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6. Medical Insurance
A medical insurance policy can take many forms. But the basic concept of medical insurance is to cover hospitalisation costs incurred by individuals.

Policies are typically non-participating types. That means that they are not policies to benefit from economic losses to an individual. They are usually charged base on yearly renewables, subject to the usual terms and condition.

You will only be covered if you continue to pay premiums. Usually during renewal periods, the insurance company will renew your policy automatically. Which is called yearly renewable.

However if the policy is lapsed, the policy coverage will no longer take effect. So you may want to take careful care on ensuring your policy remains in-force. Because to reapply for another medical insurance may be troublesome, because the insurance company will re-access your health condition before granting coverage to you again.

One important point to take note is when you decide to transfer coverage from one company to another (usually this happens when you are cutting costs) make sure your health condition is perfect. Always apply for another medical insurance first and see if you like the terms and conditions they lay out to you before effecting a change. You do not want to get caught in a situation when you have already stop coverage for your existing policy before you effect a new coverage. This is what we call a risk gap involved.

Medical insurance are usually claim on the basis of re-imbursement and you cannot economically benefit from it unlike a life insurance policy. Therefore it does not make sense to buy more than one medical insurance plans.

Types of Medical Insurance:
Medical insurance can be bought by an individual or as a group in a company. The only difference is that, as an individual, you will have to pay slightly more premiums as compare to a group of people effecting cover as a group in a company.

The reason for the higher costs individuals have to incur is simply economies of scale. It is cheaper to underwrite a group rather than to underwrite the risk of one individual at a time.

However the one draw back for insurance companies who underwrites group medical plans is sometimes the underwriting process may be too lax that risk is accepted hastily and in time to come the claims may arise more than individuals combine.

On the other hand, strict individual underwriting process may also help insurance companies that they accept the right risk so that the companies will enjoy insuring the best kinds of insured. Thereby reducing the amount of claims from their balance sheet.

1. Basic Medical
This form of medical cover is the very basic form. It usually covers for only a certain smaller amount. But the advantage is that it covers from the first dollar onwards. Which means the moment you start your stay in a hospital, the first dollar of coverage will be taken care of.

The disadvantage is when you out stay the amount insured, for example if you are suffering from an illness that needs a longer recuperation time, your stay in hospital may be longer and your costs of medication and specialist advice may be costlier. That is when basic medical plans do not extend their cover. Therefore you need to go to the next type of medical plans, called enhanced medical plans.

2. Enhanced Medical
This is usually the next best thing in medical insurance. It usually covers the more costlier stuff in medical costs. Costs such as chemotherapy, renal dialysis and so on are medical treatments that cost quite a fair bit. If an insured only has the basic medical plan, they may not be sufficiently covered. Thus enhanced medical plans are enhanced plans to cover the extensive long-term costs.

Things to take note of enhanced medical plans are that they usually include co-insurance element and they are usually in the region of 10 to 15% co-insurance. Co-insurance element means that the insured will have to pay out of their own pockets of up to 10 to 15% co-insurance costs before the policy can start claiming.

Example of an enhanced medical plan in Singapore is the government's own Medishield plans.

Another term for co-insurance is deductables.

3. Out-Patient Medical
Out-patient medical plans are just medical plans that cover out-patient cost such as a visit to the general practitioner for common ailments such as cough and cold.

This type of plans usually are included in the basic medical and enhanced medical plans. They are seldom plans on their own as the cost of insurance may be high, because of the frequency of claims and also the inability to accurately calculate its costs is the major draw back to have it as an individual policy on its own.

4. Dental Cover
This type of medical insurance are usually added as additional benefits in a group medical insurance. There are limits as to the cover and do not usually have high coverage.

5. Daily Hospitalisation Plan
This is the only plan that you can buy as many as possible. This is also the only medical plan that you can economically benefit from. Therefore you can buy as many hospitalisation plans as possible.

6. Critical Illness Cover
This type of insurances are usually under life insurance. As they can also be benefited economically. But because the major terminology is critical illness, we have decide that it is also part of the medical insurance term. Please see under life insurance to find out more about Critical Illness Plans.