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Choosing health insurance

We are constantly surrounded by risks, some which we try to cover, and others we simply leave to chance. When we cross the street, drive a car, or travel, there is a risk that something can go wrong.

Living in this part of the world, we are also faced with diseases like dengue and Typhoid, and the threat of diarrhea from drinking water and foods.

This is why health insurance has become an unquestionable necessity.

Health insurance is the most complicated type of insurance in existence.  Its cost is based on four major variables, including age, area of coverage, medical history and extent of benefits.

Insurance is a science of probabilities, and the older we get the more likely we are to have medical needs.

Pricing is usually presented in age bands, and increases with each progressive band. At the age of 50, for instance, health insurance becomes noticeably more expensive, with a 30-50 per cent mark-up from age 49.

Insurers generally accept new applicants below the age of 65. However, as life expectancy has increased, some now will cover up to age 70. If a local policy is selected, the insured would be covered within that country unless special provisions are requested and included in the price, such as medical treatment in neighbouring countries.

For international policies, pricing is typically based on the area in which the insured resides, in accordance to the cost of medical provisions in that region.

The coverage usually extends worldwide, with the usual exclusions for the United States, which charges excessively high costs for medical care. It is also possible to cover temporary visits, albeit at a much higher cost and with limited liability for the insurer.

An applicant for health insurance will be required to disclose any pre-existing conditions, including diseases, illnesses or injuries for which the applicant has received treatment, current medications, or any other symptoms.

The insurance is intended to cover unexpected events happening after the start of a policy, not conditions already present. Some policies, however, may cover pre-existing conditions after a moratorium period, typically measuring 24 months.

The policy will generally state that the coverage is for the cost of necessary, recognised medical treatments of acute conditions or an acute exacerbation of a chronic condition.

In this context, an acute condition implies a disease, injury or illness that is severe and sudden in onset and is likely to respond quickly to treatment.

Examples include a broken bone or rapidly spreading infections. A chronic condition is generally a long-term ailment such as cancer, asthma or arthritis.

Budget policies rarely cover the maintenance of chronic conditions, while more expensive policies will, but with overall annual liability capped. The policy will typically have a total monetary annual benefit limit, or the maximum the insurer will pay on the policy in a given year. The more extensive policies have higher limits.

For simply covering catastrophic events, in-patient coverage may be sufficient. Such coverage typically extends to spending a short time in a hospital, ranging from a few hours to a day.

Out-patient treatment is when you receive treatment at a doctor’s office or emergency room, but it is not medically necessary to be admitted to a hospital. Out-patient coverage grows increasingly expensive when it includes broader coverage such as general specialists consultations, physiotherapy and alternative medicines.

To mitigate costs, a higher excess may be selected. Excesses are the amount the insured pays per condition. The higher the excess, the greater the discount.

Anthony Galliano is chief executive of Cambodian Investment Management.



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