2024 Actual Expense Reimbursement New System! 3 Tips to Review Your Policy and Smartly Cope with Changes in Copy Claims
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summary: “Can’t buy a 3rd actual expense reimbursement medical insurance policy? This article explores the reasons behind the new regulations of the Financial Supervisory Commission (FSC) and the policy changes of insurance companies, analyzes the possible future development trends of actual expense reimbursement, and provides practical advice on how to plan the most effective medical protection under the current regulations.”
Actual expense reimbursement medical insurance has become a standard product in recent years, but it is also a product with a so-called “extremely high loss ratio” in the eyes of life insurance companies. In recent years, they have adjusted their products and sales strategies. The actions of insurance companies such as discontinuing sales and raising premiums reflect the burden on companies selling actual expense reimbursement medical insurance. The FSC also proposed on August 8, 2019, a measure to limit the number of actual expense reimbursement medical insurance policies (including products that offer a choice between daily allowance or actual expense reimbursement) to a maximum of 3 per insured person, and implemented it on November 8, 2019.
Global Life Insurance confirmed that from September 16th, it will not accept applications for a 3rd policy for the same person, regardless of whether they already have 2 actual expense reimbursement medical insurance policies with Global Life Insurance or other companies. However, it also emphasized that the company is not the first life insurance company to adopt this underwriting rule, and that the company will regularly review the underwriting rules of each product and make some adjustments.
In addition, there are very few actual expense reimbursement medical insurance policies on the market that accept copy claims. Although Global Life Insurance does not accept applications for a 3rd actual expense reimbursement insurance policy, the Global Life Insurance Real Medical Reliance Rider (XHB) still has the advantage of copy claims. Other well-known ones include Taiwan Shin Kong Life Insurance Hospital Medical Rider (HX), Far EasTone Life Insurance Yong Kang Fu (RM3), and China Life Insurance Hao Kang Tai (MAJISA), etc. Among them, Taiwan Shin Kong Life Insurance Hospital Medical Rider (HX) has a maximum insured age of 70 and can be renewed up to 84, with no waiting period for illness, making it the most capable of accompanying people to old age.
Multiple Actual Expense Reimbursement Planning Method Dominated the Past Decade
In the past, when life insurance multiple insurance was not restricted, multiple actual expense reimbursement has always been a very high C/P value planning method. Although it is necessary to insure with different insurance companies, and the claims may be more troublesome, it must be said that when the premium for “daily allowance insurance” is relatively high compared to “actual expense reimbursement” insurance, making multiple actual expense reimbursement a pseudo-substitute for daily allowance insurance has become a popular choice.
This planning method has been accompanied by many disputes caused by “malicious multiple insurance” in the past, but it has also been entangled in the dilemma of “the value of human life” vs. “the principle of compensation.” That’s why the FSC explicitly stipulated a maximum of 3 policies per person from November 8, 2019.
💡 I personally think that actual expense reimbursement insurance companies only need to launch products with appropriate premium planning through risk assessment, and limiting the number of policies is meaningless.
What if I can’t buy multiple actual expense reimbursement policies in the future?
Will multiple actual expense reimbursement disappear? In fact, if you look at this from the perspective of the “principle of compensation,” according to the current trend of evolution, it may move towards the path of “good faith multiple insurance.”
⚖️ Insurance Law
Chapter 1 General Provisions
Section 5 Multiple Insurance
Article 35
Multiple insurance means the act of an insurance applicant entering into several insurance contracts separately with several insurers for the same insurable interest and the same insured event.
Article 36
In the case of multiple insurance, unless otherwise agreed, the insurance applicant shall notify each insurer of the names and insured amounts of the other insurers.
Article 37
If the insurance applicant intentionally fails to give the notice referred to in the preceding article, or enters into multiple insurance with the intention of improper gain, the contract shall be void.
Article 38
In the case of good faith multiple insurance, if the total amount of insurance exceeds the value of the insured object, unless otherwise agreed, each insurer shall only be liable for proportionate sharing of the entire value of the insured object in proportion to the amount insured by it. However, the total amount of compensation shall not exceed the value of the insured object.
The Product of Increasingly Mature Financial Technology
In today’s increasingly mature financial technology, my personal view on the future direction of actual expense reimbursement is that the claims process and methods will become more and more convenient and simple. With the launch of claims blockchain (now there is a claims alliance chain), under the framework of the insurance industry technology application sharing platform, the Life Insurance Association and 18 life insurance and 3 property insurance companies have joined hands to promote the digitalization of insurance services with blockchain technology, optimizing the convenience of people using insurance services.
This solves the pain points of customers handling insurance claims, data changes, and other services. At the same time, the Life Insurance Association also responded to the policy goals of the FSC and the Insurance Bureau to promote “digital identity authentication and authorization,” and launched the “Claims Alliance Chain 2.0” pilot project on December 20 last year (2022) with the approval of the Insurance Bureau. By combining electronic signature technology, it realizes paperless claims services. And it extends the service tentacles to hospitals, so that people do not have to run around to apply for insurance claims after being discharged from the hospital, which greatly reduces the waste of time and cost. The more information insurance companies have, the more things they can do.
Actual Expense Reimbursement Personal Multiple Insurance Moves Towards Insurance Company Sharing System
Although the purpose of past multiple actual expense reimbursement was to compensate for the medical expenses of the insurance applicant and the insured, from the perspective of financial planning, it is to make up for the loss of medical expenses in personal risk.
However, the biggest intention and the biggest controversy in multiple insurance is the “moral evaluation” issue.
Maximum Principle vs. Prohibition of Improper Gain and Avoidance of Moral Hazard
The principle of utmost good faith is of course because the daily allowance is too expensive, and buying 2 actual expense reimbursement policies is just right, but the news events that have been exposed in the past are always cases of “malicious multiple insurance.” When all good intentions disappear, who can lead us back to a good intention environment?
Further Reading
Lazy (懶得) Conclusion
Money! In the end, it’s your own. The planning of actual expense reimbursement is important, but what’s more important is preventing and avoiding risks, rather than pursuing those petty insurance benefits when risks come.
No matter how much you buy for multiple actual expense reimbursement, it’s only between NT$200,000 and NT$500,000 (USD $6,000 to USD $15,000 approx.). Instead of thinking about getting double the compensation of NT$500,000 (USD $15,000 approx.) if you are hospitalized (that would have to be a very serious or expensive medical expense), it is better to do a good job of financial planning on a regular basis. Double your wealth through a sound plan.
However, if there are products with guaranteed renewal, it is still more reassuring to buy them!
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