) that accused hospitals and surgeons of not publishing meaningful data as to their success rates.

It explained that without information such as infection rates it was impossible for patients and GPs to assess quality – a clear suppression of competition.

The OFT also alleged that the hospital groups made inflexible pricing arrangements with insurers. The aim of this was to exclude new hospital groups from breaking in to local provision.

Private medical insurers have long claimed that some private consultants routinely put their bank balances before their patients’ needs. They welcomed the decision of the OFT, following a year-long inquiry, to refer its findings to the watchdog.

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Publication of the OFT report highlighted the friction between insurers and providers that has existed for years. Relations further deteriorated when Bupa, the leading medical insurance company in the UK and internationally, said 20p in the pound was being wasted on “inappropriate” surgery.

Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, said hospitals in Britain were half-empty. The implication was that they were spinning out treatment cycles and doing unwarranted tests and treatments to stay in business.

What is not disputed is that health insurance premiums have risen by about 10 per cent per annum for several years in the UK – and even more for expats buying international cover.

And while the problem of prolonging treatments, instituting unnecessary tests and putting patients through surgery when better options are overlooked is a big concern in Britain, the picture elsewhere in the world is often worse.

According to the Association of International Medical Insurance Providers (AIMIP), fraud is endemic in parts of the system.

Carl Carter, chairman of the London-based association, said: “We are working among ourselves and with other industry bodies and databases to share information and combat provider fraud and inflated costs – for instance where hospitals are overcharging, charging for treatments they never did, or are overtreating, such as unnecessarily long admission periods.

“Many overseas doctors see an international medical insurance policy as their meal ticket and are keen to charge heavily inflated 'tourist’ rates for much more than they would charge a self-paying or local customer.”

Mr Carter, managing director of IMG Europe, told of a 35-year-old customer who suffered a nosebleed while in Tokyo. He attended a private hospital where the condition was viewed as extremely serious.

Doctors wanted to admit the man for 30 days, but the patient called his insurer. Mr Carter said: “Our medical team liaised with the treating doctor and we agreed to a three-day observation and to review after that.

“It turned out it was a simple case. By coincidence, with the mild concussion he also had high blood pressure and he had scratched inside his nose when he’d been jolted from behind and had fallen over.”

The case highlights the importance of policyholders contacting their insurance company in advance of treatment, emergencies excepted. Routine pre-authorisation is key to curbing abuse.

Mr Carter concluded: “Luckily, the customer followed the instructions on his membership card and all was fine. He made a full recovery and was quickly reunited with his family, and without his policy incurring the bill for 27 unnecessary days of in-patient stay.”

Last year, AxaPPP International linked up with Medix, a global consultancy firm, to give policyholders the chance to take a second opinion before treatment. That is one defence against unnecessary treatment, argues Jonathan Gray, the company’s director of medical services. He also points out that patients may be saved from intrusive and potentially risky diagnostic tests and treatment.

“We recognise that over-treatment is a factor in provision of health care, whether in the UK or abroad. It varies according to the pressure on the providers,” he said. “In the Middle East, where doctors are mostly employed by the hospitals, there’s pressure on them to utilise the hospital facilities. That can lead to unnecessary diagnostics and treatments.”

But similarities occur in all countries. “Particularly with surgeons, a significant proportion of their remuneration is related to the procedures they do. So it’s in their financial interest, if they have the opportunity to justify medically that a procedure takes place, that it goes ahead.”

Mr Gray does not think that unethical practice is systemic in all countries. “We believe it’s a factor in all markets to varying degrees, depending on individual providers or specialists.”

AxaPPP has an anti-fraud team of six people who will investigate a suspect case and, if malpractice is established, will then investigate the whole hospital. Overtreatment is more difficult to detect. A second or third MRI scan in a straightforward case arouses suspicion.

“The key in all this is that additional interventions are not good for health outcomes,” Mr Gray said. The Medix scheme was “about getting people the right treatment for their condition in the right way – it saves the heartache of going through unnecessary procedures.”

One example was a patient who was about to undergo prostate removal, an operation often leading to long-term complications. He was spared surgery when a leading specialist in the US reviewed the tests.

Another insurer to set up an anti-fraud unit recently is InterGlobal. As for Bupa International, it is just as aghast as its UK partner at the relentless rise in premiums.

