Thursday, November 11, 2010

7 types of Health Insurance

Basic Medical Insurance  or commonly known as Hospital & Surgical Insurance (H&S), is a reimbursement medical plan that provides benefits for covered medical costs that result from accidents and sicknesses. Reimbursed for inpatient expenses incurred during hospitalization as well as certain outpatient expenses subject to the limits stated in the policy. In other words, the client may not get a full reimbursement for the medical expenses incurred. 2 common types of limits – Separate limits, a.k.a. sub-limits for each of the covered expenses. Next, it’s the maximum limit on a per disability basis for the inpatient benefits and a flat dollar amount for the outpatient benefits.

Some insurers may practice “expense participation method” on the policy, which means to say that you need to bear part of the medical costs.

Deductible is usually a flat dollar amount of medical expenses, such as $500 or $2,500 that the patient must fork out of his pocket. I call it the “first-dollar ownership”. It is usually on a per year basis.
The “second-dollar” payment is the co-insurance whereby the patient need to pay a specified percentage, e.g. 15%, of the total covered medical costs which are in excess of the deductible.

Major Medical Insurance or Catastrophic Medical Insurance is designed to cover the cost of major illnesses where the medical cost can be substantial. Besides covering for inpatient and outpatient benefits, it also provides cover for certain expensive treatment like kidneys dialysis and cancer treatment.  Together with the basic Hospital & Surgical policy, some insurers name it as comprehensive major medical expense insurance policy. Such plan usually has deductible and co-insurance element, as mentioned above. The national MediShield is one good example.

Supplemental Medical Expense Insurance is a separate range of optional covers to the main Medical Expense Insurance policy which some insurance companies offer. These are meant to enhance the cover under the main medical plan and include:
·      Emergency assistance services;
·      Dental cover;
·      Maternity benefit;
·      Organ transplant
·      Specific disease insurance;
·      Surgical implant and prosthesis;
·      Miscarriage benefit;
·      Private nursing home care;
·      Death Benefit, etc.

Key Features of Medical Expenses Insurance
  • Stand-alone or Rider
  • Choice of Plans
  • Family Coverage, usually come with a discount
  • Reimbursement of expenses
  • Deductible & Co-insurance
  • Plan Limits – Lifetime limit, Annual limit, Event limit.
  • Coverage charges, e.g. Room Charges, surgery, doctor’s consultation, etc.
  • Geographical limit – Usually auto terminate if you are out of Singapore for more than 180 days.
  • Waiting Period
  • Age Limit
  • Premiums is based on age-band
  • Guaranteed Renewability
  • Exclusions & Limitations
  • Co-Ordination of Benefits Clause – To ensure that the insured will not get more than he has actually incurred.

Disability Income Insurance helps to replace a portion of your income should you becomes totally or partially disabled and unable to work as a result of an accident or sickness. It is an income protection plan.

Disability Income Insurance (DII) is not Total Permanent Disability (TPD) Benefit. Briefly, DII provides an income replacement if you are unable to work whereas TPD serves to accelerate the death benefit payable under a life policy.

Long Term Care Insurance pays a monthly fixed amount for long term nursing treatment, based on ADL requirement. Benefits are paid when you cannot perform some “activities of daily living” (ADL). These include bathing, dressing, feeding, going to the toilet and moving around. The national ElderShield offers the long term care benefit.

Critical Illness Insurance, commonly known as Dread Disease plan, provides a lump sum benefit to an insured in the event that he is diagnosed to be suffering from one of the critical illnesses or is undergoing a surgical procedure covered under the policy. (Please refer to http// for the CI definition.)

Hospital Cash Insurance is a daily cash benefit paid directly to the insured if he is hospitalized as a result of accident or illness. The daily benefit is a fixed dollar amount selected by the insured at the inception of the policy, and is usually limited to a specified number of days per hospitalization.

Seek Professional Advise. As there are different types of medical plans available, it could be confusing what is suitable for your situation. So it is always advisable to seek professional help, someone who could analyse your medical needs and has your best interest. Such a professional would be an independent financial planner. For instance, you wouldn’t want to be caught in a situation where you are over-insured and is limit by the “co-ordination of benefit”.

Being “independent” is not constraint to marketing a specified product or forcing you to buy “house-brand”. Instead, you could compare various benefits from different insurer where the independent financial planner could present his comparison that best suited for your needs, and most importantly within your budget requirement.

In this way, you could secure the appropriate and suitable medical coverage for yourself and set a good peace of mind for your love ones.