Hospitalization Insurance or otherwise known as Health Insurance or Medical Insurance is one of the most crucial type of insurance one should have. Rising medical costs and the rapidly aging population around the world makes health care cost extremely expensive. These problems will likely cripple a family's finance if they have inadequate planning.
Yet the underwriting is also the most stringent. A lot of people, especially the older folks, who did not look into their health insurance planning when they are younger usually would have medical conditions like high blood pressure, diabetes or even gone through some operations before they realized the importance of getting a plan.
Due to their age and the current health conditions that they have, some of them are most likely to be declined coverage. Insurers would not want to insure them due to their medical conditions.
There is however, a particular type of underwriting known as Moratorium Underwriting, underwritten by an Insurer in Singapore that provides coverage without the need for evidence of health and thus they are guaranteed issuance as they do not require the proposer to declare their current health conditions.
Moratorium underwriting method allows the person not to declare their current health conditions but any pre-existing medical condition that exists prior to the commencement of the insurance shall be excluded.
Meaning to say, if a person has diabetes, any hospitalization that results directly or indirectly from the person's diabetic conditions will be excluded.
In this case, one would wonder: "if that's the case, what good does Moratorium underwriting has?".
The answer to this question is simple. The proposed person with a diabetic medical conditions can still be covered for other illness or accidents that is not caused by his/her current medical condition. Examples include Cancer, which is currently the number 1 cause of death in Singapore (*Statistic by MOH).
Due of his/her existing diabetes, the person might be rejected or declined for cover by insurers. If this were to happened, they would not be able to get health insurance protection for Cancer or accidents that is not related to the diabetic conditions.
You need a clean bill of health to buy health insurance. If someone already has certain medical conditions, it will be much more difficult to get covered. Having this method of underwriting allows someone who usually will be declined for coverage a guaranteed chance of buying a Health Insurance Plan (with their pre-existing conditions excluded) so that they can get protection from other things that have yet to happened.
Also unique to this method of underwriting is that during the 5 years' continuous insurance from the date of commencement of cover or the date of the last reinstatement or the date of Upgrade, whichever is later, under the plan, the insured person has not, in relation to a Pre-Existing Condition:
1) experienced symptoms;
2) sought advice or tests from a Physician, a Specialist or Alternative Medicine Provider (including checkups for that Pre-Existing Condition);
3) required treatment or medication; or
4) received treatment or medication
in which case, the Insurer will cover the Pre-existing Condition under the plan. This 5-year period is known as Moratorium. If an insured person has experienced any of the above during the moratorium period, then that particular Pre-existing Condition shall be permanently excluded from the plan.
Illustration of how moratorium works:
Peter is a identified to be Hepatitis B Carrier in a medical check up done during National Service.
However, he did not have any medications nor any treatment as it is not required as instructed by his doctor.
If Peter would have applied using the usual standard Full Medical Underwriting, his hepatitis B will likely be permanently excluded even after 5 years. Subsequently, he develops liver cancer due to the complications of hepatitis B, the health insurance will not cover for the treatment of the liver cancer.
On 1 Jan 2010, Peter is issued the policy under moratorium underwriting. During the next 5 years till 31 Dec 2014, he did not experience any symptoms nor seen any doctor regarding hepatitis B, nor taken treatment, or even medical check ups.
He would be then effectively covered for hepatitis B and its complications as he has passed the 5 years moratorium period. If liver cancer develops and Peter is hospitalised and treated, he will be covered.
On 1 Jan 2010, Peter is issued the policy under moratorium underwriting. During the next 5 years till 31 Dec 2014, he had went on to do a medical check up and his blood test shows positive results to hepatitis B. This will violate the term as being "experienced symptoms".
He would be then effectively be permanently excluded for hepatitis B and related complications even after 5 years. If liver failure develops and Peter is hospitalised and treated, he will be NOT covered.
For the avoidance of doubt, the Moratorium will not apply to the following list of Pre-Existing Conditions and these Pre-Existing Conditions shall be permanently excluded under the Policy if You have selected the Moratorium Underwriting:
As such, I would advise people with medical conditions to consider using this method of underwriting and refrain from seeking Health Insurance from other insurers in Singapore. If you have been previously declined or postponed for coverage by any other insurers in Singapore, you will not be allowed to use this Moratorium underwriting method.
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I have 11 years experience in the financial planning industry. I have created this website for my clients to learn more about financial planning.