What is a hospital income plan? Here’s what you need to know.
Hospital daily cash insurance/takaful plan (also known as income protection insurance/takaful) is a way to replace your income while you're hospitalised in a ward, and in the ICU (Intensive Care Unit). The payout during an ICU stay is usually twice that of a normal hospital admission. The plan pays out a fixed amount per day spent in the hospital, where the amount is pre-determined at the point of participating in the plan. You can participate in it as a standalone plan or in addition to your hospital insurance or takaful plan.
What is the difference between a hospital income plan and medical insurance/takaful plans?
The hospital income plan should not be confused with a medical plan. Medical plans cover your medical and hospitalisation bills incurred pre and post hospital stay, as well as inpatient and outpatient costs. Usually, these plans will issue a medical card that provides cashless admission to public and private hospitals. On the other hand, a hospital income plan only pays out daily income per day of hospitalisation.
What is the difference between a hospital income plan and critical illness insurance/takaful plan?
A critical illness coverage plan pays out a lump sum amount upon the diagnosis of a critical illness (e.g.,cancer, stroke, heart attack), depending on the list of covered critical illnesses specified in the plan. The lump sum payout can help you cover your lost income as well as any living expenses and lifestyle changes. These are additional costs that may be incurred after you are discharged from the hospital, beyond the medical related costs that will mostly be covered by your medical insurance/ takaful plans.
On the other hand, a hospital income plan pays out for each day that you are hospitalised, even when it’s not due to a critical illness. For example, if you are admitted in the into the hospital due to an accident, or food poisoning,the daily income will be paid out.
Why get a hospital income insurance/takaful plan?
So why get a hospital income plan if you are already covered by existing insurance or takaful plan? Here are 3 good reasons why:
To replace your income in the event of hospitalisation
Most employed workers should have medical coverage as part of their company benefits and be entitled to 60 days of paid leave in the event of hospitalisation as required by the EmploymentAct. However, income earners who are highly dependent on daily wages, such as freelancers (gig economy workers) and self-employed may not enjoy these employment benefits.
Cover out-of-pocket expenses
The daily income received from the hospital income plan can help cover out-of-pocket expenses not usually covered by hospital, medical insurance or takaful, like transportation, living costs and several medical bills. This is to ensure that you don't have to dip into your savings or retirement fund while you're hospitalised.
Your hospital insurance or takaful may not be covering you in full
If your hospital insurance or takaful plan has a deductible feature, you will need to pay that deductible amount in cash first before the hospital plan covers the rest. For example, if your medical bill is RM5,000, and the deductible in your medical plan is RM1,000, you need to pay the deductible amount of RM1,000 first before the medical plan covers the remaining RM4,000. In this situation, the daily hospital cash amounts received can help offset the upfront deductible amount that you have paid.
How do I decide how much daily hospital income benefit I will need?
There are the 2 ways to calculate the amount you require:
Calculate based on your monthly expenses
The first way is by calculating how much you spend each month on average, including your loan payments, mortgage, bills, groceries, and other daily expenses. Add them all up and divide by 30 days. For example, if your monthly expenses add up to about RM4,500, divide it by 30 which gives you RM150.
RM4,500 ÷ 30 = RM150
Calculate based on your income
The second way is by using your income as the gauge, where you divide your total monthly income by 30 days. For example, assuming an income of RM7,500, divided by 30 to get you RM250.
RM7,500 ÷ 30 = RM250
The reason for calculating using your expenses and income as a gauge is to find the ideal amount in the event that you are not able to work due to hospitalisation. A daily hospital income of RM150 would mean that you do not have to worry about your financial obligations while the plan takes care of your expenses for you. Choosing a daily hospital income of RM250 would be for income protection purposes where the plan provides a temporary income while you are not able to work.
Hospital income insurance or takaful helps replace your income in the event you are unable to work due to hospitalisation. This plan will be perfect for you if you do not have sufficient medical coverage and are dependent on daily wages for income.
For better peace of mind, get covered for FWD MedSecure Direct, a hospital income takaful plan that provides daily cash income for the days that you are recovering in the hospital. The plan provides a daily hospitalisation cash allowance of up to RM350/day, and if you are admitted to the ICU, you will receive 2 times your daily hospitalisation cash allowance. For example, if you chose Plan 350 which has a daily hospital income protection of RM350 per day, and you are admitted to the ICU, you will receive RM700 per day of your stay. For added coverage, you can also opt for a plan enhancement to receive reimbursement for your medical bill if you are hospitalised due to an accident. As a bonus, you can also enjoy a 20% no-claim discount if you have not made any claims within the past two certificate years. Get a hospital cash takaful quote now.
