Any upside to transfer to VHIS?
The tax deductions available under the VHIS and related promotions by insurance companies have prompted many existing individual indemnity hospital insurance plans (IHIP) policy holders to consider the migration to VHIS Plans. Furthermore, the VHIS requires participating insurance companies to offer their existing individual IHIP policy holders with the option to switch to VHIS Certified Plans.
Rule of thumb: consider your needs and budget
When deciding whether to migrate from an existing policy to a Certified Plan within the same or different insurance company, you should give consideration to the following:
- Compare the benefit coverage and benefit limit
The protection offered by a health insurance policy is the most important factor to consider when making a switching decision. You should carefully compare the benefit coverage and benefit limits of your existing policies and the VHIS Plans. If a VHIS Plan offers better protection and is better suited to your needs, then the switch is worth considering.
- Consider the premiums
Compare the premiums of your existing policy with those of VHIS Plans. If the premiums of a VHIS Plan is higher than your existing policy, you should consider your budget and actual needs. If the premiums of a VHIS Plan is lower, you should check if the benefit coverage and benefit amount fall short of those offered by your existing policy. On the other hand, many insurance companies offer premium discounts as a way to promote their VHIS products. These discounts are often short-term and one should not make a policy switch just based upon the premium discount offered.
- Do not transfer plans just for the sake of tax deductions
While VHIS Plans offer tax deductions, you should not switch plans or change to another insurance company just because of the tax benefits. Before you reach a decision, compare the benefit coverage, benefit limit and premiums between your existing policies and VHIS Plans.
- Whether re-underwriting is required
Before switching to a VHIS Plan, you must understand whether re-underwriting is a wise option; particularly for those with health conditions or have made claims on existing policies. If re-underwriting is required, exclusions or additional premium surcharges may be applied, the waiting periods may have to be reset after the switch, or the switch applications may not be accepted at all.
According to the VHIS rules, a participating insurance company must offer existing individual IHIP policyholders an one-off option to switch to VHIS Certified Plans. The migration arrangement may take one of the following forms:
- Direct renewal from your existing plan into a Certified Plan (i.e., same plan with VHIS features incorporated) at your next policy renewal. If you refuse to accept this direct renewal arrangement, the insurance company needs to offer a VHIS Standard Plan for renewal purpose; or
- In addition to your existing plan, you are given an option to change to a Certified Plan. In this scenario, you may be subject to re underwriting and required to disclose your latest health conditions. If your application is rejected or you refuse to accept the re underwriting result, you may still stay insured with your existing plan.
Furthermore, if you change from an existing non-VHIS policy to a VHIS Certified Plan offered by a different insurance company, the new insurance company has the right to undertake re-underwriting. In this case, when the new policy comes into effect and the waiting period expires, you can then terminate the existing policy. This will ensure continuous protection despite the change of insurance company.
28 May 2019