Best investment in old age is an insurance cover

It was not until one of his parents got admitted in hospital that James Ngomeli, the chairperson of the Chartered Institute of Marketing Kenya branch, realised the dangers of not being insured.

Ngomeli, who has all along had medical insurance for his family, had never given much thought about his parents’ medical wellbeing. Whenever they complained about any small ailment, he would send them money to go the local hospital.

Besides, they had never fallen seriously ill so he had never had to confront the problem.

However, all that changed when his father got admitted at a private hospital in Nairobi after suffering from a stroke and the family was asked to put down a sizeable cash deposit because of the nature of the ailment. Luckily, Ngomeli had the money and was able to take care of the emergency without turning to relatives.

What shocked him, however, was the amount of money he ended up paying for the few days his father spent in hospital.

Hospital bills

It was this incident that opened his eyes to the risk of losing all their savings to pay hospital bills. People, even those who are fairly well-off, have ended up losing everything when a family member falls ill or is involved in an accident. They often have to rely on relatives to raise funds to clear outstanding medical bills.

“This is a situation that should not happen because it can wipe out all you have saved and invested, leaving your children and grandchildren without an inheritance,” Ngomeli said.

Following this experience, Ngomeli decided to take out medical insurance for his ageing parents so they wouldn’t have to worry about being hospitalised or buying medicine on a monthly basis, which can be costly.

“Taking insurance for my parents was the best decision I have taken because as they age, their medical needs increase and this can be a big drain on the pockets if one is not prepared,” he said.

Parents

Many Kenyans with ageing parents are slowly waking up to the reality that medical expenses are slowly eroding their lifetime savings. They are therefore opting to mitigate the risks by taking out insurance covers for those over 60 years, a move that Peter Nduati, the CEO of Resolution Insurance agrees with.

“This risk is real and it is imperative for us to manage and mitigate it. Fortunately, insurance is there to enable us to transfer that risk to someone qualified to carry it.”

A few years ago, it was practically impossible to get insurance if you were over 60 but this is changing because some of the elderly people invested well in their youth and today have more money than the segment of society that insurers would favour.

Today, underwriters are warming up to clients’ needs and registering much older patients with pre-existing conditions, a situation which was unheard of before. Jubilee Insurance, for example, is using this to push its products in the market. It also covers patients with chronic, psychiatric and congenital diseases as well as HIV/Aids and related conditions.

“The overall uptake of general insurance in Kenya is about three per cent. For medical insurance, the uptake is even lower at below two per cent mainly due to lack of awareness and information on the importance of health insurance and the high premiums charged depending on risk exposure [fraud, high provider costs],” said Abnery Madara, manager Medical Business CIC Life.

Medical cover

As of the end of 2013, the industry netted a total of Sh21 billion for medical cover for a total insured population estimated at 800,000. The National Hospital Insurance Fund (NHIF), on the other hand, has roughly over 3.3 million principals with an estimated 7.8 million beneficiaries.

Young adults graduating from college at around the age of 25 years and those over 60 are the ones most at risk of not being insured. Young people don’t have a source of income while the old, while they may be wealthy, do not see the importance of taking up insurance cover.

“My parents wondered why we were paying for their annual medical cover yet they were not ailing,” said Ngomeli.

Ignorance, myths, negative perceptions and high provider costs that impact on premiums are some of the hurdles standing in the way of health insurance uptake.

“I think there is still a general mistrust of insurers by most of the public because of a history of collapses and not honouring claims. However, our regulation regime today is so robust that an insurer cannot decline a genuine claim without facing the wrath of the insurance regulator. I also think the industry still has a lot of work to do to simplify our offerings,” said Nduati.

There is also the inclination among people to only take insurance when they get older because that is when chronic conditions are more common.

“Most young people see little value in insurance believing that there are better things they can do with their money,” says Jubilee’s Catherine Karori, general manager, Medical Business.

Rich

“There is also the notion that you have to be rich to afford insurance, but this is far from the truth. Think about this: for less than the price of a beer or a newspaper a day, one can cover their family comprehensively,” said Nduati.

Individual medical insurance especially for the old may not actually cost as little but with planning, it’s easy to afford and the accruing benefits are immense especially when one gets to an age where they need more frequent medical care.

The value of premiums is determined by the client’s needs. However, common features one should look for include in-patient and outpatient covers complete with benefit packages like hospitalisation, maternity, pre-existing and chronic conditions, dental and optical cover, and overseas treatment.

Air evacuation can also be included in the cover as it gives you the chance to be airlifted should you fall ill in a place with no proper medical facilities or should you need to be airlifted from one location to another. Ambulances are also provided for evacuation.

“Evacuation is a standard benefit under the in-patient cover. On some of our products we have options to purchase this as a separate option because air evacuation can wipe out a member’s limit leaving them with little or no benefit after the evacuation,” Karori said.

Health care providers also dictate the premiums payable to the insurer. Category A includes top-end providers like Nairobi, Aga Khan University and Karen hospitals. There’s also category B with medium-level providers while government and faith-based facilities are in category C.

Countrywide outlets

Most of the top-end providers have, in the last three years, opened outlets all over the country. This has eased access for customers seeking their service from upcountry as they no longer have to travel to the city to get medical services. Aga Khan and Avenue hospitals are some of the institutions that have spread their wings countrywide.

Children looking for medical cover for their parents or young people seeking cover need to observe the following seven pointers in order to get the best value for their money: Scope of cover, details of what is not covered, time when the benefits cannot be accessed, affordability and healthcare provider panel and their reach.

Ease of access and whether it is cashless or on reimbursement basis is also important. Finally, take time to understand the meaning of terms such as pre-existing, chronic and congenital conditions.

Insurance premiums are paid annually. Children taking up cover for their parents can split the amount among themselves to afford better care for their parents.

However, parents can also be responsible for their health by either making the total contributions from one source or paying for it partly from their income, pension or savings. Getting your insurance at the age of 50 other than 65 can also help ease the membership process.

Group cover

Another way of going round insurance premiums is by buying a group cover. Students and other young people enjoy lower premiums as their risk is perceived to be lower.

Margaret Kathanga, manager Medical Sales at Britam, says group covers are cheaper due to the risk being spread out among many people. She defines a group as any registered company, businesses and organisation with a minimum of at least 10 employees.

Students, on the other hand, also attract low premiums because of less risk. Insurers, however, agree that they need to create more awareness on the different covers available to rope in more clients. Awareness will definitely guarantee Kenyans better healthcare and risk mitigation.

As a parting shot, Nduati asks, “why would people who ought to be aware of the benefits of medical insurance be holding fundraisers when someone falls sick and is hospitalised? I am happy that the harambee culture is going out of fashion.”

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