Is this an ILP (with medical card rider) or a Par life policy or some other savings plan?

This post has been edited by contestchris: Dec 6 2024, 09:52 AM

Medical insurance is not like normal reinsurance where there is risk pooling against low probability events.

Medical insurance is actually an admin service provided by insurance companies. In most pools, upwards of 10% of the participants are claiming EVERY YEAR! They take a 5% cut for handling your business with private hospitals. The moment their margin is being eaten, they reprice. In projects, this is known as the "cost-plus" model. The cost is always passed down to the consumer.

Interim measures to provide continued access to suitable MHIT products

1. To help manage the impact of MHIT premium adjustments, ITOs will spread out the changes in premiums over a minimum of three years for all policyholders affected by the repricing. This measure will remain in place until the end of 2026. With this measure, at least 80% of policyholders are expected to experience yearly premium adjustments due to medical claims inflation of less than 10%.

2. For policyholders aged 60 years old and above who are covered under the minimum plan within the MHIT product that they purchased, ITOs will temporarily pause premium adjustments due to medical claims inflation for one year from their policy anniversary. The interim measures above are not applicable to premium increases that may apply when a policyholder moves to a higher age band. This will be managed separately by the ITOs.

3. Policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the repricing can reach out to their ITOs to request for a reinstatement of their policies based on the adjusted premium under this measure without additional underwriting requirements.

4. All ITOs will provide appropriate alternative MHIT products at the same or lower premiums for policyholders who do not wish to continue their existing MHIT plans that have been repriced. ITOs that do not currently offer appropriate alternative products must make these products available to policyholders by the end of 2025. Switching to the alternative MHIT products will not require any additional underwriting or involve any switching cost. This, together with other reforms to contain medical cost inflation, will serve to avoid significant future premium adjustments.

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Item #4 is interesting, especially the bolded part. If I am reading this correctly, as an example, policyholders on the older Great Eastern ILP riders (such as SM or SMX) can "upgrade" to the newer rider (i.e. SMS) without undergoing a full medical underwriting! The benefits of the newer plan is superior, AND the premiums are lower.

Sounds too good to be true. How can Great Eastern and the rest agree to this thing? What's the catch?

Also, won't this disadvantage the existing cohort, as the bad risks from the older plans infiltrate their cohort and cause a rise in claims?

This post has been edited by contestchris: Dec 21 2024, 03:32 AM

Not worth the hassle, definitely not for 15% and for your primary medical card.

While there are no guarantees, part of what makes pay-and-claim cheaper is that insurance companies' claims department also have more time to scrutinize your claim submission, hence a higher chance of claim rejection as they can thoroughly investigate the claim. As opposed to cashless admission, which is usually handled by the Third Party Administrator - there is some time pressure here and the level of scrutinization is not at detailed. Yes, even after getting a cashless admission, the insurer can chase you back, but it's not as common and I believe insurers only check cashless admissions on a sampling basis.

Also, in any case, a pay-and-claim can take months to settle as insurers ask for this document and that. A cashless admission is rather clean - even if they come back eventually and flag that it is not a covered event, you can discuss a payment plan with them.

I think I saw RHB standalone medical card before, the pay-and-claim discount was close to 50%.

Also, why FI Life? Who is their TPA? Why not go with one of the established names, is the pricing and benefits significantly different?

This post has been edited by contestchris: Dec 28 2024, 01:20 AM

Company insurance is usually smooth because they generally DO cover pre-existing illnesses and have either minimal or zero waiting periods.

Is it existing since birth, i.e. congenital? If yes, generally all congenital conditions are excluded. Unless you know "creative" doctors. But it is risky for them. Many exists still.

One correction. It happens not only due to medical inflation - it could happen due to incorrect claims assumptions or expense assumptions in pricing the premiums/COI. It could also happen due to lax underwriting and poor claims management (e.g. checking prior medical history, pre-existing illnesses, necessity of the procedure etc).

Generally they are all the same so best to stick with what you have, maybe optimizer your cover slightly.

Prudential, AIA and Great Eastern are also somewhat better as they have a more stable increment due to having large pools. It'd be much worse if you go to a smaller insurer with smaller pools

Anyone got repricing letters for this year?

Yes, there are some considerations.

1. Your basic regular premiums will likely have 100% allocation after a certain period of time. However, any single-premium adhoc top-ups or regular premium top-ups will have a maximum allocation rate of 95%.

2. You will not be able to claim tax relief progressively.

Your idea is sound but at that point why not just buy a standalone medical policy and pay the premiums annually?

No, they will not deduct the 40% of the "unallocated premiums" from your existing ILP account balances.

If you upgrade to a new medical rider on your existing investment-linked policy, you do not actually need to increase your basic regular premium (for which the increased portion will be re-subjected to lower allocation rates).

Also, there is a "hack" around this:

1. Just do single-premium topups annually (with 95% allocation rate)
2. Opt for regular top-up premiums (with 95% allocation rate)

This is a loophole in the older ILPs, which the newer ILPs have fixed. My SmartProtect Essential 2 policy does not disallow this.

1. ILHP is a much older plan, it stands to reason that the insurance pool is very substandard already. Hence the quantum of repricing will be higher, all else being equal.

