Insurers roll out higher coverage ahead of national initiative
PETALING JAYA: As Malaysia prepares to roll out the Medical Health Insurance and Takaful Initiative (MHIT), several insurers are offering policyholders upgraded medical plans with higher annual limits and longer protection periods.
However, these plans often come with deductibles and cost-sharing features that many consumers may not fully understand, said industry observers.
MHIT, with affordable premiums but still offering premium private hospital healthcare, is set to be rolled out in the second half of the year.
In order to minimise the number of policyholders switching over to the new initiative, insurers are now adjusting product structures.
Many of these newer plans – providing higher limits with cost-sharing features such as deductibles and co-payments – are designed to supplement existing coverage rather than replace it, said insurance industry expert and lawyer Thechinamoorthy Subbiah.
Deductibles and co-payments are costs the policyholders pay before the insurance kicks in.
“If a policyholder already has existing coverage, the new, higher deductible should come out of that policy,” he said.
Concerns arise mainly when policyholders cancel existing plans and switch fully to new structures with deductibles.
Thechinamoorthy also said medical coverage limits have risen steadily over the years alongside escalating healthcare costs. Higher annual limits, while attractive, may not reflect typical usage patterns, he added.
On MHIT, he said the scheme could widen access to basic coverage and ease pressure on smaller claims.
However, there are still grey areas, including how it will be implemented.
“The bigger concern is sustainability. Will it still be there 10 or 20 years from now, especially if there is a change in government?”
He noted that the industry’s recent return to deductibles and co-insurance reflects a broader pullback after years of popular cashless, no-deductible medical cards, which he said contributed to overuse and rising claims.
Thechinamoorthy said a national-level MHIT scheme could strengthen risk pooling, but urged consumers to avoid rushing into major changes without clarity on long-term direction.
“It is still important for them to maintain their current coverage and wait for clearer details,” he said.
An insurance agent, who only wanted to be known as Iris, said rising premiums should not be blamed solely on insurers, citing broader drivers such as medical inflation and advances in treatment.
As a cancer survivor, she said her insurer had paid nearly RM1mil for her treatment, including targeted therapies that aided her recovery.
“Without insurance, many Malaysians would struggle to afford such treatment.”
She cautioned against relying too heavily on subsidies or proposals to tap EPF savings for healthcare, saying retirement funds should be protected.
“Insurance remains essential protection against catastrophic medical bills, and premiums must be viewed in the context of long-term medical inflation.”
She called for a whole-of-nation approach involving government, hospitals, insurers, pharmaceutical companies, agents and consumers.
A long-time insurance agent, who requested anonymity, said insurers have steadily raised coverage limits over the years, often beyond what most policyholders would realistically use.
He said some products were once marketed with limits reaching several million ringgit, which he described as sales-driven rather than need-based.
“Limits like RM5mil, RM10mil or even RM30mil were largely sales-driven. Most people will never reach that level.”
He added that agents often face pressure to promote company-led products rather than tailor advice to individual needs.
He warned that rising premiums could lead to policyholders dropping coverage later in life, when they really need it.
“Some may lapse their policies at 65 or 70, when they still need coverage.”
When contacted, a spokesperson from the Life Insurance Association of Malaysia (LIAM) said it did not have many details about the MHIT and coverage.
“The details will be shared once we have them.”
