Service Preference Sets Premium Costs

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While health insurance premiums may not be large, it's never prudent to spend more money than you need to. So don't just opt for the most expensive health insurance. Be discriminate.

"Choose a level of protection that meets your expectations of service," advises Sonny S.H. Tan, acting chief executive officer of The Pacific Insurance Bhd. "Do you want privacy? Do you have any preference of hospital?" he elaborates.

"The most expensive product does not necessarily provide the best coverage," agrees Alexander Ankel, chief executive officer of Allianz General Insurance Malaysia Bhd.

Insurers will be able to provide you with some indication of the costs of hospital room and board and the costs of surgical procedures.

"We do our own research, but sometimes hospitals move too quickly in their own reviews," say Bernard Ong, head of business development at Aviva Insurance Bhd.

Insurers therefore say it is wise to do some of your own research.

"Determine your preferred hospitals and find out the costs of the services and facilities befitting your expectations. Only then should you decide the level of coverage," says Tan.

Choosing a hospital is not just about the cost of the facilities on offer.

"Sometimes the name precedes the person. Sometimes it depends on your own experience and also on information from your peers," suggests Ong. "But hospitals are usually quite transparent and will give information on room and board cover," he says.

"But be mindful that hospitals can increase their fees at any time," notes Tan.

Room and board rates are roughly consistent among private hospitals. A four-bed hospital room will cost between RM80 and RM100 per night. A two-bed room will cost between RM120 and RM140 per night and the cost of a private room is between RM195 and RM220. These prices include meals. If you are looking for deluxe accomodation, expect to pay much more.

"The cost of treatment varies from each hospital. It all boils down to the doctors and the treatment provided," says Ankel.

Tan says it is unlikely that the hospital administration would be able to help you forecast these costs in advance. "Your preferred doctor may provide better advice," he suggests.

"The insurer would also be able to assist the policyholder as the company can obtain discounted rates from the hospitals," says Ankel.

Hospitals are only likely to be able to provide you with a rough figure for the cost of surgery. The cost really does depend on the individual doctors and of course you can't know in advance whether surgery is likely to meet with complications and involve further expertise and a prolonged stay in hospital.

As an indication only, hospitals will say that charges for major operations such as heart surgery start between RM22,000 and RM25,000. An intermediate operation such as appendicitis will cost in the region of RM4,000 to RM6,000. Smaller operations such as the removal of a cataract or a lump would be between RM2,000 and RM5,000.


In order to control premium levels, insurers apply limits to various types of costs. You need to understand how and where the limits apply in order to be able to decide which is best for you.

Ankel explains that a plan with inner limits means that the cost is limited per item. So if your surgery coverage is RM5,000 and the actual costs are RM11,000, you will pay the outstanding RM6,000.

Plans on an as-charged basis with an annual limit means that you have a certain limit each year, and each time you are admitted the cost will be deducted from you total amount. If your annual coverage is RM30,000 and your first visit costs RM10,000, you have a balance of RM20,000 left for the year.

An as-charged plan with a fixed limit on a per disability basis means that if you are covered for RM30,000 per admission each time you are admitted you will have a coverage of RM30,000, regardless of how much is left from your previous admission.

Medical cost inflation is always at the forefront of any discussion of health care. Insurers say in Malaysia it is currently running at about 20 per cent a year. So when you take out a policy you should bear in mind that if you end up having to have an operation towards the end of your policy period, chances are the costs will be higher than they were at the start of the policy period.

"Policies are renewable annually. Companies cannot guarantee the costs down the line in five years' time," says Ong.

"But if you are purchasing a guanranteed renewable policy, you may wish to choose a policy with coverage higher than your present expected costs because you may not be able to increase your coverage limits in later years when inflation sets in," explains Tan.

"For yearly renewable policies, you should determine the level of protection based on the current cost of treatment," says Tan. "To ensure adequate protection, always choose a policy with a coverage level 15 to 20 per cent higher than your current expectations," he concludes.

Extracted from the Reader's Digest.