Sneh Khemka, medical director of Bupa International, points to the apparent readiness of some doctors to perform keyhole knee surgery without clinical need. “Doctors work on a reimbursement basis – the more they do, the more they get paid. In the UK, where we have been looking at the rates of knee arthroscopy, for example, the rate of operations in the privately insured market is almost three times that in the NHS.”

He continued: “One of the postulated reasons is that doctors may be incentivised to do a procedure that they would not otherwise do. That’s the UK situation, but in certain countries outside the UK, I’d say the situation is even more exaggerated.”

While UK doctors are well regulated, the same does not always apply elsewhere. “The standards and the regulations are not there,” he said. “That gives doctors freer licence to practise and that leads to inappropriate intervention.”

Dr Khemka – who has previously voiced a warning that private insurance would become unaffordable if trends continued – added that Bupa, because of its size, had a special responsibility to tackle the problem.

“We don’t want to keep members beholden to ever-rising premiums because hospital groups are charging way above what they should and trying to fill gaps in their capacity by overcharging – which is then directly transferred to individual private members.”

HOW INSURERS POLICE OVERTREATMENT

» Pre-authorisation: It is standard practice for insurers to insist that customers contact them before seeking treatment, except in emergencies. The UK-based body representing global insurers (AIMIP) advises: “The first requirement is clear documentation and membership cards and to always ensure that the insured person gets in touch with their medical insurance provider before getting the treatment or admission.”

» Case management: It is an advantage to have an insurance provider who has in-house medical teams and doctors available as well as a panel of medical specialists available for second opinions. “It’s unlikely that specialists will seek to overtreat if they know someone is monitoring their work,” says AIMIP.

» Information exchange between international insurers so that hospitals known to make fraudulent claims are boycotted.

» Dedicated anti-fraud units set up by insurers.

WHERE ARE THE WORST OFFENDERS?

Insurers mainly point to Asia, South America, the Middle East, Turkey and Spain. But no country is free of medical fraud. Generally, Europe is less infected with the culture of overtreatment because regulation of the medical profession is tighter.

Carl Carter, chairman of AIMIP, says: “Due to very little competition, certain hospitals in China, Hong Kong and elsewhere in Asia are charging exceptionally high rates to expats who are demanding US- or EU-style private hospital facilities when perfectly adequate modern local facilities are also available.

“Among other major offenders are Turkish hospitals and clinics, for trying to admit people when not required, as well as some of the tourist hospitals in Spain for charging 'tourist’ rates to expats.

“It’s not just these areas. In many parts of the world it is common practice for some hospitals and clinics to have a different rate for locals, expats and the tourists.”

http://www.telegraph.co.uk/health/expathealth/9017881/Hospital-patients-overtreated-and-overcharged.html

Hospital and Surgical Insurance Claims: The main condition is that the claims must be genuine.

For a painless hospital, surgical stint
Written by Lim Siew May of theedgemalaysia.com
Monday, 19 September 2011 16:29


KUALA LUMPUR: You’ve probably heard horror stories from friends and kin about hospital and surgical (H&S) claims being denied or claim amounts not being entirely reimbursed by their insurers. Industry players stress that insurers do not attempt to minimise payments to claimants.

The main condition is that the claims must be genuine.

“Insurance companies want to be in the business for the long term, and establishing a good reputation is important for us,” says Tan Chue Chau, appointed actuary at Manulife Insurance.

Sharon Chong, managing director of Moneywise Wealth Planning & Consultancy, stresses that insurance companies do not deny claims that are supported by required documents such as medical reports and hospital bills.

Martin Yong, head of life division at State Insurance Brokers, an insurance brokerage firm, says, “It is very straightforward to make an H&S claim. If you’ve declare everything to the best of your knowledge, you will usually be reimbursed. If the insurance company thinks you’re a risky applicant based on your declaration, they would have imposed a loading or not accepted you [as an insured] in the first place.”

Here are the top five reasons why an H&S claim may be denied.

1) The claim is not covered
This problem arises because the claimants are not aware of the exclusion clauses in their policies. “Very often, they’d mistakenly think that a disease is covered, or that they are covered in particular situations,” Yong points out. Insurance agents, when highlighting the benefits of a particular policy to a consumer, should devote some time to explain the exclusions as well.

Congenital conditions, medical or physical abnormalities at the time of birth, are usually excluded, to the surprise of many claimants, says Yong. Most H&S policies do not cover congenital conditions but some insurers do provide them, with conditions on the age of the insured.

