Tutorial 5: Protecting Your Health

1. Discuss the various policies related to health insurance that are available in Malaysia
market. Which of the policies discussed is more important to you and your family?
- Hospitalization and surgical benefit plan (H&S)
It is usually referred to insurance schemes that compensate for expenses incurred if
insured is hospitalised
- Critical illness
Pays you a lump sum when you are diagnosed with any of the stated dreaded diseases
- Disability income plans
Provide you with an income in the event that you are incapacitated
- Personal accident plans
Have a certain measure of coverage for hospital bills relating to your accident

*No long term care in Malaysia. Got medical card, Critical Illness, disability, personal accident

Hat – disability income plans

Shirt – Hospitalisation and surgical benefit plan
Pants – critical illness
Shoes – Personal accident

• Hospitalization and surgical benefit plan (H&S)

It is usually referred to insurance schemes that compensate for expenses incurred if insured is
hospitalised
• Critical illness
Pays you a lump sum when you are diagnosed with any of the stated dreaded diseases
• Disability income plans
Provide you with an income in the event that you are incapacitated
• Personal accident plans
Have a certain measure of coverage for hospital bills relating to your accident
2. How can you analyze the costs and benefits of your health insurance policy?

1. Indemnity contract (just need to buy 1 or 2 is enough. Can save some money because can only
claim up to the bill amount) vs. value contract (the more the better)
2. limit (annual and lifetime) lower or higher? (Higher limit means higher premium incurred)
3. Guaranteed renewability (once enter into this plan, as long as you pay premium, you will
continue to be insured; will be more expensive cuz has more features) vs. non-guaranteed?
4. Co-ins & deductible (can help to save some premium, cheaper; but you will have to pay more
when you want to make a claim)
5. Coverage period (the longer the better, but will increase in price/premium)
6. Premium (If want all the features, it will be more expensive. But if exclude some, it can be
cheaper)
7. Waiting period (There will be a waiting period for certain diseases. However, for accidents,
can claim since it is unpredictable.) The shorter, the better for you.
8. Exclusions (items not covered under insurance: pre-existing conditions, conditions when you
are born) so this person needs to include loading; will incur higher costs/premium

*if you want certain benefits, you need to pay more

*if you don’t want certain benefits, you may need to pay more when the circumstances arise (can
claim less).
3. Describe both the liberal and strict definitions used to establish whether an insured is
disabled.
Liberal -
It is for own occupation
This is an insurance policy that covers individuals who become disabled and are unable to
perform the majority of the occupational duties that they have been trained to perform. This type
of insurance policy is contingent on the individual being employed at the time the disability
occurs.

Strict -
It is for any occupation
Any occupation is disable from performing the duties of any occupation that the insured can
reasonably be expected to perform as a result of his pas training, education or experience. This
definition is more restrictive.

In Malaysia we do not have stand alone policy. It is free, included when you buy life insurance.
Normally will divide it according to occupation. But this is too relaxed/ more liberal. Eg. A
teacher lost his voice, so he cant teach. BUT he still can do other work.

Highly specific skilled occupations: Heart surgeons, singers, celebrities, sports

Normal admin staff, clerk: can’t justify disability

In Malaysia: Presumptive disability

- In order to claim, must strike the combo.
- This is very strict, not likely to have the combo. So it’s given free of charge in basic
policy.
- Eg. Lose 2 eyes, 2 hands, 2 legs, 1 eye & 1 hand, 1 eye and 1 leg.
4. Paul is covered by a comprehensive medical policy that specifies a RM500 deductible
each calendar year and a 20% coinsurance provision. In Feb 2018, Paul incurred RM5,000
in covered expenses. In June 2018, he incurred RM10,000 in covered expenses. He incurred
no other covered expenses during year 2018.
Based on the above information, calculate the amount Paul has to pay for year 2018.

Amount Paul has to pay for year 2018= [(15,000-500)*20%] +500

= RM3,400

5. Winston purchased a medical plan which had a Room & Board entitlement of RM150
and all other expenses based on an As Charged Basis subject to an Annual Limit of
RM60,000. One day Winston was admitted to hospital for what was later diagnosed as
dengue fever. Instead of his eligibility for a twin sharing room, he opted for a single bedded
room which costs RM280 per day. Five days later when Winston was being discharged he
received a total bill of RM9,000. The policy imposed 20% co-insurance on expenses other
than room and board. Compute how much Winston has to pay and the amount he can
claim from insurance company.

Total Bill=RM9,000.00 R&B=(280x5)=RM1,400.00 Medical plan=RM150x5=RM750

Remaining costs=RM9,000.00-RM1,400.00=RM7,600.00

20% of co-insurance= RM7,600x20%=RM1,520.00

After the 20% of co-insurance=RM7,600.00-RM1,520.00

=RM6,080.00
Amount Winston can claim from insurance company=RM6,080.00+RM750.00=RM6,830.00

Amount Winston has to pay=RM9,000.00-RM6,830.00=RM2,170.00

Total Bill = RM9,000
R&B = (280 x 5) = RM1,400
Medical plan for R&B = RM150 x 5 = RM750

Remaining costs (other expenses)

= RM9,000 – RM1,400
= RM7,600

20% of co-insurance
= RM7,600 x 0.2
= RM1,520

After the 20% of co-insurance on other expenses

= RM7,600 – RM1,520
= RM6,080

Amount Winston can claim from insurance company

= RM6,080 + RM750
= RM6,830.00

Amount Winston has to pay

= RM9,000 – RM6,830
= RM2,170
6. John met a car accident and immediately rushed to hospital for treatment. He remained
there for 60 days, after which he was allowed to go home for further recuperation. During
his stay in hospital, he incurred the following expenses:

John has a medical policy with Zin Company that has RM2,000 deductible clause; an 80%
coinsurance clause; internal limits of RM180 per day on room & board; and RM5,000
maximum surgical fees.
How much John can claim from his insurance company? How much must he pay out
of his own pocket?

Total expenses incurred

= 7,500 + 3,000 + (185*60) + 2,500 + 1,000 + 100 + 150 + 900
= RM26,250

Amount John can claim

= 26,250 – 2,000 – [(26,250 – 2,000)*20%] – (5*60) – (7,500 – 5,000)
= RM16,600

Amount John has to pay

= 26,250 – 16,600
= RM9,650