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Saturday, December 1, 2012
Questions to ask

Buying medical cover can be complex and daunting exercise for many consumers. Turning to a financial adviser for help is certainly a good idea. But there is more to it than that: clients need to ask the right questions so they can be steered in the right direction.

Principal Officer of Resolution Medical Scheme, Mark Arnold highlights some key questions to ask your broker before you sign on the dotted line.
Advisor or salesman? A broker isn’t acting as a financial advisor if he is just selling medical cover from one medical scheme – he’s simply an insurance salesman. Ask your broker how many members he has placed with different schemes over the past year. “If he’s only placed members with one scheme, be suspicious,” says Arnold. “You need independent, unbiased advice.” Brokers who receive commission from a particular medical scheme may not recommend the most appropriate one for your financial and medical needs.
Compare different schemes. Your broker should have done his homework and conducted an in-depth analysis of different medical schemes before he recommends a product to suit your particular needs. This means, not only comparing different options and benefit plans, but also conducting a thorough check of the scheme’s risk profile, membership numbers, growth and premium increases from year-to-year. A scheme risk profile is related to the average age of its members and the size of its pensioner ratio. “You want to make sure that the scheme for which you are signing up is financially stable, sustainable and has consistently affordable increases,” adds Arnold.
Health and wealth analysis. It’s a no brainer to check that your broker has the necessary qualifications to be giving you financial advice, such as his licence from the Financial Services Board. In addition, it is important to verify what processes he follows in recommending different schemes and products to you. Your broker should not only carry out a thorough financial needs analysis based on your individual circumstances, but also conduct a background health check. “You may find that you have too much life and funeral cover, for example, but cannot afford comprehensive medical cover,” says Arnold. “Your broker should help you balance your portfolio of cover to ensure that you are sufficiently covered for potential medical expenses.”
Understand the plan. Medical schemes each offer different options with a variety of benefits. It’s vital to determine what level of cover you need at each particular life stage. If you are in your twenties and you are fit and healthy you are likely to need only a hospital plan that covers catastrophic events. However, in your early thirties, you are more likely to start a family and would need more comprehensive cover. As you hit your forties and fifties you will need a medical scheme that pays generously for chronic medication as this is when most lifestyle diseases start to develop. Ask your broker to explain the benefits of schemes’ different options.
Waiting periods. If you are new to a scheme, it is entitled to implement a waiting period where you will not be able to make a claim, even for Prescribed Minimum Benefits. Ask your broker whether you will be subject to a waiting period and rather switch between plans on the same medical scheme than between medical schemes if your cover is not sufficient. Your broker should regularly assess your healthcare needs, look ahead to the next five years and advise you on what plan you should be on.
Networks and limitations. Cheaper premiums may mean your medical cover limits you to a particular network of hospitals and doctors called ‘designated service providers’. Check with your broker to see which healthcare providers you can use and whether this will be convenient if you become ill. Weigh up the cost difference of moving to a more flexible plan if you would prefer to use your preferred doctor or specialist.
Tariffs and co-payments. Very few doctors and specialists charge standard tariffs, so ask your broker whether your medical scheme will refund you at 100% or a higher percentage of the tariff, or you could face steep co-payments. You could also opt to take out gap cover to make up the difference, without incurring the higher premiums of a more comprehensive plan.
Be honest upfront. Each medical scheme will require you to fill out a medical declaration before taking out cover. “Make sure you go through this with your broker with a fine tooth comb,” says Arnold. “Even innocent omissions can lead to dire consequences.” He says schemes use the medical questionnaire to assess your risk. The scheme can even terminate your contract on the basis of non-disclosure, for example, by failing to declare previous medical conditions. If you need authorisation for a treatment within the first 12 months of joining a scheme, it can approach your doctors to see what you have been treated for before you joined the scheme and could refuse to cover treatment if you were dishonest about a medical condition. Arnold says some members do omit information deliberately, but the vast majority make a genuine mistake in not disclosing. “The best advice is to take your time in filling an application form, and make sure your broker goes through it with you so that you don’t miss anything out.”

Copyright © Insurance Times and Investments® Vol:25.12 1st December, 2012
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