hi Optiplex330,

this is not entirely true at all. if you buy a medical insurance early (as early as you can actually!) and you have a guaranteed renewal, no loading, no exlcusions policy you have made the best possible choice. if sickness strikes, no matter how hard, you will have an insurance to cover for you. this is the principle of insurance. if you wait until something happens, such risks are becoming bad risks - noone will insure them and you will have to fork it out for yourself.

insurance is not about getting money back. dont confuse this please. it's a common misconception in malaysia that an insurance should make you money. this not at all the case! let me explain to you what the purpose of an insurance is:

a group of people realise that they are all exposed to some risk (sickness for example) which can potentially be very very expensive. so expensive indeed that they would not be able to pay for the costs themselfes. but there is an advantage: the risk that such a risk materialises is very very small. if however it occurs it will ruin the individual. now say the costs would be 250,000 for a specific event. the risk that it will materialise is 0.001% annually. so on average anyone of this group will face an _expected_ loss of 250,000 * 0.001% = 2,5. this is very little indeed! so if a large number of people agree to pay 2,5 every year (plus some admin fees etc. so maybe make it 3,00) into a large pool and if one of them faces the loss the losss shall be absorbed from the pool then this is an insurance.
for the individual the loss is now know: i have to pay 3,00 annually to be covered. that is that. i will have to pay no matter what but if something happens, the group will save me.

its not the group's pool purpose to invest 3,00 annually and return profits to you. that is what investments are for. dont mix insurance and investment as they are entirely different things. this is also why i do not support ILP life insurances with medical riders. they dont make sense from an economical and risk assesment point. probably the main reason why people buy them anyway is because you are promised some kind of profit. that is not what insurance is about though.

if you cancel your present medical policy to switch to a new one, the new policy will asses your risk at the current situation - not at the situation when you first signed up and were (possible) more healthy. so when age increases, you will find it harder to find an insurer willing to take over your risk without loadings / exclusions etc. esp. if you made claims in the past. if you are still healthy, there is no problem with switching at all - you can even apply for a takeover so the waiting periods will be mostly or entirely waived. i have switchted three times in the past without any hassle but this is because we were and are still in good health and young.
if you wait until you are 55 you might get yourself into trouble. it wont be as easy to get cover as with age 1. for that reason you should stay away from lifetime limits and only seek annual limits (with an implied lifetime limit of limit*years of insurance possible). otherwise once your limit is eaten up, you are in trouble too. such life time limit policies are only usefull as top-up for extra expensive risks.

hope i was clear and not too confusing

Optiplex330,

in that case apply for the new company and request a take over. take overs are "encouraged" by bank negara. take over means your waiting period will be waived. otherwise you need to account for an initial overlap between the policies to ensure you are covered. for example a take over might be refused if the benefits are significantly better. in that case get the waiting periods from the company. for this duration you will need your old policy so you need to time the purchase properly.

other than that you dont loose anything as you would with life. you are perfectly save to switch assuming your health is the same. i would get the approval from new insurer first before i decide not to renew the old insurance.

mind sharing what company you want to switch to?

---

Added on July 18, 2009, 6:12 pmJustin1000,

this is exactly my point. there is and cannot be a difference in the way the medical cover works be it from life or general insurer. and this is the reason why it's not advisable to choose life + rider to cover for health. if you want to cover health - take a health policy.

This post has been edited by PJusa: Jul 18 2009, 06:12 PM

yes assuming axa does not want to impose any loading or exclusions on you you can simply switch the policy. this is the advantage of a general insurance product. unlike like with rider you are not bound. the premiums are per age band and no old age savings to couchon the increasing premiums are beeing made that you might loose. so you loose absolutely nothing.

but: do make sure axa want you without exclusions and loadings first. also insist to treat the change as a takeover of the policy. if you dont get it as takeover, waiting periods apply that last up to 120 days for specific illnesses. if such periods apply you should make sure that your cover from prudential overlaps with the new axa plan so that prudential would have to pay when axa will not yet pay. always try to account for the worst

and i agree with you on axa. they're benefits are lot better than most other insurances in the market. but i think only the SmartCare Executive has a lifetime limit. and this plan has a major catch. they have a sublimit per disability! please be aware of this.

the SmartCare Optimum does not have any lifetime limit only an annual limit. i strongly suggest this plan over the executive plan despite the difference in cost. in the long run not having a lifetime limit is almost invaluable esp. if you intend to run the plan until old age.