“For instance, some insurers state that they do not cover congenital diseases diagnosed before the age of 17. If the claimant is diagnosed after 17, the benefit is payable,” says Chong.

Diagnostic tests are usually not covered as well, though some insurers may pay for certain specified ones. “Insurance exists because most of us are likely to need help to pay for surgery, [and it usually does] not [cover] diagnostic tests,” says Chong.

Another common policy exclusion that is often overlooked is the overseas residence clause. This is pertinent to people who are studying or working abroad for an extended period of time.

“For instance, if you’ve stayed overseas for 90 consecutive days, you will not be compensated if you’re hospitalised anywhere in the world on the 91st day,” explains Chong.

The reasonable and customary charges provision comes into play when a claim is made for treatment received outside the country. In this provision, medical charges should not exceed the general level of charges made by providers of similar standing in Malaysia, Yong explains.

“For instance, say you did a heart surgery is the US, which cost you RM600,000. In Malaysia, the same procedure might only cost you RM100,000. The insurance company will pay you RM100,000, as it is the amount you would have incurred had the surgery been performed in Malaysia,” he says.

2) You have exceeded the coverage limit

Many policyholders are not aware of caps imposed on their medical plans. In addition to a lifetime limit, insurance companies tend to impose an annual limit or an inner limit on H&S policies. For instance, a policy can stipulate a lifetime limit of RM300,000 but limit the amount of claims to RM50,000 a year.

If your actual hospitalisation bill is RM70,000, you would need to pay the difference and you cannot make any claims for the rest of the policy year.
H&S plans that were introduced more than a decade ago may even specify an inner limit.

“For each benefit of your H&S plan, there might be a limit imposed for claims. For example, if your inner limit for surgery is RM20,000, that’s the maximum that you will receive, even if the actual surgical cost is RM50,000,” says Chong.

Fierce competition among insurers has removed the inner limit clause today.

“Now, most medical plans go by the ‘as charged’ basis, which means that the insurer will reimburse the policyholder the amount charged by the hospital. Clearly, this is much better for the policyholder,” says Yong.


It is also common for policyholders to overlook their eligible benefits, such as staying in a more expensive room than the one specified in your plan.

Says Chong, most insurers have a clause stating that if you go beyond your entitlement, you must pay a 20% co-insurance fee (a fixed percentage, usually up to 20%, of the medical bills).

“Some insurers will require those who stay within their entitlement to pay a 10% co-insurance fee and there is a limit on how much they need to pay,” she adds. Others levy an administration fee, says Yong.

Also, check whether your H&S policy stipulates a “deductible”, which is an amount that you have to pay. “Say you’ve opted for a deductible of RM3,000, and your total hospital bill is RM4,000. The insurer will only pay you RM1,000 [RM4,000 – RM3,000],” Tan explains.

3) Failure to disclose pre-existing illnesses


Failure to mention an existing illness is another common reason for the rejection of a claim.

“For instance, you were diagnosed with a disease and went for an operation a few years ago. If you don’t declare it and subsequently make a claim, you will not be paid if the insurer finds out about it,” Yong explains.


4) Coverage has yet to commence

Most insurers impose a waiting period, during which claims for some specified illnesses will not be paid. “For instance, most insurance companies stipulate a 120-day waiting period for illnesses such as hypertension, tumours, cancers and cysts from the day the policy is issued,” says Tan, adding that this waiting period does not extend to accidents.

When upgrading your H&S policy, do not cancel your old plan until the waiting period for the new one has ended, advises Lim Teong Lay, author of Insurance Planning Guide for Malaysians.

5) Failing to pay your premiums on time
Needless to say, you won’t be covered if you’ve not been remitting your premiums on time. Tan says a policy lapse a month after the premium due date.

Medical plans that ride on a basic life insurance policy or investment-linked policy usually have a surrender value or an investment value that will pay for H&S coverage if the policyholder fails to pay the premiums. Once this underlying value is exhausted, all benefits will be void and claims will not be paid out, says Yong.


http://www.theedgemalaysia.com/personal-finance/193112-for-a-painless-hospital-surgical-stint.html

Medical insurance is something you take but hope never to have to use.

Sunday November 14, 2010

Security blanket

By DZIREENA MAHADZIR
starmag@thestar.com.my

Medical insurance is something you take but hope never to have to use.

