2 days ago I went to see a client. He was really upset about his insurance policies. He is scheduled to go for a heart operation today, and the amount he could potentially claim from his life policies is only RM70.00! Although the entire cost of his surgery will be covered by his company’s group medical insurance policy, he is not happy with the meagre sum claimable from his own life policies. The surgery, i suspect is a key-hole surgery, not an open heart surgery.

It began about 15 years ago, when he was an insurance agent himself. He bought 2 life policies with attached Hospital Benefits of RM30 per day and RM40 per day respectively. When I first became his insurance consultant, I told him to let me have a look at all his existing policies, but he did not find it a priority to do so.

I was sitting in front of him accross his huge working desk in his office room, and he was telling me about how unfair insurance companies are, how he had contributed the premiums for the past 15 years and all he could claim is RM70 per day if he is hospitalised. Further to the grumbling, he also mentioned he had had a bad day and scolded some people. I sensed that what he was saying was unreasonable and he was definitely not well. So it was time for me to use some NLP (Neuro Linguisist Program) methods. I agreed with him on how he felt and raised my voice and speech rhythm to match his. I gave him a ’clarification’ question by asking “Are you saying all these in front of me because you felt that I am responsible for all this?”. Immediately he stood up and replied “I am not blaming you, I have never said that I blame you and did you hear me say that it was your fault? It is just that I feel really cheated. I have been consistently paying the premiums and now when I need it, it is such an insultingly small amount”. Then I stood up (to match him) and said “Insurance companies pay claims according to the terms in the policies, and to put crudely, you bought a small underwear when you were very little and now that you have already grown up, the underwear no longer fits you” (said in a loud and fast way to match him). Then he smiled a little and agreed that it was indeed a very small underwear and he is a grown man now.

Then he sat down and said “Can you help me cancel all the hospitalisation benefits with immediate effect? I have just paid the renewal premiums and I want the money back”. In response, I had to manage his expectation by saying that since the premiums have already been paid and the unexpired amount is small, we will just leave the amounts in the policy. Then he boomed again “I don’t trust you agents, I want the cheque! I know it may be less than RM100, but I want the cheque, I don’t care. I know it is very troublesome for you but you have to do it, I don’t care!”. In my opinion, I don’t mind doing it for him.  In fact, I have done lots of these similar services for people who are not even my customers. The only reservation was the phrase “I don’t trust you agents”. I must save this PR disaster on behalf the entire insurance industry. So this was what I came up with. I told him “I have never seen your previous 2 policies, who knows you might have some other riders (term attached to life) or supplementary benefits that are just as small and you may want to get rid of them? You know, some other ’small underwears’ you may want to discard? Please bring the policies and fill up the ‘Alteration Forms’ to cancel the insurance benefits that you may consider irrelevant. We will photostat the forms and you keep one copy and I keep one copy. This way you don’t need to trust anybody but your own eyes”.

After saying this, there was a moment of silence and he said “Ya! I will bring the policies to you and thanks for dropping by”. I replied “Take care my friend and I understand how you feel”. At this very moment, his face squirmed in pain. He put his hands on his chest and said he felt very unwell. Then he put both elbows on the table whilst he was in a sitting position, dipped his head between his elbows and looked down onto the floor. I got worried. I asked his staff to get the Ambulance, but he insisted it was not necessary, and he had been on the ambulance once before and but this time no need (not bad enough I guess).

Insurance consultants are a well trained lot, if I may say so myself. After some years, we are quite ok with handling our own emotions when it comes to customers service. But one thing I can never get over is the sadness of seeing people falling ill, very …. very ill. 

Heart disease is a silent disease. This means it just happens without any warning. If you are overweight or have a significant belly you are almost certain to have it. Having it means, at least the heart arteries are already clogging up. It is high time to go for a medical check up and/or enter into some slimming & fitness programme.

The introduction … 

36 Critical illnesses cover is also known as; 

a)     Dread Diseases cover

b)     Crisis cover

c)     Living Assurance cover 

Well…… a rose is a rose by any other name … They all meant more or less the same 36 diseases. Different insurance companies will use different names for them. Some choose to vary the definitions and/or covers a bit, so as to differentiate themselves from others, giving their sales person one more point to convince their customers, their policies is slightly better than the rest.  

Of course, we all know there is no free lunch; every benefit has a cost in it. As consumers, we need to know exactly what we want, and we choose the plans primarily according to the major things we want to cover and the frills should be secondary. 36 Critical Illnesses (CI) can be grouped into 6 areas.

Equating the human body to a car is just for the purposes making this subject less morbid and easier to understand and to remember. I have no intention of making fun of these deadly fellows, I am sure if one of them were to fall in love with you … it will be no joke.

