Guest Contribution
"I’m sorry but your insurance does not cover this."
By Kayne Kwa
Guest Contributor
14 June 2021
“I’m sorry but your insurance does not cover this.” These are the dreaded words that one hopes never to hear as they file for a claim.
16 years ago, I had purchased my first insurance policy – a hospitalization plan from a then friend of mine. It was one of the things that one commits to when they begin their working and adulting journey. Insurance is generally something that people don’t think about buying, until they are approached by a friend whom they have not met in eons but who surprisingly pops out of nowhere seeking to “reconnect” over coffee. This was the modus operandi of many such insurance agents in the past and thankfully less employed these days given its surefire way of straining one’s friendship.
“Hospital charges can wipe out your entire savings. I’m sure you are aware that one bill can wipe out your entire savings.”
“Just the other day, I woke up with excruciating pains in my abdomen and decided to ward myself in the hospital immediately. Doctors discovered I had appendicitis and had to operate at once. Thankfully my full bill of $7,000 was covered.”
“As long as you are warded in the hospital for more than 8 hours, your inpatient bill will be covered by this policy.”
These statements, sometimes expressed in various other ways, were repeated to me on numerous occasions whilst I was considering to purchase a hospital plan. Eventually I did, and I signed up for the “best” plan together with the rider*, which meant I could be warded in any private hospital and not have to fork out a single cent. Or so I thought.
I’ve come to realize that if anything sounds too good to be true, it probably is. And be exceedingly sceptical if it comes from the mouth of a salesperson. Make sure all doubts are cleared and the risks are spelled out before signing on the dotted line.
Fast forward years later when I discovered that there are some instances which hospital insurance does not cover. To be absolutely clear, these exclusions are distinctly spelled out in the policy document.
However, let’s be honest, how many of us read the fine print in any contractual document?
Where insurance is concerned, our decision on whether to make a purchase hinges on the information or misinformation that has been presented by the agent.
One of the exclusions that I learnt was that any pregnancy related conditions are not covered by any insurance company. If one is admitted because she has abdominal pains and later discovers whilst hospitalized that she is pregnant, the insurer is likely to reject the claims on grounds that it is pregnancy related.
Expenses related to mental illnesses and injuries related to hazardous sports or activities are also excluded. Imagine the horror when one sustains an injury through a mountain biking activity, only to find that the claims are rejected as it is termed as a hazardous activity. It leads one to wonder, if such hospital plans are meant to cover large hospital bills and yet the exclusions may not be entirely clear, how can one be sure if they would be able to make a successful hospitalization claim?
To make matters worse, since April 2021, there have been changes to all existing hospital plans (called integrated shield plans in Singapore). As medical costs have risen over the last decade, and insurers have been incurring losses due to higher claims, insurance companies have been increasing the premiums on a yearly basis to compensate for this. Other than this, insurance companies have done away with riders that cover the entirety of the bill, requiring that clients co-pay at least a 5% portion of the bill, with a limit of $3000, subject to certain conditions.
The complexity is further exacerbated by the differences across all insurance providers. Some have instituted a panel selection of doctors which they require clients to seek treatment from in order for claims to be approved while others have adopted a claims based pricing structure.
This has resulted in confusion amongst clients, financial consultants, hospital practitioners and even the insurance providers themselves.
Ultimately, insurance is a means of protecting against financial loss. However, more and more consumers have exploited such financial instruments, which is a contrast to their intended objective. The huge losses for insurance providers have been in part due to the abuse by consumers and medical professionals seeking to capitalize on the complete hospital coverage provided by the insurer. We all know individuals within our circle who regularly make claims, hoping to benefit and make their money’s worth. Unfortunately, this self-entitled and selfish behaviour will indirectly result in the continued rise in medical and other costs.
*Riders are insurance policies that add benefits to the basic insurance plan, providing the insured with additional coverage. Hospital plans usually require the insured to pay a deductible and co-insurance component and riders can help to reduce these components.
About Kayne Kwa
Kayne is an astute observer of Singapore's personal finance landscape. During the day, he is a seasoned educator committed to having a positive impact on people's lives in the present. When he is not teaching, you might find him climbing Mount Arapiles when the borders reopen, or trading at his desk and delving deep into technical analysis.
The statements or opinions provided in this article are entirely his own.
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