Health is wealth. This is probably the most used quote in our situation today as it has been quarantined for over a year. Prior to the 2019 coronavirus disease (Covid-19) pandemic, heart disease, cancer, cerebrovascular disease, pneumonia and diabetes were the top five causes of death in the Philippines. These diseases have two things in common – deadly and high treatment costs.
An article published in Investopedia in February 2020 stated that 66.5 percent of personal bankruptcies in the United States are due to medical problems that result in either hospital bills insolvency, job loss, or both. This is where in the US; Health programs are near perfect. Imagine the same thing in the Philippines, where most Filipinos rely on the Philippine Health Insurance Corp. (PhilHealth) leave. According to statistics, nine out of ten causes of death are illnesses. These are just a few of the reasons that make health insurance an important part of personal financial planning. With a solid health plan, you will secure your own savings, cash flow, investments, and possibly loved ones’ money.
Health care planning varies from person to person. Generally, the health plan is shaped by family history and their expectations of health care. Insurance companies currently offer a wide variety of health insurance products that meet needs and expectations. Here are the first two on the list:
Health Card or HMO (Health Maintenance Organization) A generally comprehensive type of health insurance used to fund hospital treatment costs. Whether laboratory or diagnostic tests, general medical examinations or imprisonment, hospital bills are usually covered on the basis of certain service limits.
Serious Illness Insurance A more specialized type of health insurance plan is designed to cover hospital costs for life threatening illnesses. With its generally higher coverage than most HMOs, it replaces the loss of income.
HMO vs. Critical Illness Insurance Both health insurance plans are equally important; however, they address different needs. In general, individuals have HMOs in their performance matrix. Without this coverage, budgetary constraints will make people torn between the two. In such situations, it is essential to weigh the risk of financial distress.
Ask yourself, “In the case of a minor operation, can I afford the procedure and specialist fees? If I have severe cancer or heart disease, can I afford chemotherapy or coronary bypass surgery?”
What could potentially bring you and your family bankrupt?
In general, PhilHealth, the first tier health care facility in the Philippines, pays a fraction of the hospital bills. HMO, the second tier, absorbs anything beyond PhilHealth coverage, subject to certain performance limits. In most cases, the HMO insurance cover is insufficient if the illness is critical. In addition, the treatments for critical illnesses prevent patients from coming to work.
With a serious health insurance, a significantly higher coverage for the treatment costs is guaranteed. In addition, this insurance can replace the loss of income associated with the treatment.
As with term life insurance, premium payments for HMO cannot be reclaimed if they are not used. On the other hand, most serious illness insurance policies are dividend-paying. These cash values can be used to collect premium payments.
There is no doubt that Critical Illness Insurance offers more protection from the risks of financial distress than HMO. So if you have to choose between these two, you should always choose the product that offers the highest level of protection against financial risks.
What is the ideal health insurance coverage? Unlike pension and insurance planning, there is no one-size-fits-all formula for determining an individual’s ideal health insurance coverage. It largely depends on family history and health care expectations. If a family has had life-threatening illnesses such as cancer or diabetes, it is best to get health insurance early.
The average cost of cancer treatment today ranges from 1.5 to 2 million pesos. If a person prepares financially based on family history, one needs to calculate the likely cost of treatment in 10 years, taking inflation into account. The logic behind this is that while we prepare for the worst, we hope it doesn’t happen right away or not at all.
Illnesses do not recognize age, gender, race, and even financial situation. Deferring health insurance is not an option. Good health is never guaranteed and your insurability can disappear at any time.
For a more complete assessment of health insurance, contact your financial advisor.
Arnold Umipig is a registered financial planner of RFP Philippines. To learn more about personal financial planning, visit the 90th RFP program in June 2021. Inquiries via email [email protected] or write to 0917-6248110.
source https://dailyhealthynews.ca/fundamentals-of-health-insurance-planning/
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