29 May - 4 min read
Medical insurance is often described as an umbrella; you won’t see how handy it is until a rainy day. The ‘rainy day’ in this case is a medical emergency or a sudden illness. During such times; you’ll really wish you had one. But would you have wished you had two (or three, or four?).
For some, the idea of buying multiple insurance policies for just one area in life may seem strange but many Malaysians are getting into the act of buying more than one policy be it for life insurance, medical or personal accident. Yet, just because a good number of people do it, it doesn’t mean you should too.
In this article, we tell you why you need to think long and hard about that second medical insurance policy.
Medical insurance works on the principle of reimbursement unlike a life insurance policy. What does this mean? Reimbursement is simply the act of repaying an amount of money which you’ve forked out to pay for an event covered in your policy. So, if Suzy paid RM500 for medication for her chronic asthma and this was covered in her medical insurance policy; she will be repaid RM500: nothing more and (hopefully) nothing less. Sometimes, you will be reimbursed less than the amount you paid depending on the terms in your policy but you’ll never be given more.
Contrast this with a life insurance policy and you’ll see the difference. If our same subject, Suzy bought two life insurance policies for herself with her children as her beneficiaries – upon her death, her children will receive payouts from both policies. This is simply because you aren’t ‘reimbursing’ a person’s beneficiaries for the ‘cost’ of the insured person’s death. Such a principle would no doubt be absurd!
This is why, having two life insurance policies with a payout of RM100,000 each to be paid upon the insured person’s death is more value for premiums paid as opposed to two medical insurance policies with a similar payout for critical illnesses. If you are diagnosed with a disease which costs RM30,000 to treat and your policy states you can receive up to RM50,000 for that particular disease; you will still only receive RM30,000 upon approval of claims.
As with most decisions you make in life; the answer to this is: “it depends…” There are some instances where a second policy may be helpful. Here are three instances where having more than one medical insurance policy could do you good.
Unless you can afford the extra expense and will make good use of the policy; having multiple medical insurance policies aren’t usually necessary.