Your Guide To Health Insurance

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"Your Guide To Health Insurance" provides general information about health insurance and the various products that may meet your needs. The following case studies touch on problems commonly encountered by consumers in health insurance. At the end of the case studies, we provide tips on what you should look out for when buying health insurance and a list of questions you should ask your insurer before taking up health insurance.

Case Study 1: Consumers with pre-existing conditions

Case Study 2: Different types of medical plans

Case Study 3: Renewing a policy

Case Study 4: Critical illness definition

Questions to ask before taking up health insurance

Case Study 1: Consumers with pre-existing conditions

Mrs Phua, a 40 year-old housewife, was diagnosed as having high blood pressure (hypertension) in March 2003 and has been on medication since then. She bought an in-hospital insurance policy on 1 January 2004 and the insurance company issued her a policy without any special terms or conditions. In March 2004, Mrs Phua had severe giddiness for a few days and was admitted to hospital. She was found to have a very high blood pressure reading but no other heart or circulatory system complications. She received treatment in hospital and her blood pressure went back to normal after a 4-day stay in hospital. Upon her discharge, Mrs Phua filed an in-hospital claim with her insurance company but her claim was rejected on grounds that the hospitalization was related to a pre-existing medical condition. There was also an issue of material non-disclosure as she did not declare her hypertension treatment in her application form.

Tips for consumers:

* When buying health insurance, it is your duty to disclose all information factually and completely to the insurance company in order for them to assess the risk of the application. Non-disclosure of materials facts could have the consequence of having the insurance policy void or claims declined.

* You should note that if you have some medical conditions or certain occupational exposure, you may be charged higher premium or your coverage may be restricted because of your risk profile.

* There is often a pre-existing condition exclusion in the insurance contract. In this particular case, the hospitalization has a direct correlation to the insured's high blood pressure. You should read the policy documents carefully to find out what benefits you would be entitled to in the event of a claim. If in doubt,  you should clarify with your financial adviser or your insurance intermediary.

Case Study 2: Different types of medical plans

Mdm Yeo, a 36-year old teacher, was admitted to a private hospital in January 2004 for 4 days to remove a fibroid in her womb. The total hospital bill amounted to $4000. She filed her claim with three insurance companies which she had policies with:

(a) Insurer A paid her $200 for her 4-day stay under the $50 per day hospital income insurance policy that she had purchased.

(b) Insurer B requested her to send in the original hospitalization bill and asked her whether she had other medical insurance claim filed with other companies for the hospitalization. Eventually she was reimbursed $2000 under her medical insurance policy.

(c) Insurer C reimbursed her $700 under her medical insurance policy with them.
Total reimbursement for her hospitalization amounted to $2900 ($200+ $2000+ $700). 

In spite of having three medical insurance plans, Mdm Yeo did not have her full hospitalisation bill reimbursed. As the type of medical plans that she had bought did not commensurate with the type of hospital care that she went to, she had to bear the difference of $1100 out of her own pocket.

Tips for consumers:

* It is important to consider your personal preference and affordability when deciding on what type of medical insurance to buy.

* You should note that there is a difference in medical costs between private and public hospitals, as well as the medical condition that you have.

* You should understand that having several medical expense policies does not necessarily provide extra benefits as the total benefit you will get is limited to your actual expenses.

Case Study 3: Renewing a policy

Mr Tay, a 45-year old bank manager, has an annual personal accident insurance policy with an insurance company. Before his policy was due for renewal, Mr Tay received a written notice from the insurance company that his cover will be cancelled. No explanation for the cancellation was provided. Mr Tay had made two insurance claims in the year of coverage amounting to $20,000 and felt that it was unfair for the insurance company to cancel his cover due to these claims. In response to Mr Tay's query, the insurance company explained that one of the terms and conditions of the policy gave the company the right to cancel the cover by giving the policyholder written notice before the policy was due for renewal.

Tips for consumers:

* Some health insurance products guarantee that your cover will stay in force as long as you pay the premiums on time. Other products give insurance companies the right to cancel your cover by giving you written notice before your policy is due for renewal. Insurance companies can decide not to renew the plan after a major medical claim. Such decisions would depend on the insurance company's claim philosophy and to what extent a major claim will be considered in their renewal policy.

* You should also take note that even if your cover is guaranteed, some health insurance products allow insurers to change the benefits, premium rates or other terms and conditions when the policies are due for renewal.

* Make sure you are clear about the terms and conditions of the product before you buy it.

Case Study 4: Critical illness definition

Mrs Loh, a 46-year old hawker, bought a critical illness insurance policy with an insurance company on 31 July 2003. The policy will pay her a lump sum either when she is first diagnosed with a disease covered by the policy, or after having a type of surgery covered by the policy. On 4 March 2004, she experienced numbness on her face, right arm and right leg. She also had difficulty talking, walking and seeing with both eyes. Mrs Loh was hospitalized for 5 days. Upon her discharge, she filed a claim for stroke. Her claim was rejected as the illness did not meet the definition of the critical illness as stated in her policy contract. Her doctor certified that she had suffered from Transient Ischaemic Attacks instead of stroke.

Tips for consumers:

* You should note that the benefits from a critical illness policy are paid only if the disease or surgery exactly meets the definition in the policy. Definitions of disease are fixed across all insurance companies in Singapore. You can refer to the standardized definitions of the critical illnesses from the websites of the Life Insurance Association and the General Insurance Association of Singapore.

* A critical illness policy usually has a waiting period for certain diseases or types of surgery. If any disease or type of surgery for which the policy specifics is diagnosed or carried out during the waiting period, no benefits would be paid.

* Make sure you are clear about the terms and conditions of the product before you buy it.

Questions to ask before taking up health insurance

• What will my health insurance policy cover?
• Am I already covered for the same thing under another health insurance policy?
• What doesn't the health insurance policy cover and when will I not be covered?
• How much will I be paying for my health insurance and will I be able to afford the premiums over the long term?
• How often will the premium be charged and will it be a fixed or variable sum?
• Will my policy automatically be renewed and what is the penalty if I do not pay any premium on time?
• When or in what circumstances will my health insurance policy end?
• How do I end my policy?
• How do I make a claim?
• Are there any limits to the benefits that can be paid out from my policy?
• How will my future premiums be affected after I have made a claim?
• Will I be covered for medical treatment performed outside Singapore?
• How is my health insurance policy affected by other schemes that pay for healthcare?