What Is Medical Insurance? Learn the Know-how to Buy a Suitable Plan

Public hospitals in Hong Kong are known for long wait times, prompting many people to purchase medical insurance for quicker access to private hospital care. For those on a budget, plans covering general ward stays are often a preferred choice due to their lower entry cost. However, not all insurance plans for general ward stays are created equal—some may fall short in claims coverage when it matters most. Traditional medical insurance plans come with sub-limits on different medical expenses, which can make it hard for policyholders to estimate actual payouts. In recent years, insurers have launched “Full Coverage” medical plans that also work well with general ward stays. So, what is medical insurance? What should you watch out for when selecting a medical insurance plan? The 10Life team breaks down all the essential information for you.

Medical insurance in Hong Kong comes in different forms, and each type serves different needs. Understanding these options can help you choose the right coverage.

Voluntary Health Insurance Scheme (VHIS)

The Voluntary Health Insurance Scheme (VHIS) is a government-certified medical insurance scheme that includes two main plan types: Standard Plans and Flexi Plans. Coverage includes hospitalisation, surgery, psychiatric inpatient care, congenital conditions, and non-surgical cancer treatments. VHIS guarantees renewal up to age 100 and imposes no lifetime benefit limit. Tax deductions are also available for eligible premiums. 

Traditional Hospitalisation and Surgical Reimbursement Insurance

These plans primarily cover inpatient and surgical expenses, including room and board, surgical fees, operating theatre costs, anaesthesia, and ICU stays. Reimbursement is made based on actual expenses incurred, subject to itemised or annual caps.

Hospital Cash Plans

Rather than reimbursing medical expenses, these plans provide a fixed daily cash payout for hospital stays or based on the surgery grade. This payout can be used at your discretion, which is ideal for the self-employed or those whose income halts during recovery.

Outpatient Insurance

Outpatient plans cover medical expenses incurred at clinics, including general practitioners, specialists, traditional Chinese medicine, and physiotherapy. However, they do not cover hospitalisation, and many have limits on claim amounts or the number of visits. 

Group Health Insurance

Provided by employers, group insurance typically includes inpatient, outpatient, and sometimes dental benefits. Coverage is limited by company policy and becomes invalid upon resignation or retirement.

Cancer Insurance Plans

Specifically designed to cover cancer treatment, these insurance policies reimburse costs for chemotherapy, targeted therapy, and immunotherapy. Some plans also offer a lump sum cash benefit (e.g., HK$100,000) to help with medical bills or income loss.

Medical insurance plans can vary widely, but they generally share the following key features:

Reimbursement-Based Claims

Most medical insurance plans operate on a “pay first, claim later” basis. You’ll pay the medical provider upfront and submit receipts for reimbursement, subject to the plan’s limits and requirements.

Medical Necessity and Reasonable Charges

Claims are typically reimbursed only if the treatment is deemed medically necessary, and the charges are considered reasonable and customary based on local standards.

Annual and/or Lifetime Benefit Limits

Plans may impose annual caps, lifetime caps, or benefit limits per injury or illness. VHIS standard plans, for example, have no lifetime limit, while traditional plans may cap payouts for certain conditions or services.

Co-insurance and Deductibles

Some plans require co-insurance, where the policyholder shares a percentage of the cost (e.g., 20%), or a deductible, where the policyholder pays a fixed amount before reimbursement begins.

Guaranteed Renewal

High-quality plans, especially those under VHIS, often offer guaranteed renewal, meaning your coverage continues each year regardless of changes in your health, up to a specified age (e.g., 100 years).

Optional Riders for Enhanced Coverage

You can often add Supplementary Major Medical (SMM) riders or other add-ons to boost protection for major illnesses, outpatient services, or alternative therapies.

Tax Deductibility (for VHIS)

VHIS premiums are tax-deductible, making these medical insurance plans particularly appealing for working individuals seeking both coverage and financial benefits.

Most medical insurance plans operate on a reimbursement basis, covering expenses that are medically necessary and reasonable and customary. When applying, you’ll choose a room type—private, semi-private, or general ward. General ward plans come with a lower premium, but they fall into four main categories:

• Traditional Medical Insurance with individual benefit sub-limits
• Traditional Medical Insurance + Supplementary Major Medical (SMM)
• High-limit Full Coverage medical plans offer 100% reimbursement for multiple benefit items
• Full Coverage Plans with benefit caps based on per illness/injury

Traditional medical insurance plans come with itemised benefit sub-limits, such as caps for surgery fees, anaesthesia, daily doctor rounds, operating room, room & board, and miscellaneous charges. These plans are generally suitable for minor illnesses or procedures like short hospital stays for fever, haemorrhoid surgery, or endoscopy. They help avoid the long queues at public hospitals.

However, for more severe or chronic conditions, such as cancer or cardiovascular diseases, traditional plans often result in partial reimbursement, meaning policyholders may need to rely on public hospitals for major treatments.

Table 1: Comparison of Traditional Medical Insurance (General Ward Plans)

Due to limited protection under traditional plans, policyholders often add Supplementary Major Medical (SMM). This rider kicks in when actual medical costs exceed the basic plan’s benefit limits. For general ward plans, SMM typically provides HK$100,000–$200,000 in additional coverage, calculated per policy year or illness, depending on the plan. Most SMM riders include co-insurance, requiring the policyholder to cover 15%–20% of the excess expenses.

While SMM extends coverage and boosts reimbursement rates, some SMM riders do not cover non-surgical cancer treatments, such as chemotherapy, targeted therapy, or radiotherapy. If the insured requires a long-term targeted therapy treatment which can easily cost over HK$1 million, so if you’re relying on SMM alone, you may still face significant out-of-pocket costs, needing to seek treatment at a public hospital instead.

Table 2: Comparison of “Full Coverage” Medical Insurance (General Ward Plans)

Assuming the policyholder is a non-smoking male enrolling in a plan with a $0 deductible.

Table 3: Comparison of “Full Coverage” Medical Insurance with Limited Compensation for Injuries and Illnesses (General Ward Plans) Assuming the policyholder is a non-smoking male.

Medical risks don’t discriminate by age or occupation—anyone can fall ill or get injured, which is why medical insurance is essential for everyone:

• Children may need frequent doctor visits and protection from unexpected illnesses.
• Young adults just starting their careers benefit from locking in lower premiums while healthy.
• Parents or caregivers need protection for themselves while supporting loved ones.
• Seniors face a higher risk of chronic conditions and can secure better access to care.

When illness strikes, medical insurance provides critical financial support for hospitalisation and surgery, easing the economic burden during stressful times.

Why do I still need personal medical insurance if I already have company-provided coverage?

Many people think that company medical insurance is enough, but most employer-provided plans come with basic coverage and low claim limits. More importantly, the coverage ceases upon resignation or retirement, potentially leaving a protection gap. If you want comprehensive and long-term protection, consider buying an individual medical insurance plan as a top-up to fill the coverage gaps and ensure continuous protection post-employment.

Is it better to buy medical insurance earlier?

Yes. Premiums are typically calculated based on your age and health status. The younger and healthier you are, the lower your premiums—and the more likely you’ll pass underwriting smoothly. Waiting until later in life increases the chance of higher premiums, coverage exclusions, or even policy rejection. Buying early helps you save on costs and get protected sooner.

Which medical insurance plan is the best?

There’s no one-size-fits-all answer. Each insurer has its strengths, and choosing the right plan depends on your health needs and budget. As Hong Kong’s insurance comparison platform, 10Life uses a proprietary actuarial scoring system to evaluate medical insurance plans based on coverage, premium, and key product features.