WE read of young and healthy people who, without any warning, suffer a heart attack. Closer to home, your child may fall prey to the aedes mosquito and get dengue. Or, you could simply trip and break a leg.

Whatever it is, when the hospital bill comes in, you'll probably suffer another blow when you see how the cost of treatment and medication all add up.

Heng Zee Wang ... know what you want and ask lots of questions.

That is one reason why it is important to have medical insurance.

Some people argue that it is too expensive – you pay so much and get nothing in return. But that's the thing with insurance – you take it in the hope that you won't have to use it. But should you ever do, you will definitely be glad to have had the foresight to sign up for it.

And, the earlier you sign up the better. Premiums are lower if you purchase coverage at a younger age, and when you are still medically fit.

Those who insure themselves when they're older may have to pay higher premiums or be subjected to certain exclusions. And there have been cases of applicants being rejected because of their health.

As for the cost, there are various types of insurance to meet different needs. And you can tailor medical plans according to your budget, says Heng Zee Wang, chief product and marketing officer of Prudential Assurance Malaysia Bhd.

"The cost of hospitalisation is very high, so it's important that you have a medical card. You can have a basic insurance plan that comes with medical card for as low as RM100 a month, so it will cover room and board for that amount."

Before signing on the dotted line, there are some things to take note of.

"You must know what coverage you want and look at what's available. Even if you take a basic plan initially, you can upgrade it as you go along. Look at the terms and conditions, the inclusions and coverage waiting period. This is important to avoid disputes later on," Heng adds.

Some people reason that as long as they are working, their hospital bills will be taken care of by their employer because "my company already provides medical coverage".

What they may not be aware of is that once they leave the company, the cover will terminate. The same regulations apply come retirement. In Malaysia, most private company do not cover employees after they retire from work.

By then it will not be easy to purchase your own medical insurance because of the age factor, and the state of your health. Even if you do sign up for a policy, the premium will probably be higher, and certain illnesses may not be covered.

If you are aware of the benefits of medical insurance but are baffled by the different kinds of plans out there, here are some guidelines from insurance professionals.

To enjoy comprehensive health care protection, ideally you should have:

* A hospitalisation and surgical insurance plan which covers room and board, laboratory fees, use of special facilities, nursing care, and certain medicines and supplies which are medically necessary.

* A critical illness plan. With this, the policy-holder will get a lump sum cash payment from the insurance company if he/she is diagnosed with any of the critical illnesses listed under the policy.

* A hospital income plan that provides income replacement should the insured person be hospitalised due to an accident or illness.

* A disability income plan that covers the policy-holder's day-to-day expenses if he/she is unable to work due to an accident or illness.

How about complaints that "we pay so much for insurance but don't get anything in return"?

Heng says his company has introduced a medical plan which allows the policy-holder to get a no-claims bonus if he/she does not make any claims. It is an indirect way of rewarding customers for staying healthy.

The plan works very much like motor insurance: those who don't submit any claim during a policy year will get a bonus, which is automatically converted into additional units. These units will be invested in investment-linked funds of your choice, thus increasing the value of your policy.

Claims is another issue that is often the bane of many. Heng's advice is to ask the right questions before buying your policy. If you don't, you may encounter problems when it comes to making claims.

Presently, an e-mail is being circulated concerning the case of a woman in Singapore who found herself in a such a predicament. She says she has three policies which cover her for critical illness but has not been able to make any claims because they do not cover ductal carcinomas-in-situ or Stage 0 breast cancer.

What is the fine print that you should read carefully when it comes to a critical illness plan?

Heng explains that typically, this plan excludes medical conditions such as carcinoma-in-situ (or early stage cancer, where the cancerous cells have not moved out of the area of the body where they originally developed).

In Singapore, each of the critical illnesses stated in a policy contract follows a set of definitions given by the Life Insurance Association of Singapore. These standard definitions apply to the critical illness policies offered by life insurance companies in the country.

Insurance companies here follow definitions laid down by the Life Insurance Association of Malaysia (LIAM).

However, Heng adds, it is possible for the policy-holder who has been diagnosed with carcinoma-in-situ to claim for the cost of treatment for her condition, provided she has an existing medical plan. This may include expenses for her hospitalisation, surgery and post-hospitalisation treatment.

There are also certain insurance plans in the market which provide payouts for early stages of cancer.

