Medical and Critical Illness Insurance: Product Features and Points-to-note for Elderly when Taking Out Insurance
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Medical and Critical Illness Insurance: Product Features and Points-to-note for Elderly when Taking Out Insurance
As health risk increases with age, citizens may face rising pressure from medical expenses. This article outlines the features of medical insurance and critical illness insurance products in terms of coverage and compensation models, helping the elderly to make informed decisions and develop comprehensive medical insurance coverage tailored to their individual needs.
Hong Kong is one of the regions with the longest life expectancy in the world. As a result, the public, particularly elderly, has a growing demand for chronic disease management, hospitalisation, and long-term care. With the loss of group medical insurance coverage upon retirement, financial pressure from medical and related expenses becomes more evident. Therefore, when planning for retirement, in addition to daily expenses, one should also review medical protection needs early and carefully choose suitable and affordable insurance coverage.
There is a diverse range of medical and critical illness insurance products available on the market. Besides covering the medical expenses, these products also provide financial support to policyholders during illness, allowing greater flexibility in treatment options and lifestyle arrangements. However, these two types of products differ in terms of coverage and compensation model. They complement each other rather than serve as substitutes. Policyholders should tailor their coverage according to personal needs to ensure more comprehensive protection.
Understanding Medical Insurance and Critical Illness Insurance
| Medical Insurance | Critical illness insurance | |
| Coverage | Outpatient coverage: Covers outpatient consultation and examination fees, and medication costs.
Hospitalisation coverage: Covers expenses in relation to hospitalisation, including room and board, doctor’s visit fees, surgery fees and miscellaneous expenses. Hospital cash benefits: Provides a fixed daily cash allowance according to the number of days of hospitalisation.
Voluntary Health Insurance Scheme (VHIS): A policy initiative by the Health Bureau to regulate indemnity hospital insurance plans. All certified plans must feature standardized policy terms and conditions, prescribed level of coverage, and offer guarantee renewal up to the age of 100.
For details, please visit the VHIS website: | In general covers critical illnesses include cancer, stroke, heart-related diseases and severe illnesses related to major organs. Certain products extend coverage to “early-stage” illnesses (such as carcinoma in situ), but the payout is usually limited to a proportion of the sum insured.
The insurance industry introduced the Best Practice on Standardization of Critical Illness Definitions, which provides standardized bilingual definitions for common critical illnesses. For further details on the Standardization of Critical Illness Definitions, please visit the website of the Hong Kong Federation of Insurers: |
| Claims Settlement | Eligible medical expenses settled on a reimbursement basis. Some plans offer supplementary major medical benefits (SMM) that allow the insured to claim a portion of the medical expenses exceeding the sub-limits of individual items. | In general, claims for critical illness insurance are settled in a lump-sum payment with no restriction on the use. They can be categorised as “single payout” or “multiple payouts” subject to policy terms.
Single payout: The policy terminates after a one-off lump- sum claim payment is made.
Multiple payouts: If the insured experiences a recurrence of a covered illness or is diagnosed with another covered illness, multiple claims may be made according to the policy terms. |
Points-to-note when buying medical or critical illness insurance
1. Apply Early
Medical insurance and critical illness insurance policies generally set age limits for applications. While the typical entry age limit is 65, VHIS products allow entry up to age 80. When underwriting a policy, insurer will consider factors such as an applicant’s age, health condition, medical history, and habits such as smoking or alcohol consumption. Generally, as health risks increase with age, the likelihood of developing health issues and resulting in exclusions being imposed on policies also increases (i.e. previous medical conditions being excluded). Therefore, you should secure insurance coverage early to ensure adequate and comprehensive protection.
2. Suitability and Affordability
When selecting a suitable insurance product, you should ensure the coverage suits your protection needs and consider the affordability over time. In general, critical illness insurance adopts a level premium structure that remains relatively stable throughout the coverage period; while the premium of medical insurance would be adjusted based on factors like age, medical inflation and insurer’s overall claims experience. As income levels may change after retirement, you should compare the coverage and premium schedules across different age groups and prudently assess your long-term affordability to avoid situation where rising premiums become a burden that undermine protection coverage in future.
3. Disclose Your Health History Honestly
Insurance contracts are based on the principle of “utmost good faith”. Applicants are obliged to proactively and honestly disclose all personal health conditions and medical history, including conditions such as hypertension, hyperlipidemia, diabetes, and previous medical records or injuries. To help policyholders better understand what should be declared, the insurance industry introduced the Standardized Underwriting Questionnaire (SUQ) which encourages insurers to adopt clear and simple questions and a standardized format to collect health-related information. Insurers will assess the risk based on the information provided and decide whether to accept the application, charge additional premium or impose exclusions. If the policyholder misrepresents or fails to fully disclose medical history, the insurer may reject claims on the grounds of non-disclosure of “material facts”.
4. Seek Professional Advice
Given the wide variety of medical and critical illness insurance plans available, you should consult your insurer or licensed insurance intermediary for details of the products as well as the relevant policy terms and conditions. Before purchasing insurance, it is also advisable to discuss with family members to choose a plan that offers suitable coverage and is affordable, and proactively inform them about the policies you have purchased to ensure claims could be made and followed up in a timely manner when needed.
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