In the UAE, like many places around the world, the healthcare sector is a hot topic. Specifically often, medical inflation can make it financially crippling and difficult to actually afford medically necessary treatment. As a result of this, citizens look to their government for its support and the government tries its best to be able to put a model in place that is sustainable and fair. Certainly, the people running the Emirates of the UAE are no different in this regard.
So, based on the above, one would assume that it is fairly logical to deduce that the main reason for buying a health ‘insurance’ policy is simply to avoid being in a situation where a financially crippling medical service needs to be paid for due to an unforeseen incident or diagnosis. While in principle this should be the reason to buy health insurance, in the UAE it is often bought for other reasons, hence making inflationary and prohibitory pressures actually worse! Due to a misunderstanding of the fundamental reason to buy insurance, people are either paying more than they should be or, which is even worse, buying inappropriate or insufficient policies.
To explain how buying the wrong product can actually increase your overall cost of healthcare, most simply put, if the insurance company is ‘cash swapping’ with you or an insurance portfolio has a high number (high frequency) of small claims (low severity) then they are adding a cost to the transaction – one that could have been completed more efficiently by the patient and the doctor. For example, it is widely popular to see plans in the UAE that have higher out patient deductibles (and therefore lower premiums) not selling or plans with out patient on reimbursement not selling purely because the potential policyholder says ‘what’s the point of an insurance card if I can’t actually use it?!’. Well, if you have to use something often, it’s not insurance! The whole point is that there should be a financial support in the event that there is a catastrophe – an in-patient procedure, for example. For any other ‘regular’ costs, the insurance company can obviously forecast (to a surprising extent of accuracy) how much it is costing and hence add their operating costs and profit margins to it.
So, the next time you’re looking to buy your medical insurance, think about the in-patient capabilities of your plan. Think about how well the product would be able to cover you in the event of a large claim. Forget about the small claims – it’s actually more efficient to pay those yourself. Just have a higher deductible applied on your policy and you will see the difference in cost! Or why don’t you consider an in-patient-only plan? To answer the question in the title, I can say as a professional insurance broker that one should buy health insurance (or life insurance for that matter) in order to be financially stable in the event of a traumatic health condition or at the time of an accident. Of course, like most things in life one should note there are exceptions to this recommendation – for example, corporate group policies are priced and structured differently. Or, for example the functions of policies designed for blue collar workers may be different… But largely speaking, the above principle holds true.
At InsuranceMarket.ae we have a whole host of health insurance products – those that would cost you just AED 1000 annually to those that would rent you a studio flat in JLT! Each kind of product has its own function and strength – and we can always find something to match your preference (even if it’s not as per the recommendations in the above article!) Why don’t you get in touch with us and we would help find the right solution for you.
[Image sources: thenational.ae/thenationalconversation/industry-insights/economics/uae-healthcare-system-deserves-better-from-its-insurers