What is the purpose of long term health insurance plans?
Just like retirement plans covering our financial future, long term health insurance plans are designed to do exactly the same. With the development of the modern medicine, we tend to live longer than ever before in human history, but we are also at a higher risk of spending our golden years with one or more disability or chronic condition.
Therefore, everyone who is long sighted and wants to plan for their financial stability in the future will find this article useful. We will explain what the features of long term health insurance plans are, how they are different from the short-term ones, and finally, how such insurance can be of benefit to you in the long run. Besides this article, Pacific Prime has recently released a dedicated Guide to Obtaining Long Term Insurance, which talks about this topic in even greater details.
What are long term health insurance plans?
Here, we describe long term health insurance plans as policies that customers obtain with the intention of keeping it for a long time, possibly forever. This means he or she won’t change it even if other plans offer lower premiums or better benefits at a given time. The main characteristic of a long term plan is the premium stability that allows customers to keep the policy for the long term.
Short term vs. long term health insurance plans
When shopping for medical insurance, you might be lured by some plans from less known insurers, which offer extensive benefits at a lower price. Such policies might be a trap because it is a well-known strategy for new players in the industry to provide plans that are “too good to be true” in order to increase their customer base. After some time, these insurers will drastically increase the premiums to minimize loss and match the average prices worldwide. You can learn about premium inflation rates in our International Private Medical Insurance Inflation – 2018 report.
Such short-term plans are not cost-effective or even in the best interests of customers. If you are pushed to switch policy due to a high premium increase, you will lose cover for pre-existing conditions, which is one of the most critical reasons for obtaining a long term insurance plan.
Why should you secure a long term health insurance plan?
Being able to afford proper healthcare now and especially in the future is the key to long term planning. We need more medical attention and doctor’s visits as we grow older. The frequency and types of treatments can quickly become a financial burden to anyone without health insurance. Below you can find five reasons for obtaining health insurance with the long term in mind:
Cost-effectiveness in the long run
The primary and only purpose of the long term health insurance plans is their cost-effectiveness in the long run. This feature brings along many benefits, some of which you might have never even thought of. Below, we list five benefits of securing a medical plan with the long term in mind:
Continuous protection (pre-existing conditions cover)
The Achilles’ heel of every health insurance plan is the pre-existing conditions. Any health condition that arose during the course of your current policy, and for which you have received medication and consultation, is considered a pre-existing condition by the new insurer. Examples of pre-existing conditions, among others, are diabetes, cancer, high blood pressure, and pregnancy.
In your new plan, pre-existing conditions are almost always excluded from your coverage, meaning you will not receive any reimbursement for the treatment of these conditions. Some international plans may offer a waiting period or a higher premium to cover the pre-existing condition. However, your best, and the most cost-effective option is to stick to a quality, long term plan. Being under such a policy means that the insurer is obliged to cover for any of your medical conditions that you’ve developed during the plan.
It is challenging to obtain health insurance after age 60 – 65, especially because you are more likely to develop chronic conditions. Another aspect of this point is that some insurers, usually those that offer local plans, carry a “renewable upon mutual agreement” clause, which gives insurers the right to reject renewal if they think you have made too many claims or developed a new chronic condition.
A well-suited long term health insurance plan will guarantee lifetime protection – you can decide to cancel the policy anytime, but your insurer can’t. Being able to maintain your health care coverage even if you frequently need doctor’s visits due to any medical condition, is what describes a well-chosen medical plan.
Stability of premium increases
Stability of premiums is probably the part you want to know most about. While some less reputable, or local insurers may offer lower premiums, the benefits cover and limits may also be insufficient to cover all your medical needs.
While low premiums sound like a considerable saving at the beginning, it’s unlikely that the price will be sustainable. The medical costs dictate the premium price, and initially low premiums will be most likely dramatically increased to compensate for the insurer’s losses. That may force you to switch plans, and drop your coverage for any pre-existing conditions, and expose you to higher medical bills in the future.
Stability of premiums is a crucial part of any quality long term plan. Being able to predict your premiums and be confident that they will rise in a stable, and affordable matter is what makes quality health plans an excellent tool for long term planning. And while at first the premiums you are paying for your quality plan might seem high, they are most likely to be stable throughout the duration of your plan, making it a more cost-effective option than the low premium plans.
Portability of plans
In the era of high rates of mobility for work, and any other reasons, it only makes sense to secure a plan that is effective everywhere you are. While local plans are usually cheaper, they only provide coverage in your current location. If you move countries, you’ll need a new policy, which again, might not offer coverage for any pre-existing conditions. Also, you may end up paying for a health plan twice because if you need to move countries in the middle of your plan, you will end up paying for two policies at the same time, in both locations until the previous one expires.
With the international plan, you don’t have to worry about your medical coverage at all. Whether you need to change the country of residence for work, pleasure or just for short term like holidays, you can keep full access to hospitals and clinics worldwide at no extra cost. Most importantly, you keep your benefits for chronic diseases whether you are in Italy, Japan or virtually any place in the world (for plans that include the US coverage).
Private international health plans come with extra benefits
Many of the international private medical plans come with a set of auxiliary coverage benefits. These benefits often go beyond standard medical-related only benefits and might include supplemental cover for:
– Assistance for major political/terror issues
– Medical evacuation
– Right to the second opinion
– Convenience services – e.g. 24-hour nurse advice hotlines, pharmacy delivery
– And more
While the chances of a major accident in which you need to be transported to a highly specialized clinic or require terrorist-related assistance are slim, it’s nice to have that extra layer of protection. Such extra benefits are an indication of an excellent international private medical plan.
How to identify quality long term health insurance plans?
There are many things to look for when deciding on a plan that is supposed to offer a lifelong coverage. From analyzing the history of the insurer’s premium increases to its reputation and size, plan’s portability and benefits, quality plans are not easy to find.
Pacific Prime has identified ten ways of determining a quality long term health insurance plan in Pacific Prime’s Guide to Obtaining Long Term Health Insurance, which is available for free download.
Our guide is an excellent overview of the process and will give you all the necessary knowledge and prepare you for the conversation with one of our brokers because, in reality, no guide can beat the advice from an experienced insurance adviser. Contact us today for a free, and non-binding chat!