SMX is much newer, launched in around 2016.The insurance pool is likely not as bad.

2. We also don't know the history of premium adjustments. Was ILHP repriced before, but you DID NOT accept the revised premiums? Likewise, was SMX repriced previously, and you did accept the premium increment?

3. ILHP being attached to an older base plan, may have had different sustainability requirements back then. With SPE2, the requirements got stricter. They are even more strict now. Hence, you may have bought the older base plan under very aggressive assumptions (in terms of investment returns, future medical inflation etc) compared to the newer SPE2/SPE3 plans.

4. It's highly likely you already received annual sustainability notices to increase the ILHP base plan premiums, which you've conveniently ignored. The ILHP base plan is on sustainable to age 66 as opposed to the SPE2 plan which is sustainable until age 73.

EDIT: For both plans, switch to the new SHP. Pronto!

This post has been edited by contestchris: Mar 27 2025, 10:06 PM

Yes you will get the cash value of your investment holdings. You can easily check this amount by logging into eConnect.

May I know why you want to surrender the policy? SPE2 is one of the better ILPs around and is something that I personally have too.

Anyone here knows how the "sum assured" of the IL Premium Waiver Extra Rider for Great Eastern is calculated? It is an odd figure and I can't seem to reconcile how it is computed.

My request for policy alteration has been denied for using an incorrect "old" service request form.

The bloody idiots, I got it from your own website!

Plus, it's a basic request and there is no material difference in the forms.

Why are they linking to and hosting outdated versions of the forms on their website?

I don't have a printer anymore and don't wanna go get a witness signature again. There is no material differences in the form, at least not in the portions applicable to my request. What are my options? Can I compel them to process it and threaten to complaint to BNM if they refuse? Feels like so wasting my time only.

This post has been edited by contestchris: Apr 18 2025, 09:27 PM

Yes Great Eastern just launched a brand new product with multiple deductible options. If you decide to upgrade to it, make sure you undergo full underwriting (assuming your health is 100%) to be in the healthy pool.

You have it wrong. In Malaysia, "health and surgical" insurance is not actually insurance per se as they are all priced on an "annually renewable" basis. Real insurance is life, TPD, CI, cancer etc that are priced for the long-term. "Health and surgical" insurance is actually a cost-plus insurance model. Given the inflationary nature of the underlying claims, this only makes sense. If they were to price the product "properly" as a long-term product, your annual premiums will be 10x to 20x higher.

Medical Insurance Reform Suggestion

Standalone Medical Insurance

For standalone medical insurance policies, there is possibly only one reform required in the presentation to customers. In the Sales Illustration (SI), insurers must be able to show projected long-term future premiums under a low/medium/high scenario to customers. The low scenario can be 7%, the medium scenario can be 12%, and the high scenario can be 20%. This is not legally binding and purely illustrative. Fundamentally however, nothing will change for standalone medical insurance policies as these are already annually renewable, and premiums are only paid for and coverage is only guaranteed for 12 months.

Investment-linked Medical Insurance Rider

For investment-linked insurance policies with medical riders, there is substantial reform required. All of us who purchased investment-linked insurance policies have been told that we are “overpaying” now to build a reserve to pay for future increases in medical costs. The promise has generally been that the premiums will be level (although, the insurers are smart – this was never communicated in writing). This is all pure bollocks.

The picture is muddied further by the fact that unlike standalone plans, there are two components for ILPs – the premiums themselves, and the “cost of insurance”. The premium is dependent on a host of factors, which include the performance of the underlying investment funds and changes made to the policy (i.e. increase coverage term, add/remove riders etc).

Suggested reforms:

1. The base plan (which usually covers death and TPD) and other riders such as CI, accidental death, income replacement and premium waiver are priced on a long-term basis. While repricing is possible, it is rather unheard of and should not occur unless the insurer mispriced the product. Repricing for these will only occur under exceptional circumstances – e.g. a widespread pandemic far more lethal than Covid-19, or a major catastrophe event that either wipes out or severely infects a significant portion of the population in one go.

On the other hand, medical insurance is priced on a cost-plus basis. They are “annually renewable” in nature, which allows the insurers to capture emerging trends such as medical cost inflation and increasing morbidity in the population.

Given the distinct nature, it only makes sense that the medical rider premiums for ILPs be desegregated from the rest of the ILP and be presented separately. This will take away a lot of confusion and “unfairness” given that many were duped into thinking getting medical ILPs will ensure level premiums for life.

2. Another reform would be similar to the one proposed for standalone plans above. In the Sales Illustration (SI), insurers must be able to show projected long-term future premiums under a low/medium/high scenario to customers. The low scenario can be 7%, the medium scenario can be 12%, and the high scenario can be 20%. However, given that there is already other projections being shown in the SI (e.g. the investment returns projection), this might just get too complicated for consumers to comprehend.

This post has been edited by contestchris: Apr 21 2025, 10:22 AM

Hafiz, you're not wrong. I'm just staying the truth, medical insurance in Malaysia is not true insurance, rather a cost-plus model. Yes they may not be explicitly annually renewable, but they might as well be given how things have been going on in recent years with regards to medical cost inflation. I agree regarding your ILP critique hence see my suggestion