I have many clients. By the law of large numbers, I have seen cases that no one could ever imagine that could occur to them. Today, I want to talk about pre-existing conditions within the context of insurance.
I always advice my clients to take insurance to hedge against the financial risk of an unforeseen circumstance. However, what is “unforeseen” to them, is foreseeable to me. In many insurance cases, I have seen clients who had no known medical problems are diagnosed with medical problems after the insurance application medical checkup.
The next unfortunate thing is that some of my clients found that they have pre-existing conditions after they bought the insurance from me and as a result claims were rejected. Many people think that after they have bought the insurance plan, they can feel safe. However, this could just be an illusion because most insurance plans exclude pre-existing conditions. The exclusion stands regardless whether the client knew of their illness or not upon application. Examples of exclusions are:
- For medical insurance, all pre-existing conditions (whether known or unknown) are excluded. Under certain limited cases, pre-existing conditions are covered but this is an exemption rather than the rule.
- For all life policies covering critical illness, if a Heart Attack or Major Cancer is diagnosed within 90 days after inception date, this is considered exclusion and therefore not covered.
- For life policies, some permanently exclude any congenital or inherited disorder; some would exclude cover if the manifestation occurs before the Life Assured’s 7th birthday; only one insurer does not explicitly exclude congenital or inherited disorder. An example of congenital disorder is MVP (layman term – hole in the heart).
- All travel insurance excludes pre-existing illnesses. Take for example, if you had already a heart disease (whether known or unknown is not important) and if you have a heart attack while on oversees trip, your travel insurance will not reimburse even a single dollar of your medical bill.
Coming back to the law of large numbers, I frequently encounter clients or their own family members who need to make insurance claims after purchasing the insurance from me within a year. There was one case which the claim came in just 2 months after the policy was bought. Unless it is a personal accident or a brand new infectious disease (like H1N1), the illness is likely to have started prior to the insurance commencement date. For example, cancer does not start overnight. Cancer cells take time to grow. A heart attack is due to coronary heart disease which does not occur overnight. High cholesterol resulting in high calcium score takes a long time to build up. Once the disease or illness can be determined to have started prior to the policy inception, this is considered pre-existing condition. Who determines whether the illness is pre-existing or not? It will be your attending doctor who will have to write a medical report and he/she will be ask the most important question: “When did this condition first started?” The date which the doctor writes determines when the illness is pre-existing or otherwise.
So, what should one do? At this moment, there is no ideal solution other than ensuring one get insurance as early as possible – preferably the day the child is born. The longer a person waits, the risk of having no coverage increases dramatically. In view of so many of my clients having illnesses even before they reach 30, I shall be changing the manner which I recommend insurance. In the past, I recommend insurance plans based on immediate needs. For future needs, I often suggest postponement of those insurance coverage that are only meant for future (hypothetical) needs. Moving forward, I will recommend clients to get ALL their insurance coverage sufficient even for future needs. Unfortunately this is not always possible because the insurer often refuses to provide a high coverage if there is no immediate justification for it.
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