Are you paying a fair premium for your private Shield plan? Are you being over-charged? How can you find out?
You can look at the ratio of claims to premiums, as reported by the insurance company for this plan, in their return to MAS.
Take this example. If an insurance company has 100,000 policyholders and pays a total claim of $10 million each year, the average cost of claim is $100 per policyholder. The insurance company needs to incur expenses and to have a reasonable margin of profit. As a rule of thumb, the loading should be about 50% over the cost of claim. A reasonable premium should be $150.
The actual premium charge will differ according to the age of the policyholder and other relevant factors, but the average for all the policyholders should be $150.
If the average premium paid by the policyholder is $500, it can be considered to be excessive. Why should the policyholder pay an average premium of $500, when the average cost of claim is only $100? This means that $400 is taken away to pay commission to the agent, and profit to the insurance company.
Why is this insurance company able to get away with charging such a high premium rate to its policyholders? Here are the ways:
1. It makes it product different from its competitors, so that the policyholders cannot compare the prices.
2. It provides some special features that make the product look very attractive, but the actual claim cost is small. This is a way to mislead customers.
3. It pays high commission to incentive its agents and train the agents on how to market the product aggressively.
As a consumer, you should avoiding paying far too much for a private Shield plan. The money is taken from their Medisave savings. If you spend too much money now on unnecessary insurance, or is overcharged, you will have inadeqaute savings to pay for the medical expenses in your old age.
- ► 2013 (348)
- ► 2012 (1270)
- ► 2011 (1873)
- ► 2010 (2369)
- ► 2009 (1655)
07/13 - 07/20
- Advice to the young - save 15% of your earnings
- A fair premium for private Shield plan
- Invest in an indexed fund
- Unfair rejection of Shield claim
- Returned E-mail
- Keen to work for an honest insurance company
- Impact of market drop on long term yield
- Paying the right price
- A low cost investment fund
- Buy critical illness for 20 years only
- Buy the right product
- MAS Guidelines on Fair Dealing
- Rejection of claim on grounds of non-disclosure
- ERP charges displayed on gantry
- Price of a product or service
- School should not be a business
- Find out about the charges
- Advice for young people
- Business ethics
- Joke: Establish the fact
- Courtesy in use of mobile phone
- Joke: Telling the truth
- Weakness of the Global Financial System
- Large profit margin on Shield plan
- Switch to basic Medishield
- Shop around to get a competitive rate
- Global recession
- SAFRA insurance
- Choose a low cost term insurance plan
- A fair rate of return
- Joke: Inflation and wages
- Excellent Public Transport in Hong Kong
- Tips on personal insurance
- World class transport system
- Visit to Manila 14-16 July 2008
- Existing Life Insurance Policies
- Joke: Amputed the wrong leg
- Joke: Planning for retirement
- Insurance for a child
- Complaint to the regulator
- Insuring against critical illness
- ▼ 07/13 - 07/20 (41)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)