What are the Reasons People Choose to Ignore Health Insurance?

The modern medical industry is fast growing with many fatal diseases of the past becoming easily treatable today. As we progress further, we find ourselves getting healthier and living longer with a generally better quality of life!
There is just so much that technology has empowered us to do, and there is so much more to share and do together!

As the medical sector continue to grow, yet many of us (in fact one in two persons* in Malaysia) still shy away from taking health insurance coverage for many reasons (or any insurance at all).

Here are some of the top few reasons from my own encounters:

1. Reliance on Group Coverage
Individual Health Insurance in Malaysia, as opposed to Individual Life Insurance which is widely publicized, does not benefit from the same level of penetration despite it being the single most sought after employees benefit item in the employment market. Unfortunately in this day and age, job security is not a given.

Your employer’s health insurance coverage will only protect you as long as you are employed with the company. The second your employment stands terminated for whatever reason, your health insurance cover stops too. Between the time you have no employer insurance and find another policy, you will be out of insurance cover and liable to pay every penny for hospitalization. Even with a new job at a new company, chances are you will not be enrolled into the company's Health Insurance benefit for the duration of your probation period. And even after that, there are waiting periods that apply for specified illnesses too. It is the same process every time you switch companies. 

It is evident that health insurance awareness is there but yet a big group of salaried professionals choose to ignore purchasing their own Individual Health Insurance.

Note: What about retirement? (Keep reading)

Having an Individual Health Insurance policy will keep you covered despite your employment status.


2. Underestimating Medical Inflation
Many do not opt for health insurance policies without an accurate understanding of the escalating prices of drugs and treatment.

What does 16.1% mean to you and I? 
Well, if that is the FD interest rate, I would jump for joy! 

However, 16.1% is the currently running medical inflation rate in Malaysia. 
Which effectively means that hospitalization expenses are on the rise and for years it has been proven to be too burdensome for employers and organizations providing the benefit for their employees, as well as the general public without an Individual Health Insurance coverage. 

Most of the insurance providers in Malaysia are now offering very high annual coverage figures for Individual Health Insurance. 
In the case of AIA Malaysia, the coverage starts from RM100k/year to RM1,1mil/year, to RM1.76mil/year with no lifetime limits. 
The numbers might seem far-fetched for us 80s and 90s babies now, but at 16.1%, we are going to need it when we retire. 


3. Losing Focus on Personal Financial Management
Most people tend to think twice before investing in their Individual Health Insurance since they assume that such policies do not have any sizable returns. 

While it is true that the upkeep of an Individual Health Insurance policy may sometimes come across as a burdensome cost, or unnecessary even, do keep in mind that your Individual Health Insurance policy may someday do more than just to take care of your healthcare costs.
It can sometimes make the difference of preserving family dignity in more serious and/or complicated conditions.

In our investment ambitions in property, business ventures, or the stock market, sometimes the premium for Individual Health Insurance may seem small, hence unimportant or even relatively negligible.
The idea of keeping your investment portfolio afloat and shielding it from the probable impact of healthcare costs is quite obvious!

Think: What would be the first thing you liquidate to fund your healthcare costs should you not have any Health Insurance?

In many ways, an Individual Health Insurance (and Life Insurance) only compliments your financial portfolio with significance and with purpose.

*Note: Should a serious health condition strike, wouldn't your Individual Health Insurance policy be your best investment with the highest returns?


4. Underestimating Between Now and Retirement
As mentioned earlier, you will only be covered for the duration of your employment with the company. After your retirement, which is when you’ll need insurance coverage the most, you will have to put in an application and be at the underwriter's mercy. 

Getting a policy after the age of 50 is an extremely arduous task, and requires medical tests to be undertaken. Getting a new insurance policy after the age of 50 also means that you will be signing a form that says there will be no coverage for “pre-existing medical conditions” – which effectively means that the insurance provider has no liability or responsibility towards you, should your hospitalization be due to a disease or medical condition that you’ve had before taking the policy. 

A majority of hospitalizations for senior citizens are for pre-existing conditions picked up during their 20s, 30s, and 40s, and this does not help you at all. Getting a private insurance cover in your youth, which extends beyond your retirement age, is definitely how you need to play this.