People frequently claim that they are saving money for retirement, a house, or their children's education. Nobody declares that they are putting money aside to give their entire estate to a doctor when they get sick. But they actually do that, much to their surprise. When they are healthy, many people find it difficult to justify the need for health insurance. Those who obtain it vouch for its significance. You purchase health insurance to prepare for unavoidable events, much like you would purchase an umbrella for a future rainy day.
Health insurance is a contract that obligates the insurer to cover some or all of the insured person's medical and surgical costs. Health insurance is now seen as a fundamental component of financial planning due to the rising incidence of health problems among people of all ages. The average age of claimants with a disability is 38 years, while that of those with critical illness is 47 years, according to a Gulf-specific study by MetLife. These figures highlight the importance of providing adequate insurance coverage for every member of the family.
Policies and Types
Every resident in Dubai and Abu Dhabi is required to have insurance. Most people typically have access to group health insurance through their employer. According to the latter's generosity, the coverage could be extensive and go up to a million dirhams or more, especially as one gets older. Some people buy individual policies by paying the premiums out of their own pockets, usually those who aren't covered by a group policy.
However, there is a strong argument for individual insurance over group/corporate insurance. A group policy is dependent on employment; it is valid while you are employed. Your employment might be in jeopardy, for instance, if you are given a serious illness that prevents you from performing your job and has a protracted recovery period. Because of the pre-existing condition by that time, your chances of obtaining a new individual policy are slim to none. Therefore, for greater protection, it is advised to add individual insurance that has no relation to employment status to a group policy.
A person is covered for the illnesses listed in the policy, regardless of whether the insurance is group or individual. Depending on how it is set up, it might cover common consultations, operations, and even post-hospitalization care. The amount of coverage, limits and sub-limits, exclusions, add-ons (dental, maternity, vision, etc.), and, most importantly, the network of accredited hospitals are all factors that affect premium costs. The hospital network's reach may be national, regional, or international. Policies with global coverage give policyholders the opportunity to receive better care in nations like the US. Such policies typically have premiums that are at least 40% higher than average. Benefits are directly inversely correlated with premium costs.
Policies Are Changing With Digitalisation
Insurance companies are increasingly including preventive healthcare in their offerings as a result of growing clarity and empirical evidence. As a result, insured individuals have the choice of receiving health examinations and screenings for no cost or at a low cost. The justification for this is that insurance companies will incur relatively lower costs by facilitating preventive healthcare than they will likely incur in payouts when illnesses have advanced. This development has benefited both insured parties and insurers.
Similar to how some insurers are thinking about including experimental and alternative treatments as part of risk mitigation. Among the fields making inroads into the health insurance industry are genomic sequencing, the detection of inherited diseases and cancer-causing mutations, 3D bioprinting, the printing of complete organs for transplantation, and mental wellness.
Some insurers have already made significant strides toward tailoring policies for customers by utilizing technology. Incentives are included in their plans for those who agree to share their health, exercise, and other data. The foundation of insurance underwriting is the shared data. These data, which are also derived from IoT-based gadgets and wearables like smartwatches and bands, allow insurers to take on greater risk and significantly increase coverage for lower premiums.
Point To Remember
The renewability of policies has grown to be a major bone of contention between insureds and insurers over the past ten years. Some insurers promise that the policy can be renewed year after year. Others still have the option to reject, which they can do in a few specific situations, such as when there was a claim in the previous term. If the insured is elderly or has been identified as suffering from a serious or critical illness, the absence of the renewability provision raises questions. The diagnosis makes it difficult for them to find new insurance. Some insurers, particularly international ones, promise renewability in exchange for rising premiums. Subject to inflation and age, the premiums may rise by about 7% annually.
People who are leery of cancellable policies frequently add critical illness (CI) products to their health insurance. When a critical illness specified in the policy is diagnosed, CI insurance guarantees the insured a lump sum payout. The sizable payout can help the patient financially and ensure a speedy recovery by offsetting the loss of income resulting from the illness. Additionally, it can pay for services that are frequently not covered by health insurance policies, such as post-hospitalization care, treatment abroad, and alternative medicine. CI insurance acts as an additional layer of protection in financial planning as a result.
Co-insurance, or the co-payment the insured must make for treatment, is another crucial thing to keep in mind. If your co-insurance is, let's say, 25%, you are responsible for 25% of the medical bill and the insurer is responsible for the other 75%. Reduced co-payment translates into higher premiums. Similar to how you must think about deductibles before purchasing a premium. The amount that the insured must pay before being eligible for claims is known as the deductible. Policies typically have deductibles starting at Dh10 to prevent you from taking unfair advantage by filing claims for the most minor of illnesses. The premiums for a policy with no deductibles are high.
Due to an increase in claims, insurance underwriters have become more meticulous in recent years. Both inclusions and exclusions have changed significantly since the pandemic outbreak. Therefore, it is advised to provide accurate information when applying for insurance. The slightest omission of a disease or medication can lead to a claim being later rejected. By working with a financial advisor or insurance intermediary, such complexity can be easily navigated.