The most common Health Insurance Pitfalls for Expats
To present the main conclusion right at the start: in international private health insurance too, you have to read the small print and in the end you get what you pay for. The extent of cover and the services offered of course depend mainly on your budget. In view of the wide variety of plans from many different insurance companies available worldwide, anyone interested in such insurance is hard pressed to make a well-informed choice that is appropriate to their situation and requirements. There are also many pitfalls to avoid, and of the large number of private medical plans available, only relatively few are ultimately worth considering at all.
Many countries run a compulsory health insurance scheme or a public healthcare system which provides at least basic cover. Local insurers also offer different types of private medical insurance, inclusive of cover for temporary stays abroad. As local health insurance – even with international cover –is in most cases cheaper than international health insurance policies, many expats are inclined to go for local insurance. They don’t realize, however, that in most countries the cover offered by local health insurers is limited to residents of that country. If expats move on to another country, for example, their policy will not as a rule be continued. They are then left with a choice of finding another local insurer in their new country of residence or turning to an international health insurer at that point– if their age and health condition then still permits, that is.
Similarly, many expats, who may be covered by an employer’s plan now but which may be terminated some time in the future, do not realize that persons over 55 years of age or with health problems may find it difficult or even impossible to obtain private health insurance in addition to the basic healthcare provided by the country to which they are returning. So it is highly advisable to take out appropriate health insurance for the long term at a younger age and before the first signs of ill health manifest.
Then there is the problem of choice: there are many health plans to choose from whose benefits and prices vary widely. Policies differ greatly not only in their cover of optional extras such as homeopathy, for example, but also of major eventualities such as transplants and chronic illnesses. It is therefore relatively difficult to compare the wide range of products available internationally, and considerable time and effort is needed to obtain at least an overview of their key features, benefits, exclusions, options and premiums. Yet all too often expats look at one or two different plans and then decide, which often leads to a sub-optimal solution for their needs.
It is indeed is an almost impossible task to obtain all this information quickly and efficiently, and then to analyse and compare the different products and options properly, unless it is done routinely. But nearly all international health insurers operate through brokers who give advice to those seeking insurance. In return, the brokers receive a commission from the company whose product is chosen. As no provider reduces the premiums by the value of this commission if the client buys from them directly, it makes sense to seek such advice as long as the broker is really independent, has the necessary expertise and experience, and does not work under contract for only one insurer. Some insurance consultants also charge a consultation fee for more complex cases, which is usually well worth paying as it ensures that you really do receive unbiased advice. Independent insurance consultants are experienced in identifying potential problems because they continuously monitor the health insurance market worldwide and compare cover, premiums and level of service.
If you look at the costs, you may well find that for a particular age band with similar cover, prices under different insurance plans vary by as much as 300% or even more. All private insurance plans charge tiered premiums, with the tiers typically rising in age bands of five years. Generally, the older you are, the more expensive your health insurance becomes. However, expats often look only at what they currently pay but neglect to consider what will happen when they get older. The premiums of some health plans become extremely expensive for higher age bands. Also some insurers do not provide clear pricing tables so it is sometimes difficult to find out how much you will pay once you get to 65, 70, or 75, which is precisely when you are more likely to need the cover. However, a few companies offer more balanced premium curves where you pay relatively more when you are younger and relatively less once you reach higher age bands. Incidentally, these tend to be also the insurers that offer fully transparent pricing tables.
Particularly if you need long-term cover, you should not only look at the price and product but also at the company itself. It is advisable to check out the company’s claims handling procedure, and it also makes sense to ask what the situation will be like in ten years’ time and whether the health plan – or even the company – is still likely to be around. This is why most expats choose more comprehensive and established plans and are generally quite prepared to pay more for good cover that is appropriate to their needs, as the price they pay for this insurance buys them true peace of mind for themselves and their family.
The 10 questions to ask yourself when buying IPMI:
- What cover do I really get for the premium I pay?
- What premiums will I pay at a higher age compared to now?
- Does the insurance plan have to be terminated once I return to my home country?
- Does the insurance plan offer lifetime renewal?
- What deductibles are available?
- What is the procedure for claims handling?
- How long has the insurer been in the business of providing international health insurance?
