The importance of Medical insurance

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Individual-Health-InsuranceSome have it and some don’t. The fact is many people we meet, even 60-year olds tell us that Medical insurance (the most basic form of income protection) is not really important and that they can do without it. Others tell us that their company has them covered.

[quote]’I have medical insurance through my company and  it is sufficient’ is the most common statement I hear.[/quote]

For those who don’t have medical insurance at all, here are some facts. In this article by Gulf News – ‘Sharp rise: Health at a cost’, you can see that even the per-day ICU costs have gone up in government hospitals in Dubai (and these are 2010 numbers).

If you land in the ICU through an accident or any other reason, the per-day cost in a govt. hospital is Aed 3,100. While X-rays will cost Dh120, up from Dh50, charges for CT scans and mammograms have gone up to Dh500 from Dh100-Dh150 earlier. The cost of MRIs has doubled from Dh600 to Dh1,200, with most surgeries costing more, sources said, adding that there will be no change in consultation and room charges.

[quote]We know that emergency treatment is free in government hospitals in Dubai, but you will be asked to pay for ongoing treatment costs after the initial emergency treatment is done.[/quote]

According to the revised maternity packages at Al Wasl Hospital and Dubai Hospital, both operating under the DHA, the fee for a normal delivery reportedly costs Dh7,000 with a two-day hospital stay, while a caesarean section costs Dh10,000 with a four-day hospital stay. The charges for a normal delivery and stay in a private room now costs up to Dh9,000, while a caesarean section and stay in a private room costs Dh12,000.

For those who have medical insurance through their company, ask yourself this question –

[highlight]’Do you even know what is the annual claims limit on your policy?'[/highlight]

Secondly, the insurance cover provided by your employer is good as long as your problems are straightforward. Things can get tricky when your medical condition is more serious and life-threatening.

Most companies provide on average between Dh100,000 and Dh500,000 per member per year. As someone who enjoys this group cover, your average out-patient visits for a minor flu, sprains and fractures are all taken care of. However, it may not be enough to cover a major condition like cancer, which could require regular chemotherapy sessions and can be very expensive if treated in the UAE.

Imagine this: You and your family are part of the company’s group medical scheme. Three years into the programme, your company decides to change providers, as does happen, because the premiums that have been charged to them today have gone up by 25-30 per cent based on the claims ratio of the group, medical inflation and scheme members getting older.

While your old contract covered pre-existing illnesses (asthma, high blood pressure, diabetes) and maternity, the new contract does not. To make matters worse, the new insurance company underwrites you as a fresh case, and you now have to declare all your medical conditions again. And they may or may not cover you now. If your spouse is mid-term into pregnancy, the new contract may not cover her now or may have a waiting period. In the unfortunate situation that something goes wrong during the pregnancy or with the new born, the costs can be high enough to put you in debt for the rest of your life.

The safest option, albeit not always the most affordable one, is to buy your own private health insurance. This can be in addition to your company’s group policy. Remember you get what you pay for. Look for a policy that has a guaranteed renewability clause and that doesn’t stop cover after the age of 60 or 65.

Again, nothing like a worst-case scenario to provide you with more insight. Ajay is covered under his company’s group scheme. Now diagnosed with cancer, his treatment is covered fully up to Dh500,000 under his group plan. The nature of the treatment keeps him away from work for long periods. As a result, his employer has had to let him go, thus he is no longer part of the group medical plan. From here on, all the bills are his to pay. What’s worse, no other insurer will cover him for the cancer as this is a pre-existing condition.

Do you still think your insurance cover is good enough?

Ask Amit

About the author

Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.

He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.

He helps business owners and professionals ‘Create A Second Income’ through investments.

Amit Mitbawkar

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