Investment-Linked Health Insurance Cut Coverage To Below 65 Years: Sim

KUALA LUMPUR, Sept 8 — Bayan Baru MP Sim Tze Tzin has targeted investment-linked health insurance plans, citing consumer complaints that their coverage period was cut to below 65 years.

The PKR lawmaker cited three complaints involving plans purchased in 2018. The first involved a 47-year-old man who bought a plan with RM2.1 million medical coverage and riders until age 100.

Despite staggered premium increases under Bank Negara Malaysia’s (BNM) interim measures from RM4,000 to RM5,600 annually in five years, his coverage period was cut until age 64.

“When he complained to BNM and the insurance company, the insurer explained that the projection was merely a ‘sales illustration’ and even the most optimistic assumption at purchase (9 per cent returns for the first 20 years) could only sustain coverage until age 68,” Sim said in a statement today.

The second case involved a 45-year-old woman who also purchased a medical plan with RM2.1 million coverage and riders until age 100. 

Her premium increases of 40 per cent were staggered (RM300 to RM420 annually over five years), but coverage was cut to age 59.

“Even after trying to negotiate a reduction in coverage to RM1 million, the insurer only lowered her premium by RM2.40. This forced the customer to accept unfair terms,” said Sim.

The third case involved a 59-year-old man who received notice that his new RM3,600 annual premium would only last two years. He was asked to top up drastically, paying RM8,580 (138 per cent increase) for coverage until age 81 or RM10,800 (200 per cent increase) until age 90.

Sim said these three cases showed insurers’ overly optimistic profit projections when selling investment-linked products. 

“Many plans assume returns of up to 9 per cent annually for 20 consecutive years. In reality, actual returns were much lower than projected, leaving funds insufficient to cover protection costs. As a result, insurers drastically shortened coverage periods,” he explained.

“This means when policyholders retire in their 60s, when medical coverage is most needed, they are ‘abandoned’ by insurers.

“In fact, BNM issued a circular in July 2019 to regulate these investment-linked products. However, problems still affect policyholders who bought their plans before 2019. Therefore, I urge BNM to find solutions for pre-2019 cases.

“Under Section 155(b) of the Financial Services Act 2013 (FSA), Bank Negara must issue directives if a company conducts business in a way that harms the interests of depositors, policyholders, participants, consumers, creditors, or the public at large.”

The Pakatan Harapan MP warned that failure to resolve these issues could cause more T20 income earners to shift to public hospitals.

Kuala Lumpur Hospital (HKL) director Dr Harikrishna KR Nair told Berita Harian in an interview that HKL, the country’s biggest hospital, was seeing a rise in T20 and VIP patients, who had shifted from private hospitals to HKL over the past 10 years when their treatment exceeded insurance coverage.

He attributed this to an increase in medicine prices.

Another reason for wealthier people shifting to HKL was to seek oncology services in the government hospital with robotic technology. HKL receives two million patients a year and has 2,300 beds.

Health Minister Dzulkefly Ahmad told reporters yesterday that rising health insurance premiums could be a reason why T20 income earners are increasingly seeking treatment in public hospitals.