How much medical insurance coverage do I need?

Updated 02 Oct 2017 – By Loanstreet


While many people would feel stressed and lost after listening to the well-articulated pitches of insurance agents about the benefits of different insurance plans, we realise that many would eventually make choices that in hindsight, may turn out to be an unwise decision. Here, we are not revealing to you the ‘best’ insurance plan in the market, but rather setting your mindset right and to consider the factors below when you are buying the coverage you need.

1) Age

It is true that you need less protection when you are young and healthy. Moreover, buying insurance during an early age can benefit you by having a low premium. On the flip side, when you are slightly older, more coverage is necessary to alleviate the potential impact of falling sick.

However, it’s never good to wait until you are older and showing sign of illnesses. The insurance company would often exclude the coverage on your pre-existing disease (though some insurance companies may offer riders to cover your pre-existing disease at a hefty amount of cost), therefore buying at this point would defeat the purpose of insurance.

Advice: It’s good to be young and in a healthy state. You pay fewer premiums and need less coverage. Give yourself more protection once you reach middle age.

2) Affordability

Insurance can be expensive if you are going for a well-coverage plan with different riders. The best insurance plan is a plan that neither over-insures nor under-insures oneself. Although there is no general rule of thumb, we advise you to stay within your limit. Redo the calculations if necessary.

Subtract your monthly savings and total expenses (loan payments, food, groceries, entertainment and others) to derive the upper limit you can possibly pay for insurance. If you know that you will have difficulties in affording the high premiums, settling for the lower premiums can make your life easier. You will still enjoy useful coverage that can help fund a portion of your medical bill.

Advice: Don’t overstretch your budget. Your insurance plan will still be terminated if you fail to make the necessary payments.

3) Family history

If your family has a history of falling sick with an inheritable disease, you will certainly need the coverage to protect you against the possibility that it may occur. An insurance plan and medical card is important to make sure you are financially prepared for a possible body breakdown.

In this case, it would be wise to buy protection ever since you are young to enjoy the coverage and lower premium. Also, adding on riders to raise the annual limit may come in handy if your medical expense is very large. However, do note that insurers will likely raise the premium to compensate for it.

Advice: Buy the necessary coverage when you are still young.

4) Overseas treatments

If your family has a long history of inherited medical conditions and you know that you will only be able to find a good doctor overseas, you should buy a plan or a rider that covers you for overseas treatment. In this regard, insurance companies might only offer to cover treatment in certain overseas countries or partnering hospitals. Also, many insurers may only be willing to cover the rate if you were to receive the same treatment at local hospitals.

For example, if you incur a large amount of medical fees overseas which cost you RM100k, whereas the local hospitals only charge RM50k for the same treatment, you will need to fork out another RM50k because insurers will only pay according to the local rate. Thus, overseas treatment plan is useful but it comes with a substantial cost.

Advice: Buy the coverage for overseas treatment if you know your family history of disease will need treatment outside the country.

5) Lifestyle

Not everybody leads a healthy lifestyle but many are blinded by the history of their good health. If you happen to be one of those who belong to the high-risk group, such as smokers, drinkers and obese people, you should definitely buy yourself coverage for the consequences that these lifestyle habits may lead to. For example, cigarette smoking contributes to most cases of lung cancer, alcohol addiction leads to liver disease and high blood pressure, and obesity causes heart disease, stroke and diabetes.

Advice: Buy more coverage if you know your lifestyle is not healthy.

To conclude

The factors listed above may serve as a useful guideline when you are buying insurance plans. However, the factors, depending on individual situation and needs, may be different for every person. Keep in mind that regardless of the factors being taken into consideration, you should always have the discipline to stay on budget because insurance plans are not meant to lead you to a miserable life.

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