Say what? Shouldn’t buy insurance? That’s right, that is until you have asked your agent these 8 questions!
You Shouldn’t Buy Insurance Unless Your Agent Has Answered These 8 Questions
1. My company/ employer offers group insurance. Do I still need to buy additional protection for myself?
In general, group health plans offered to employees have limited coverage. The features that you would like to be included in a health plan may not be present. Such as a certain illness that you are at risk for due to family history.
Employers negotiate with the insurance providers and select the most cost effective plan. So you may find that the group health plan insufficient. Furthermore, you lose the coverage once you leave the company. Or when the company decides to cut back on expenses and cancels or downgrades its group health plan. Therefore, we highly recommend that you own your own health insurance plan that caters well to your specific need.
2. I already have life insurance, do I still need health insurance?
They have very different purposes. Life insurance is to ensure that your family and dependents left behind are able to maintain their lifestyle in your absence. Although it may offer some protection against illnesses, the coverage may be somewhat limited.
The main objective of health insurance is to cover you against medical and hospital expenses. This cost includes hospital charges, surgery, prescribed medications, actual treatment charges, follow up appointments and consultations. More on health insurance here.
Although one may not need life insurance (for easy infographic, read here) but everyone should own a health plan, considering the rising cost of medical care and the fact that contingencies can strike any time.
3. What is the ideal age for me to buy insurance?
Although there is no right age to purchase insurance, buying early does have its advantages.
Insurance is about managing risk. Purchasing life and health insurance at a young age means lower risk at making a claim due to death or illnesses. This will entitle you to a lower premium.
These risks are higher as you age, making it costlier for you to purchase an insurance plan. Furthermore, insurance companies will reject your application if you are already suffering from a certain disease.
Another advantage of buying early is that once you have already purchased a plan, the insurer can no longer add exclusions to your policy for any illness that you may be diagnosed with later, while being insured by them.
4. I have an insurance plan. But will the premium increase every year?
This is perhaps one of the most critical information you should obtain from your agent before purchasing a plan! Too many customers are unaware of this bit of fact making them blame their agents when they find that their premium costs more the following year.
Be aware that some policies have a fixed premium rate throughout the length of the policy, while others may offer an increasing premium rate. Increasing Term Insurance is a good example where sum insured increases every year, which causes premium to also increase accordingly.
Many people just want to have a life plan that they know they will be paying a fixed premium every month without any surprises. So make you clarify this with your agent first!
5. What will happen if I don’t pay the premium?
The relationship you will be having with your insurance policies are likely long term. So make sure you are ready financially before committing. A default in payment (failure to pay) may mean losing your coverage altogether. Ouch.
Policies may not lapse (become invalid) immediately after failing to make your monthly/ yearly payment. Some policies offer a certain number of grace period.
So make sure that you truly understand the terms. Ask your agent about it and make him point to the find prints!
6. What will happen if I decide to cancel my policy?
As said above, insurance is a long-term commitment. Do not go into it unless you are truly ready. Avoid having to cancel your policy especially if you have already had it for years. However, if you are unable to avoid from doing so, here’s what you need to know.
It really depends on what type of policy you are cancelling. Some policies accumulate cash value over time, in which case, you may be able to cover some of your premiums with the plan’s cash value. Other policies however, you get nothing.
Cancelling a policy almost always guarantees that you lose more in premium no matter how much return you may gain from it. So make sure your agent explains the consequences clearly and thoroughly.
7. What if I don’t make any insurance claim against my motor and health policies?
Well then good for you! Because although you have all the right plans in place, you should still wish that you don’t ever need to use it. Imagine you going on a gloomy day with an umbrella. Just because you are well prepared, does not mean you wish for the rain to fall. Even so, your agent should explain to you the benefits of not making a claim against your policy – if any.
Some policies offer a reward system such as the No Claims Discount (NCD) if no claim is made throughout the length of the policy. This is common for motor insurance and you can save a lot of money from it – up to 55% of your premium in fact. So learn about it here.
8. What will happen if my existing agent no longer works for the same insurance company?
Here’s an important question many neglect to ask. Agents come and go. Some don’t leave the industry for good but choose to move to a different insurance company. So what happens when yours no longer represents the company you purchased your plans from?
A good agent would probably let you know beforehand. However, in such a situation, insurance company will usually notify you of the news via an official letter. The letter should also consist of the name and contact details of your newly appointed agent.
If you choose to stay with this new agent that was selected for you, or if you know of some other agent representing the same company whom you are more comfortable with, you can request to switch.
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