This will be the third of three parts article explaining the increase in medical insurance’s premium. The first part explained the reason why there is a need for the increase. You may read it here. The second part explained how this increase in premium happens. This article will talk about what you should do when you received a notification from your insurance company on this issue. Do take note that as this repricing of premium mainly affects investment-linked medical policy, these articles will be focused solely on it.
When you received a notification of medical repricing from your insurance company, do take note that it is a recommendation and not compulsory. If you remember from the previous article, you are actually “overpaying” for your medical insurance. The “overpaid” portion of your premium is invested and used as a buffer to manage the future increase of insurance charges. If you opt to do nothing, short term wise, it has no immediate impact. Only when nothing is done in long run, your coverage may end earlier than you originally planned. Remember, when your investment fund is zero, it automatically means the end of insurance coverage.
So, should I follow the recommendation?
Obviously, a premium adjustment is definitely recommended especially if the difference is not great. However, it is also entirely understandable for you to not to, given the current economic environment. You may choose to increase your premium at a later date when your financial situation is much better.
Any other alternative?
A single premium top-up is a one-off cash injection into your insurance policy. It acts the same way as increasing your premium; instead of periodically, you choose to inject a lump sum. You can do this at any point in time while you still own the medical insurance policy.
More alternative, please?
The better your coverage is, the higher your insurance charges. Lowering your coverage will lower your insurance charges therefore avoiding the need to increase the premium. In fact, Bank Negara is actually recommending the introduction of medical insurance with deductibles, co-payment, co-insurance and etc. This is mainly to prevent the buffet syndrome mentioned in the first article. I personally do not recommend this unless you know exactly what you are doing. Simply, you know the potential financial risk of lowering your coverage.
Now that you understand the why, how and what of the increase in your medical insurance premium, I hope these articles will help you to make an informed decision on your medical insurance coverage. If you still have doubt, feel free to drop me a message and I will be more than glad to assist you.