So, it is vital to ask questions and know what you need. And be prepared to review your policy as your needs grow. One hopes never to have to turn to medical insurance, but it certainly is reassuring to know there is a security blanket at hand should the need ever arise.

Checklist

WHAT to do when buying medical insurance:

1) Understand what your needs are and how much you can put aside regularly. Seek your agent's advice before choosing a plan that suits you best.

2) Understand what the terms and conditions are, as well as the scope of cover provided under the policy. What are the benefits? What is NOT covered? How long is the coverage for? What is the waiting period? What is the limit (both annual and lifetime) you can claim?

3) Is there any co-insurance? Co-insurance is a cost-sharing arrangement between the insurer and policyholder. For example, co-insurance on a 10/90 basis means the policyholder will pay 10% of the bill, and the insurer will pay the balance, subject to the terms and conditions of the policy.

4) Will the premium remain the same amount throughout the duration of the policy, or will it increase according to age?

5) It is important to disclose details of your or your family's medical history (if any) at the time of purchase, to avoid any dispute in the future.

6) Take time to talk to your agent about the claims procedure, so you are aware of what's involved.

7) All insurance companies offer a 15-day free look. If you do not find the policy suitable and return it within that period, you are entitled to a refund of the premium paid (subject to terms and conditions).

8) Review your medical insurance plan at least once a year. This is important, especially with the cost of health care outpacing inflation. Chances are the plan you bought some years back may not be enough to meet future needs. Upgrade if you can afford it, so you will have the financial resources to meet rising medical costs, particularly after retirement.

http://thestar.com.my/lifestyle/story.asp?file=/2010/11/14/lifefocus/7418582&sec=lifefocus

Current healthcare business model causing rise in expenditure

Frost & Sullivan: Current healthcare business model causing rise in expenditure


Written by Melody Song
Thursday, 21 October 2010 13:04


KUALA LUMPUR: The current healthcare business model, which is driven by incentives given by insurance providers based on patient visits are causing the rise in healthcare expenditure, according to a survey from Frost & Sullivan.

The business research and consultancy firm said in a statement Thursday, Oct 21 that the present model results in 90% of a country’s healthcare expenditure being spent on only 30% of its population, thereby causing the rise in healthcare cost.

“The healthcare system needs to embrace a paradigm shift to incentivize the wellness condition of a person rather than merely treating diseases or sick-care” said Frost & Sullivan senior vice president Reenita Das.

Frost & Sullivan also said that under the current healthcare system, physicians' attention is only focused on 20% of a person's life, whilst another 80% goes neglected.

Medical hours are spent on treating symptoms or diseases rather than ensuring the overall wellness of a person, it added.

“There are huge opportunities for healthcare providers, medical devices sector, pharmaceutical sector and other healthcare verticals to tap into this 'lucrative but yet to be explored area’ of a person’s life,” it said.

Frost & Sullivan said it expected the cost of healthcare to continue rising as the global ageing population increases under the current healthcare model, unless there is a paradigm shift in the healthcare system towards a patient-centric model.

http://www.nextview.com/rss_list.php?url=http://www.theedgemalaysia.com/index.phpYYYoption=com_contentXXXtask=viewXXXid=175757XXXItemid=79

High Healthcare Insurance Rates

MAY 29, 2007

New Study released: "No Basis for High Insurance Rates"

The American Association of Justice recently published a report entitled, “No Basis for High Insurance Rates”. The report illustrates the ways insurers are gouging doctors, padding their pockets with excessive premiums, and driving up the cost of health care. The alarmingly high medical malpractice insurance rates are the results of insurance companies' policies. Insurance reform is what is needed to ameliorate rates and lower the cost of health care without infringing on victim's rights.

The study cites the 2006 financial statements recently filed by medical malpractice insurers. The statements reveal that while the amount they paid out in claims has declined, their surplus is at an all time high. One example of an inconsistency in the claims of insurance companies is paid losses vs. written premiums. The net paid claims and losses have decreased substantially in the last few years even though these carriers have raised their rates considerably. This is only one example of the discrepancies in the reasoning of insurance companies regarding rising rates.

This is a further illustration of the ways insurance companies cause harm to doctors and victims, and blame medical malpractice lawsuits in order to cash in.