I hope my analogy will not make things worst for you. If you can’t find the connections between the illnesses and the car problems, please just ignore those words in purple italics.

a) Heart and Blood Circulation (7 out of 36) – these involve the heart (cardio) and the arteries and veins (vascular). Like the ‘car engine (pistons & plugs) and the fuel tube system’. 

b) Brain and Nervous System (15 out of 36) – these include all the illnesses and conditions that happens to the brain, the spinal cord and nerves that control the body and limbs. It is the ‘Car Electronics Control Unit (ECU) & wiring’. 

c) Major Organs (5 out of 36) – these involves the vital organs such as liver, lungs, kidneys, heart and bone marrow.  This is like ‘Changing of Engine parts such as engine block, radiator and oil filter, unclogging and replacing piston chamber valves’. 

d) Chronic diseases (2 out of 36) – these are serious diseases that can happen at any part of the body. (Cancer and terminal illnesses). Maybe we can compare it to ‘VERY serious rusts on the body or engine of a car’. 

e) AIDS (3 out of 36) – AIDS and HIV related. ‘err… salt water got into every part of the car, it is a matter of time …but don’t know when the rust will start, once start the deterioration of the chasis will be fast and soon the vehicle will have to be scraped’. 

f) Permanent damages (4 out of 36) – relating to hearing, speaking, seeing and serious burn. ‘Very rare vintage car with no spare parts available, once the head lights, horn, side mirror or chasis get really beaten up, there is no way to find parts or to repair’. 

The common official names for the 36 illnesses are …. 

a) Heart and Blood Circulation (7)

• Heart attack

• Serious Coronary Artery Disease

• Coronary Artery By-pass Surgery Heart Valve Replacement Surgery

• Surgery to Aorta

• Pulmonary hypertension

• Aplastic anaemia 

b) Brain and Nervous System (15)

• Stroke

• Encephalitis

• Bacterial Meningitis

• Parkinson’s Disease

• Alzheimer’s disease

• Multiple sclerosis

• Serious accidental head injury

• Benign brain tumour

• Brain surgery Coma

• Apallic syndrome

• Motor neuron disease

• Muscular dystrophy

• Paralysis (Paraplegia Tetraplegia)

• Poliomyelitis 

c) Major Organ (5)

• Kidney failure

• Chronic Lung disease

• Chronic liver disease

• Fulminant hepatitis

• Major Organ transplant 

d) Chronic Diseases (2)

• Cancer

• Terminal Illnesses 

e) AIDS related (3)

• AIDS due to blood transfusion

• Full Blown AIDS

• Occupationally acquired HIV infection 

f) Permanent damages (3)

• Blindness

• Deafness Loss of Speech

• Major burn

The above listing is based generally on Great Eastern Life policy. I will explain a bit further in my later articles.

When we have acquired our assets such as properties and shares, or built a successful business, we need to ensure that they are protected against financial crisis such as critical illnesses.

In critical illnesses, the risk is 3 folds

1)    the immediate medical bill itself

2)    the loss of income / value due to the sickness

3)    cost of long term treatment, maintenance, health supplements and rehabilitation

Furthur notes

1) Medical bill

What is the average medical costs required for the common dreaded diseases such as the HSBC (Heart attack, Stroke, By-pass and Cancer)?

I have seen people spent RM50,000 on nose cancer and survive;

I have heard of people spent RM500,000 on a tooth cancer and did not.

It also depends on what is the level of medical service you expect?

Do you want private or government hospital? There is no right answer here. Based on the recent hospital admission I have handle, most people prefer to stay in single room, which is at least RM200/day in a private hospital. Mainly because it is much more comfortable and convenient for relatives to visit.

For a RM200/day room & board plan, it usually comes with medical bill coverage of RM100,000 per annum, and a lifetime limit of RM300,000. What happens if RM100,000 is not enough? Then the critical illnesses coverage payout from life insurance will used to pay the bill. If this is also not enough, their recourse is to go to the semi government hospital (HUKM) or GH.

2)   Household expenses and other financial commitments

When major illnesses strikes, usually will take at least 2 to 3 years to recover. During this period, living expenses will continue to be incurred. The critical illnesses protection payout is used to finance such area as well.

A basis to calculate the coverage required is as follows: Yearly household expenses x Est. Number of years to recover = RM30,000 x 3 years = RM90,000

Another area that is usually overlooked is the loss of contribution from a key man in a business due to critical illnesses. The loss to the business can be very significant and came sometimes lead to closing down of the business. In order to protect the interest of the business owner the following are some of the basis used to calculate how much to insure :

a)      the cost require to find / train a new person to take over the role

b)      the value of the goodwill / business reputation of the key man. If he is not in the business the customers may not buy goods from the company. As such we need to put a value to the involvement of the key man. Usually the value is locked in by getting an insurance cover on the key man 

3)  Road to recovery

Some of the examples of long term treatments, maintenance and rehabilitation are :

a)    Kidney dialysis and medication for kidney patients

b)    Physiotherapy

c)    Health supplements from reputable companies

d)    Home nurse

It is sad to note that a patient’s life expectancy very much depends on his/her bank account. Very often we see entire family’s coffers kaput because of an illness. How true this will be, when love takes priority over money.