Optiplex330,

i just want to highlight one important difference when it comes to medical insurance:

if you are under a guaranteed / no loading / no exclusions plan there is a benefit to remain once sickness strikes. you still get the low premiums that everyone else gets while new companies will put loadings and / or exclusions upon you. also when you are in the renewal only part of the insurance you wont be able to switch anymore.

regarding your question of old age savings: this does not exist in malaysian policies. in europe many health plans work like this: despite the insurer beeing able to offer very low premiums for healthy people, they ask you to pay more. this extra is then saved and will be used to offset your premiums in old age. the catch: its not easy to move these savings from one company to another so they can effectively lock you in through this measure.

with respect to the rider and you beeing bound: what i mean is that if you buy an ILP product (i.e. life with medical rider) you are commiting to a significan savings plan. if you later decide to switch companies and you want to cancel the plan, you have to cancel the entire policy. this usually means you are loosing out. also you are commiting a larger part of resources this way which might be harder to come up with in old age when premiums might very well be 1000 RM per month or more for an adequate cover.

if you go to axa the medical info will depend on your age and wether it will be treated as a takeover or not. in most cases a health declaration will do. make sure to disclose any little detail you can think of. if you remain silent about it, the insurer might be able to cancel the entire policy at a later date due to misrepresentation of facts.
usually listing everything will mean no harm - they might just ask you to clarify in order to avoid an exclusion.

i suggest you call AXA and let them know you want tho switch under takeover from your current prudential plan. they will advise you further. please note that if the benefits are significantly better than your current plan, your switch might not be considerred a takeover and waiting periods will apply.

on a sidenote: the agent comission for health insurance is high. i believe its 15% of your annual premium every year. if you find an agent to split comission with or go as a walk-in you can save a significant part of the premiums. AXA does not offer a walk-in discount so you need to find an agent to split comission with. (i am still looking for an agent to split the comission with for my tokio marine plan!)

personally i always try to get the agent comission as a walk-in. if they refuse, i look for an alternative insurance. if none exists, i look for an agent to split comission with. otherwise i still go direct as this means the company is saving money and if everyone would do this this would mean that premiums can remain lower for a longer period of time. (no offence agents, i know some of you do a good job in helping with claims but not everyone needs this help. most insurers will also help you if you know your rights. if you are of the kind who accepts anything an insurer tells you, then its better to seek the help of an agent for claims....)

Optiplex330,

first of yes, you are in a bit of a problem. the good part is the minimal value of the life insurance. i understand it's already nine years old. i am not sure how much you have already saved but in the current situation its likely that the savings part is worth now only 60-40% of what you initially paid into. ending the entire policy would thus lead to a significant loss.

i am not sure if you can cancel just the rider. your agent should be able to help you there. what you are facing is the main reason why i suggest not to use ILP for medical cover.

from my point of view option one and two dont make a lot of difference since you are not forced to materialise paper-losses. i.e. you can wait until the funds rise in value again. if you deem the performance good then you can continue to invest further.

it is very hard to say what is the best solution for you right now. one would have to look into the contract to see where exactly the money is going to. we would also have to consider agent comissions when looking at options and what alternative investments are at your disposal. at the end of the day the question would be: how do you profit more - stop paying, just canceling the rider or even cancel the entire policy (most likely not a good idea). then we take into account moneys freed in the process and apply an alternative investment (you could for example buy the same funds through the bank). then you can make an unbiased decision just based on optimising your future funds.

how much are you paying right now for the plan and do you know the current distribution of the money into the three parts?

Optiplex330,

alright. since the majority goes into medical, i would be very much biased to switching. this is the good news. 1250 annually should buy you very, very good cover (assuming you are below 35).

have a chat with prudential about canceling the medical rider. then you can decide if you want to keep the remaining insurance of get a new one alltogether. also get the current surrender value so you can see how big your loss (if any) is.

if you are unable to cancel the medical rider then you will have to consider two options:

a) cancel it all and cut the losses
b) use AXA and keep Pru as a top-up. considering the premium (how old are you btw?) this is a waste of resources though and you will probably be better of with a) and using a different insurance as a top up.

numbertwo,

SCO does not have a sublimit per disability. hence the substancial difference in premium.

c.o.o.l,

from the premium that is allocated to Pru Medical benfits, it's not advisable to upgrade if he can cancel the medical rider. this would be ideal as it's then possible to use this money to buy a medical insurance that does not carry an additional life-time limit. it also frees Optiplex330 from the ILP medical card. wether 10x or 5x annual limit its still a major limit and most will regret this when they are old and stuck with the plan. change now while there still is time if the need only exists for outpatient cancer/dialysis there are cheaper plans that serve this purpose. and by cheaper i mean 5x or more.

cenkudu,
do get a standalone medical card that fits the budget. when it comes to medical i would not consider an ILP plan. dont try to kill two birds with one stone here. seperate them.

mtsen,
care to elaborate what you refer to by "one key good thing about ILP is you pay lower fee to the insurance company, ie. 20% vs traditional products at 40%" what do those numbers refer to?

numbertwo,

you read correctly, the plan lists out per disability. but there are no special sublimits in SCO. inactual fact this even better for you because the limitation on "Total number of days" is per disability. so if you have several unfortunate events in a year, you can in theory be hospitalised 365 days and they still pay. the same holds for the sublimits on
Consultations & Diagnostic Procedures within 31 days before hospital
and
Post Hospitalisation Care and Physiotherapy Treatment within 31 days from hospital discharge
they are per disability and as such are much higher than a plain vanilla annual limit.

i hope this clarifies your question.

