Paying for peace of mind

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Paying for peace of mind

Given rising medical costs, health insurance premiums are money well spent, writes Walailak Keeratipipatpong
Published: 4/07/2011 at 12:00 AM
Bangkok Post: Newspaper section: Business  

If good health is great wealth, then disease is a mugger that robs you blind when you least expect it.

To make certain you can get quality medical treatment and cope with costly bills, buying health insurance is a smart choice.

Actually, an investment in insurance with coverage of either life, personal accident, or health is an effective hedging tool that helps investors deal with accidents and sicknesses comfortably.

Many people with good saving discipline may think they do not need to buy insurance, confident of having sufficient money to absorb medical costs if the need arises. But the truth is that one never knows.

"Health problems put a hole in your savings bag," said Naris Achalanan first senior vice-president of Muang Thai Life Assurance Co.

Given high medical costs these days, it is hard for those without any insurance coverage to cover the expenses.

"One of my senior relatives retired with 3 million baht in savings. Unfortunately, he later had cancer and the disease cost him 2 million baht," Mr Naris said.

Such experience confirms the findings of a health study of Finansa Asset Management Co, which discovers that of the lifetime medical expenses of a person, 80% is spent in the last two years of his life.

The advice is therefore to set aside enough money to cope with unexpected expenses for illnesses and accidents. The fund has to be larger for healthy people who tend to live longer, 80-90 years for instance.

While many health insurance firms extend coverage to age 70, a number of insurers offer medical coverage for personal accidents for senior citizens up to age 80, with a few to 90 years.

Although the government provides a universal healthcare scheme that aims at providing equitable access for 48 million citizens, especially low-income earners, and the Social Security Fund covers 9 million employees, many people have found they need to dig into their savings to when they are sick.

"Usually, it's the payment for more comfort and better lifestyle that may help a patient recover more quickly. Even if you are covered by your employer's group insurance scheme, most plans do not fully cover the costs," said Mr Naris.

A survey by the Bangkok Post found many companies still provide insufficient health coverage, especially for doctors' fees and inpatient accommodation.

Some private companies still pay for an inpatient room at the same rates they used 20 years ago, at 1,000 to 1,500 baht a day while the real costs may be double that. Many cap the medical cost at no more than 100,000 baht per year per employee.

However, most hospitals now charge at least 3,000 baht a day for an inpatient room that may include food and regular care. Costs can be as high as 15,000 to 25,000 baht at high-end private hospitals.

Low rates of 800 to 1,000 baht a night are still offered by public hospitals, which also have separate wards for inpatients with social security plans and for universal healthcare patients. The latter usually have 10-12 beds in one room and overnight stays for relatives are prohibited.

"Buying extra coverage not only helps you deal with risks more comfortably but also allows you to manage your finances even better," Mr Naris said.

There are a variety of health-insurance products to meet various demands and premiums are based on the kind of treatment and inpatient accommodation needed.

Bupa Insurance (Thailand) Co, a leading health insurer, offers 200,000 to 600,000 baht in medical coverage, and 2,000 to 4,000 baht a day for an inpatient room.

Many life insurers including Muang Thai also provide health riders that suit those already covered by group plans provided by employers but who want to cover the extras, he said.

The popularity of health-insurance products has grown strongly, especially since 2009 when the H1N1 flu or swine flu became a global threat.

The Office of the Insurance Commission said the boom also stemmed from the rising concern about serious diseases among people.

With more popularity came intense competition, which has in turn given rise to more attractive offers in the form of health and personal accident insurance products (PA).

Though premium payments for the two products are not tax-deductible, their sales are growing in accordance with the insurance industry and concerns over high medical costs.

While premiums generated by five health insurers were only 1.25 billion baht in 2009, life insurers earned 23 billion from health riders and non-life insurers generated 3.5 billion baht. The figures rose to 28 billion baht and 4.2 billion baht in the following year.

Premiums from PA riders at life insurance companies have been between 7.5 billion and 7.8 billion baht over the past two years, while the non-life industry generated 10-12 billion baht.

Premium payments vary based on the coverage plan, gender, and age of an insured person. Normally, people aged between 56 and 60 years pay high premiums of at least 20,000 baht a year for the basic programme, compared with about 7,500 baht to cover children aged 11-15 years.

"If we intend to save 10,000 baht a month, it's prudent to set aside some to pay for peace of mind," Mr Naris added.

In any case, staying fit with effective prevention is better than having to seek a costly cure later on.