How protected are you?

Recently I started obsessing about my insurance coverage. Am I adequately covered? We all know that medical costs will only increase in time to come, and as we aged, we are more likely to contract some major illness like cancers and tumors. If I am stricken with some major illness, will I be able to afford private hospital treatment rather than government hospitals? (I used to think government hospitals are good enough, but after some bad word-of-mouth publicity + unfavourable newspaper coverage, I think my best bet of getting a cure s to go to a private hospital). More importantly, will I be able to afford treatment during my older years without depleting my retirement fund?

So I started looking around at the various health insurance plans. My first thought was to get a term policy for critical illness, then I can be covered for a big sum (eg $250k) while paying a small premium, ~ $600 per year. But then I realized the catch is, if your illness is major, but not critical (eg: cancer, but not advance stage), you will not get any payout of the insurance. How then, am I supposed to pay for treatment of major illness at the still curable early stage? I turned to look at hospitalization plans (something like medishield). These plans have generous payouts as long as you are warded / need treatment. Doesn’t even have to be major illness , which covers another loophole in the critical illness term insurance. For instance, if I get dengue and am warded for 10 days, it’s not serious enough to be able to claim under critical illness, but hospitalization insurance will pay because I have been hospitalized.

At a glance, the ‘A’ plans for hospitalization under the various insurance companies seemed really attractive. Unlike basic medishield plans, some of these ‘gold class’ medishield plans offer no limit on the amount of claim per day. For instance, you can stay in A class wards in the best private hospital, and the claim limit is ‘as charged’ rather than ‘up to $600’ per day for daily ward and treatment charges. Generous compensation is provided for surgeries, organ implants, cancer treatments and even additional payouts for major illness… ok, so I should be bulletproof then…

Not so. Let’s look at the minor catch first. 1) There is a limit to how much you can claim per year and per policy lifetime. Meaning, once u have exhausted the amount you can claim per year, you have to wait until the next policy year to claim (if u are still alive by then). And if you reached the overall limit you can claim, you can kiss goodbye to the insurance. Of cos, this is a small issue as most of the ‘A’ plans offer generous payouts for the yearly limit (about 200,000) and 1mil – 3mil for lifetime limit. We are not likely to exceed this amount.

The fine print is, before you even get to claim, you are killed by the deductibles and co-insurance. Co-insurance is a euphemism for co-pay. The bottom-line is, if you want to be highly covered for staying A class wards / private hospital, be prepared to fork out $3000 upfront + 10% of the remaining bill before the insurance coverage kicks in.

At the end of the day, we still need to have adequate savings to tide us through in the event we get major but not critical illness. The irony is that having early curable stage of a major illness might set us back more than the advanced stage (because the critical illness policy does not kick in at the early stage). My conclusion is, stay with government hospitals, avoid A class wards so that you dun deplete your savings in the event of major but not critical stage of illness.