Vitorbarbosa,

thanks for the info. i thought so and it's a shame but it does make sense. however CI should be meant to cover for lost income due to CI anyway and not to cover medical bills. this would be almost always (not for AIDS and some others) be the case anyway.

since you are from the industry: is it possible to buy a minimal life insurance (i.e. sum insured 1k) and attach a significant CI plan along (i.e. 500k or higher)? due to the fact of beeing forced with life+CI i have insured myself outside malaysia but one never knows...

Vitorbarbosa,

we used to be covered entirely abroad but premiums dont always work out in out favour. my CI alternative is the result of a brief period in europe. under european law they cant cancel this insurance even if afterwards you move elsewhere. since the original cover was worldwide (and not just EU as normal) we are quite lucky.

for medical insurance its actually easy - even if your malayisan. the only problem is that those plans dont really account for the low low healthcare costs here so the premium seems often prohibitively high esp. in old age.

thanks for the info btw. i figured that i wont be able to trick the insurer that easily

mtsen,

i am surprised by your 40% margin. as far as i know there is no higher agent margin than 25% - maybe Vitorbarbosa can elaborate. i always understood that for general insurance the comission is 10 (car), 15 (for example houseowner/-holder, H&S(?)) or 25% (for example PA) depending on the product. if my information on those comissions is wrong, please correct me. if i negotiate with wrong numbers then i am not squeezing my agents hard enough hehe.

numbertwo,

thanks for the tip. maybe we should start and compile a list of healthcare plans (guranteed / non guaranteed) and top up healthcare plans as well as stand alone CI along with benefits and premiums for all of us to compare. this would be very valuable to any concerned party since it offers unbiased information.

i will check the CI from AIG out - but arent they linked with AIA?

samowong,

insurers are "encourages" by bank negara to exercise take-overs. this renders waiting periods to almost zero. my last take-over even go the 30days waiting waived. you must however ask for it. while bank negara encourages it does not enforce this unless you call them or are otherwise vocal

i am absolutely certain that bank negare does not discourage switching! this would defy the purpose of an insurance market.

i dont think you need to be scared of missing the premium. first of: where did the money for the holiday come from? from your payments. so affordability is not an issue. you had the money anyway. either you can afford the insurance or you cant. there is no magic way for you to get into a plan you cant afford.

renewal notices are sent 2 months prior to expiry so you have _plenty_ of time. and if you have an agent they will surely remind you.

and i dont follow your argument regarding the ILP part. are you saying u buy an ILP product so you can stop paying after some years and then let the APL do its magic? you are aware that and APL also comes with interest? this strategy makes no sense to me. you should be better off either paying or investing separately.

and forgive but there is one best plan when it comes for medical cover: mandatory insurance that covers all medical bills period. if all are forced to be insured the spread is best. of course if this is handled by a non profit insurance company (i.e. government) then its best. sadly this best plan does not exist (yet). i remember that not too long mandatory health insurance was discussed but the gov didnt go through with it. probably scared people would be angry if have to pay extra and not get anything from it (besides better healthcare that is).

samowong,

thanks for the tip with public mutual. this is interesting:

http://www.publicmutual.com.my/page.aspx?n...utual-Life-Plus

500k cover for only 2,375.00 RM and it comes with death and TPD but who is complaining. D+TPD should be worth around 400 RM so the 500k for CI is roughly 2000 per annum. will consider this as we wanted to increase death and TPD anyway by 500k. 1M is so little money these days. since this is the only standalone plan so far we can hardly compare prices. it would be interesting to see the premium per 100k CI alone. for now we know Great Eastern (the underwriters) seems to think 400RM per 100k is the price.

looked for AIA CI plan - seems to be only offered to business though. too bad. i wonder if a single unit of public mutual fonds will also be enough to get the insurance.