To view the full study, click here

http://medicalmalpractice.levinperconti.com/2007/05/new_study_released_no_basis_fo.html

Health insurance premiums dwarf worker’s earnings and far exceed overall inflation.

http://rmwyatt.wordpress.com/

Saturday March 27, 2010

Preventing medical bankruptcy at old age

COMMENT
By CAROL YIP

ACCORDING to the United Nations’ projections, there will be about 1.2 billion people aged 65 years and above by 2025.

With numbers such as these, failure to address our health needs today could develop into a costly problem tomorrow.

As our affluence swells, our expectations of better healthcare, financial independence and a peaceful death increases.

But due to the high cost of healthcare, only a few can afford to become seriously ill.

While immediate concerns about rising healthcare costs and retirement fund structure require attention, fundamental long-term questions should not be neglected.

There is urgent need to address what will be very expensive demographic shifts within our lifetime.

The biggest risk

Unless you are among the lucky few with lifetime healthcare coverage, you may need to bear major medical expenses during retirement. Should you need assisted living while ageing, you would enter a whole new world of long-term financial pain.

Those who have seen it happen to family members or acquaintances know first-hand that the unpredictability of our personal health is the biggest risk in retirement planning. It is a nightmare that is unforeseen and rarely controllable.

According to the World Economic Forum 2009 report Transforming Pensions and Healthcare in a Rapidly Ageing World, the question of ageing societies from a perspective that integrates implications and solutions for both healthcare and retirement pensions was addressed.

In taking this integrated approach, which emphasised multi-stakeholder collaboration, the World Economic Forum was reacting to rising concern expressed by financial services and healthcare companies, employers, governments and society.

However, no single stakeholder can hope to tackle the challenges or make the most of the abundant opportunities. Success will require diverse, multi-stakeholder collaboration and innovative approaches.

How much is enough?

With the timing of this report, we are presented with a once-in-a-generation opportunity for transformational change in retirement planning for many of us in Malaysia.

There is a need for hybrid solutions to address the increasing cost of medical and healthcare products and services.

After all, illness or sickness can happen to anyone at any time. We can experience possible medical bankruptcy at any age but the worst time to experience it is during old age. Such financial depression could end our life earlier than expected.

The million dollar question: How much is enough when medical costs could be escalating at double-digit inflation rates as we age?

It is almost impossible to calculate as the amount required is subject to unpredictable variables like types of illness, medical fees, medicine costs and more.

Concerted effort from everyone

The ability for Malaysians to ensure financial sufficiency for medical and healthcare during retirement is becoming severely reduced due to skyrocketing medical costs.

A concerted effort from different stakeholders is necessary. An effective collaboration between the Government, insurance companies, pharmaceutical firms, healthcare providers and the community to keep the financial support and aid within affordable limits is required. Initiatives from all stakeholders are also required:

·Individuals should start early with personal savings, contribution to Employees Provident Fund, life and medical insurances and investments for old age care;

·Employers should consider medical benefits for individuals under employment beyond retirement age;

·The Government should provide medical and old age care subsidies and assistance, and tax incentives to make private health and medical care affordable;

·Insurers should provide affordable medical and age care insurance that caters for specific needs and age;

·Price management is required on private health and medical advice, services, and products (food and medicines) to make them affordable; and

·Family and community assistance should focus on the provision of home care, nursing help, food, accommodation and emotional support with love, care and affection.

These ideas and strategies may not be comprehensive. Neither are they overnight solutions. They need adequate research studies and timely and appropriate decision-making processes from relevant parties.

The private sector can still benefit by catering to the needs of the elderly and the Government can facilitate old-age security while helping to overcome financial pressures on private healthcare systems and retirement plans for current and future generations.

In the bigger picture, it can be a collective and meaningful corporate social responsibility effort and initiative to turn a “greying society” into a “silver society”, in which the elderly live their golden age without financial worries associated with ageing and ill health.

·Yip is a personal financial coach and also founder and CEO of Abacus for Money.

http://biz.thestar.com.my/news/story.asp?file=/2010/3/27/business/5917769&sec=business

Comment:  No easy solution.  'Catastrophic illnesses' like a heart attack, cancer or stroke can easily impoverish the average family.  The costs for such illnesses in the private sector maybe equivalent to that of half the price of a small house.  Yet, for many, this may not be enough. The existing health care insurance schemes in Malaysia have contributed to, rather than curtailed, the escalation of health care costs.