Rockwills Wealth Planner

Medical Planning

Average life span for Malaysians is about 74. With improving health care and technological advancements, this is likely to increase. Who knows, perhaps the average could increase to 84 in ten years' time.

The question then is how will medical costs be paid for? According to National Geographic, more than 43% of deaths are not natural deaths. Here are some interesting U.S. statistics taken from their Aug 2006 issue - 1 in 5 die of heart problem, 1 in 7 die of cancer and 1 in 24 die of stroke. That makes up about 1/3 rd of all people. That is a high incidence.

Notwithstanding medical breakthroughs, if overseas statistics are anything to go by, medical costs are going up faster than general inflation.

These factors are enough to show the importance of setting aside a fund to meet medical expenses after retirement.

Once it is accepted that medical provision should be made, the question then is how much. There is no accepted norm for amount. Medical treatment costs can go up to RM 100,000 or more. It depends on affordability and what one considers to be a safe margin. For simplicity, some would take number of years' income as a guide so this could be a multiple of 2 or more.

The alternative to setting aside a fund is to purchase medical insurance. In selecting the right product, the following factors should be considered:

		1.	Cost
			Generally, premiums increase with age and are not guaranteed. Insurers have a right to raise the premium.

		2.	Type of plan
			Participation may be for the individual, for family or for a group, portability of the plan, which participating hospitals and so on.

		3.	Benefits
			What is covered, what is not covered and the limitations (such as the overall claim limit).

		4.	Available supporting programmes
			If there are some plan already in place such as a company sponsored one, look at avoiding duplication of coverage.

No medical plan provides coverage beyond a certain age. Consideration should be given to what options are available when the plan ends. Consult an insurance expert.

Medical Planning FAQs:

1.	What is the normal treatment cost that an individual needs?
A:	The treatment cost for any of the mentioned 36 critical illnesses (see critical illness cover under Insurance Planning) varies greatly and can range from RM5,000 to over RM100,000 in Malaysia, depending on the type of illness, type of treatment and class of hospital involved.

2.	Why do I need medical planning ?
A:	Medical planning involves the identification of medical risks, especially the dread diseases such as cancer and heart diseases that seem to be getting common nowadays. One needs to be concerned with how to be covered for the significant medical treatment costs in the unfortunate event that one of the many dread diseases strike. In today's insurance market, it is not difficult to find a medical insurance solution (such as a critical illness policy) to cover for such risks. The fact that more than 1 in 3 persons are afflicted with a dread disease highlights the importance of medical planning, either through the setting aside of a fund or through the purchase of a medical insurance solution.

3.	I may not get sick, why worry then ?
A:	That would be taking a major gamble. Illness may strike at anyone any time irrespective of age. One could survive medically but ¡¥die¡¦ financially. The problem with medical insurance is that one can never buy it at the time it is needed so it is bought in advance, even though it may never be needed later. And medical costs are going up much faster than general inflation. If you do not set aside an adequate medical fund or protection, then you may have to use up hard-earned savings set aside for retirement or children's education and that would be tragic.
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4.	How much do I need to plan for medical needs in life ?
	There is no accepted norm for amount. Medical treatment costs can go up to RM 100,000 or more. It depends on affordability and what one considers to be a safe margin. For simplicity, some would take number of years¡¦ income as a guide so this could be a multiple of 2 or more.

5.	When is the best time for me to get on to such a medical plan ?
	The idea is to plan early enough so that major risk issues are addressed before they become problematic or the options become less and less. For example, the risk of not having enough to live on after a major surgical operation is a major risk that should be addressed through medical planning at a young age. The closer one gets to retirement, the less are the options available to secure the desired fund size or in the case of medical insurance, the older one gets, of course, the higher the premium will be.

6.	I have a whole life critical illness cash bonus plan. What benefits do I get if I did not get any dread disease in life ?
	Most insurers would provide a guaranteed sum payable upon death while providing protection for the whole duration of life. If there are no claims for dread disease, the cash value accumulates along with any cash bonus as well as terminal bonus that may be declared.

7.	I have a whole life critical illness plan. Do I still need a medical card to supplement my other accidental and hospitalized treatments ?
	Yes. It is a good idea to supplement the traditional whole life critical illness plan with a medical card to cater for accidental injury.
	Approaches: Wealth Planning > Emergency Planning >>

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