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Growing wealth is no brainer. Get a pay rise (either by promotion of “jump motion”), invest prudently, generate multiple sources of income, start a business, etc.

 

Today, if you are reading this, I suggest we take a step back and revise our medical coverage.

 

Here’s an analogy. Like a good soccer team, having world class strikers are just not enough. A good line of defense is equally crucial, although they aren’t as glamorous as the strikers. But in soccer or in life, it is about looking at the big picture. I doubt a rectangular table can be stable with only 3 legs.

 

They say 2 things are certain in life; death and taxes.

 

I’ll like to add one more - rising medical costs.

 

That’s exactly how much common critical illnesses will cost you (as of 2013)

 

 

 

Is it easy or hard to make, say, RM 100k from our investment? Are you OK to grow your wealth to pay for any of these events above?

 

It is no secret that medical inflation hovers at 14% a year in Malaysia. If you observe the room rates in private hospitals now, a 4 person room costs the same as a 2 person room 5 years ago.

 

If you’ve bought a medical policy more than 5 years ago, it is likely that the coverage is sorely lacking now. As of 2013, the minimum coverage I will advise my clients as an independent financial adviser is a RM 200 room and board daily, RM 100k annual limit and a RM 1 million lifetime limit, regardless of any insurance company. The features will differ from company to company but these are the 3 major things one should look for when we talk about medical card.

 

Some of my clients still hold a RM 150k lifetime limit (yes, lifetime limit, not a typo error) medical policy sold by their previous insurance agents. And they thought it is sufficient for lifetime and they don’t need to look at it anymore. The fact is, insurance coverage, whether life or medical insurance changes in different stages of our lives. You must be aware that no single insurance policy is set in the stone once it is in-force. You can always request to reduce or increase (subject to underwriting) the coverage and add in or remove features (riders) from your policy, depending on your most pressing current needs.

 

So, dust off that policy of yours and see your current coverage. Call your servicing agent or financial adviser to revise the coverage higher if insufficient. Don’t wait until it is too late because it is very hard to get additional medical coverage once you are struck with any chronic illnesses. A recent true story I could share with you is that a 42 years old father of 3 just underwent angioplasty and realized his medical coverage (lifetime limit) has been maxed out. Seek my advice but I got to disappoint him. He has to live with the fact that he need to liquidate his assets or investment to pay for any future medical expenses. And may I repeat he is just 42 years of age?

 

The irony about insurance is the same like banks. Banks don’t want to lend you money when you are in financial distress, but are begging you to borrow money from them when all is fine and dandy. By the time you desperately need coverage, insurance company refuses to cover you. Nothing personal, it’s just business.

 

Any reason you don’t need any medical insurance? Yes, if you really don’t mind paying future medical bills from your own pocket.  I’ll advise you to build up and  accumulate a substantial medical fund. It’s really up to a person if they want to pay 1 ringgit for a 1 ringgit cost of medical expenses or pay a 1 ringgit premium for a 100 ringgit of coverage.

 

Another objection among working people is this - they might retort “Company cover my medical expenses, I don’t need any!”

 

Yes you are right. Now, check with your company if the coverage extends beyond your mandatory retirement age. If yes, congratulations! If not, then I’ll also advise you to build up a substantial post retirement medical fund or ensure your health is in tip top condition to still buy a medical card after retirement. The easier way is of course, either learn to love general hospitals or to get a medical coverage sooner rather than later.

 

It is ok to grow your wealth for others? My take? ”What a waste of all the effort to invest and make money over the years!”  The reality is - that’s exactly what we are doing if we focus only on growing our wealth without getting sufficient medical coverage. Most of us will be devastated if our wealth are squandered by our kids - I reckon we will be more devastated if we let private hospitals do the same. Without sufficient medical insurance, whatever we have accumulated will vanish into the thin air in an instant.

 

Lieu Ching Foo is the founder of Malaysian personal finance blog http://HowToFinanceMoney.com and an independent adviser with financial advisory firm Fin Freedom based in Penang.