This post has been edited by PJusa: Jul 20 2009, 06:06 PM

samowong,

thanks for the info. i didnt know about unit deduction option. but this only means you dont pay the interest. good though but it sounds a tad impractical to me. but then others might be less inclined to handle their bills. i take the annual renewal as an option to evaluate cover and compare prices and alternatives to make sure we have what suits us best among the current offers.

and yes the public mutual sounds like a term insurance to me as well. to me its still interesting because it allows us to compare. 2000 RM for 500k is still costly (CI only) albeit intersting - depends as always on your needs. and the renewal guarantee issue is definitely a minus.

oh and regarding the best plan. actually i think its especially viable in escalting cost environments. consider this: noone pays any bill but it's all charged to one centralised insurance. not only is the risk spread optimal for the entire population (not so much ideal for low risk ppl) but it also provides a massive negotiating power. discounts are immanent. if hospitals wont budge, the monopoly insurer might just open its own to operate at cost. but they would have be non-profit base if the insurer is in for profit, the system wont work. i dont think this ideal insurance exists, to some degree it does exist in europe but too many exits for the rich remain. ideally premium would be a percentage of your income so it hurts people equally in comparison to the money they have. this means cross subsidy but its better than having high premiums who hurt the poor a lot and rich only feel a tickle.

oh and i am not that well informed - many things yet to learn. i am not really related to the business so i only learn from the contracts and proposals i get. i am an economist by the way. so the macro-view might be better than the micro-view of things

PMlife looks less appealing and it doesnt get better well worth a look nonetheless. i dont think group insurance is per se more likely to withdrawal. you usually tend to get a better pack than as a direct customer due to purchasing power exercised. for example i previously had a plan at roughly the same cost with an official plan under life time limit but the main benefit was that unlike the regular life time limit the group plan had unlimited life & annual limit.

as per AIG i checked AIG general insurance. do you have a URL for AIG Home? as far as i know American Home Assurance is taken over by AIG general now. my sentiment is its AIG - i dont really trust them too much.

This post has been edited by PJusa: Jul 20 2009, 07:52 PM

cenkudu,

in a nutshell for both reasons. you seem to get less benefits per dollar premium paid (not surprising) and you are bound stronger due to the ILP part. you cant really benefit from ILP + rider in comparison to pure medical insurance if you leave the ease of using the investment to pay for the premium out i think overall you are getting more bang for your buck from a standalone policy alongside with all the plus and minus we have listed out previously.

raph,

seems the same. but the AIG one is for business only

mtsen,

i agree we should split it. CI is different from H&S. H&S should also be grouped: guaranteed / non-guaranteed and then split again in categories:

insurable until 65-70

insurable until 71-80

insurable above 81

we could list benefits, premium shedule and pros and cons of each plan. this would allow better comparison.

numbertwo,

basically since the plan is only listed under the business section. but if they dont mind to insure individual then that is good. do you have the premium shedule & T&Cs?

Vitorbarbosa,

i'm quite certain that no general insurer is basing their premiums on past experience alone. that would be very bad business practise. risk assesment is a highly complex thing that eventually leads to premiums - tons of statistical averages from various groups as well as econometric projections will flow into the general structure. this also holds for future adjustments. into the adjustments also the claims history will flow in but from what i know the claims history is more or less an adjustment factor only unless your group is very small. in such a case the claims history becomes progressively more important and overshadows other factors. in a broadly spread product with several 10s of thousands or more insured many other factors help significantly better setting future premiums.

this is most likely the same as it is done for life insurance - with actuaries, statisticians and the like.

life insurance cannot adjust if the premium is guaranteed and will have to factor in claims as an estimation only. also all of the other factors can not be adjusted and need to estimated far into the future. the result is more uncertain numbers and this usually leads to higher premiums than with general insurance since nobody wants to underestimate and consequentially suffer a loss.

based on this logic premiums guaranteed should on average be higher than with general insurance as those are based upon harder figures and allow for a more competive pricing strategy.

but it's true. fixed premium has an advantage - you know what you will have to pay. even though you should also assume you are paying more than you would with a broadly spread general insurance product.

---

Added on July 21, 2009, 5:04 pmraph,

can you post the CI and also the entire health plan for all of us? the website is very silent about details and it would help us all to evaluate options.

thanks!

This post has been edited by PJusa: Jul 21 2009, 05:04 PM

raph,

benefits are not too bad. care to share the policy jacket and premium schedule too?

Vitorbarbosa,

i am sure they are basing also on experience and age band. i would be surprised though if that is the sole base. i know that for example AXA is offering the same policies throughout asia with slight modifications. their risk assesment is done partially by the local branches and partially by the asia HQ. they probably also take into account the overall data they have collected. if i would be an insurer i'd get as much information base as possible and then cook it all up using the local claims and local differences as adjustment factors. and if i can think of it... mni insurer surely also can