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Risky Business |
Many lawyers have no form of medical or disability insurance cover.
Many sole proprietors and legal assistants and associates working for smaller firms do not have any Hospital and Surgical Insurance (H&S) plans in place.
There is a failure to appreciate that the risk associated with illness is real and that an individual can suffer severe financial hardship if they suffer an illness that requires in-patient or out-patient care. The impact will
be more significant if it is an illness that requires long-term treatment such as some forms of cancer.
An individual’s Medisave fund can be quickly exhausted if he suffers from any severe medical condition. While many may have Medishield, Income Shield or similar insurance cover, they fail to recognise that these policies
provide catastrophic cover and therefore have a high deductible and an element of co-insurance. That is, the insurer will only pay claims in excess of say $10,000 and then only 80% of the claim, which will mean that the individual
bears the cost of all claims below the deductible and has to co-pay a proportion of the claims above that.
It is therefore necessary to have H&S coverage at the primary level. The most cost effective way to purchase this type of cover is on a group basis. Due to cost efficiencies, the premiums paid are much lower on group policies
for the same cover than on an individual basis.
In order to decide on the type of policy you should get either on a group basis for the firm as a whole or on an individual basis, it is best to consult a financial adviser representative or an insurance broker who will be able
to give you a comparison of various covers available and the premiums charged. All insurance policies contain some limitation to the cover and exclusions. You will do well to pay some attention to these, to ensure that coverage
that is important to you, such as overseas travel, is not excluded. Some hospitalisation insurance excludes communicable diseases and that is something to keep in mind.
The type of insurance cover you get will also depend on your preferences. What level of comfort do you expect when it comes to treatment? Will you be prepared to accept a Class B ward or do you prefer Class A? Are you prepared
to use a government hospital or do you prefer a private hospital? etc.
Illness and disability are not respecters of persons and as recent events have shown, they can strike young and old alike. Insurance allows the misfortunes of individuals to be cushioned by the contributions of many.
Disability insurance provides for loss of income during periods of illness and disability. Absence from work for long periods of time will undoubtedly result in significant, if not total, loss of income. This is also a risk
that needs to be provided for.
Currently, there are several disability and disability income policies available in the market. They differ significantly, however, in their definition of disability. Some require you to be totally and permanently disabled,
such that you are unable to do any work. On the other end of the spectrum are policies that will pay out the sum assured when you are able to demonstrate with medical evidence that you are no longer able to carry out your present
occupation. In purchasing disability income cover, it is important to examine the terms of coverage carefully.
As a professional, a lawyer’s greatest asset is himself. Illness or disability is certainly a risk and may cause significant financial loss. It is therefore surprising that many lawyers would give more thought to their car insurance than they would to insuring themselves. The question is, which is more important, the car or the driver? H&S and disability insurance requires more attention than the average lawyer gives it.
Stanley Jeremiah
Goodwins Law Corporation
E-mail: stanley_jeremiah@goodwinslaw.com