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The fine prints of health insurance


We have been following the recent forum letter submitted by a policyholder from NTUC Income who brought forward her situation of being unable to receive a payout from her insurance policy despite being disabled from the waist down.

The individual was denied the payout because she was deemed as being able to perform ‘sedentary work’. The evaluation suggests she is able to still find work, if she really wants to (at least according to medical terms).

We at DollarsAndSense.sg are not qualified doctors, but it appears to us that the term ‘sedentary work’ can easily be abused to rule out many insurance payouts due to the various interpretation of the definition. Case in point, the Singapore navy regular who lost his limbs, still has a desk job with the SAF so he can still technically work if he wants to. If the unfortunate loss of limbs can still allow one to perform ‘sedentary work’, it is hard to imagine what circumstances is required before NTUC income would be unable to argue its way out from paying out on its policy.

In an ideal utopia imagined by DollarsAndSense.sg, there will be one single insurance product for which we will pay premiums for, and if anything untoward were to happen to us, our finances will be taken care of by appropriate payouts.

Instead, what we have is a market full of insurance products that all claims to ‘protect’ us, but are filled with clauses buried under insurance terminology such as ‘hospitalisation cash insurance,’ ‘medical expense coverage,’  ‘critical illness policy,’ and ‘disability income coverage.’ And in case you are wondering, they actually do indeed mean different things.

We decided to look through these insurance terminologies to better understand the various products offered, and more importantly, the many common clauses behind some of these products.

Medical Expenses Coverage

In general, having medical expenses coverage refers to costs incurred from accidents or medical reasons. These include surgery costs (both day and in-patient), investigative procedures (like X-rays and laboratory tests), and specialist consultation fees with regard to hospitalisation.

Some fine print you may want to note include:

–       There could be cap on expenses per illness or per procedure (thus there are ‘Major Medical Expense’ plans you need to buy if you want coverage for things like heart bypass surgery)

–       Some procedures or conditions may be excluded from coverage

–       Investigative procedures not directly related to treatment of current ailment may not be covered (e.g. a biopsy to test for early stage of some other condition)

–       The reimbursement may take some time to be processed, so you will still need cash on hand to cover the bills first.

Hospitalisation Cash Insurance

This kind of policy provides cash payouts for each day the insured person is hospitalised. Benefits depend on the specific plan and are not dependent on actual costs incurred.

Some fine print you may want to note include:

–       There is usually a minimum length of hospitalisation before you are eligible to make hospitalisation claims.

–       The amount of days eligible for payout could be capped per year or over the entire lifespan of the insurance policy. So if you are constantly being warded for the same type of illness, there is a limit to how much you will be compensated for (an upside risk cap for the insurance company as well)

Critical Illness Insurance

This kind of insurance pays a lump sum benefit when you are diagnosed with a critical illness as defined by your policy. It is not dependent on you being hospitalised or even seeking treatment. Typical ‘critical illnesses’ include heart attack, cancer, stroke, and kidney failure. Critical Illness benefits are often offered as part of a life insurance benefit or sold stand-alone.

Some fine print you may want to note include:

–       Some critical illness policies are structured such that benefits are based on the stage of a particular critical illness.

–       There is almost always a ‘waiting period’ from the time you sign the policy to the time you are eligible for claims. While this prevents abuse from patients who ‘sense’ they have an impending critical illness coming, it is good to know.

–       There is also a limit on the payout of the policy. If the payout hits the limit, the policy will cease. Thereafter any further critical illness that you are diagnosed with will no longer be covered.

Disability Income Insurance

If you are unable to work due to an accident or illness, disability income insurance provides a monthly payout, usually as a percentage of your monthly salary (typically up to 80%.) Do note that this is a supplement, and by no means negates the need for cash savings in such times of crisis where you may be spending a lot more money on treatment and other temporary arrangements.

Some fine print you may want to note include:

–       Your definition of being ‘unable to work’ may differ from that of the insurance company definition. Some may consider not being able to do the work you used to do as disability. In such cases, if you are able to do menial tasks, you may not qualify.

–       Once you start work, even if it is a step down from what you used to do, the payouts may cease.

–       Payouts given may also be progressively reduced as you make recovery, subject to the insurer’s review based on medical check-up reports.

–       There is typically a clause which state that payouts will cease at retirement age.

Long Term Care Insurance

This kind of plan provides a monthly payout to cover long term nursing treatment costs and there is usually an age window to qualify for such policies (you need to be old enough, but not too old).

Long term nursing means you do not need to be in hospital, but still cannot perform basic ‘activities of daily living’ on your own, and hence require long term help. These include activities such as eating, moving around, dressing and bathing.

Some fine print you may want to note include:

–       There may be a minimum number of activities you are unable to perform to qualify for this payout. Thus you may cease to receive benefits, even though you need to remain in a nursing facility or need to hire nursing help.

–       Some policies place a cap on the number of years you can receive long term care benefits, while others set conditions you need to meet to continue to quality. Do read carefully.

–       As usual, benefits only start to be paid when you have been deemed unable to perform ‘activities of daily living’ for a minimum period of time.

That was quite a mind-bender, wasn’t it? Do take another read if you need to, and share this article with your loved ones. Maybe it is time to review your health insurance policies and fully understand the scope of your coverage!

We hope this article will also encourage you to ask deeper questions the next time you meet an insurance advisor. Remember that you are not obliged to buy anything that you do not fully understand. Always be sure to ask for a second opinion on the insurance product offered. If you have the need for such a question, feel free to use our newly launched JustAsk.sg widget.

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