3 Things You Need To Know When Buying Insurance 1

3 Things You Need To Know When Buying Insurance

Aneth Ng-Lim

Posted at Sep 27 2021 01:54 PM

Call me paranoid but with COVID-19 infections continuing to rise at an alarming rate, hospitals full to capacity and health workers going on strike, plus throw in the recent typhoons and earthquakes, and let’s not forget a volcano eruption waiting to happen, I decided to buy more insurance.

With two young daughters not yet of legal age, plus a widowed parent, I wanted to make sure that they will have financial security when I pass on. It’s something not everyone wants to think about, and as a result they fail to plan. And you know what they say about people who fail to plan? They are actually planning to fail.

So on to shopping for insurance. Even with my financial know-how, it was not easy to get the proposal I wanted when I started asking around. I reached out to insurance agents from several life insurance companies and all of them were actually enthusiastic. After all, they earn a commission for every policy sold and are not entitled to a regular salary so they can’t afford to miss a chance to make a sale.

But getting them to give me the right proposal was another thing altogether. Some sent proposals even before I told them what I needed. Some ignored what we discussed where I covered what I was looking for. If you’re considering buying insurance, here are the top 3 things you need to know.

#1 Insure against the risks important to you

I was presented at least 10 different kinds of insurance products, none of which I wanted. I was not looking for a term insurance, or an insurance linked to investments. These are all good products but not the one I wanted at this time.

People buy insurance to protect them and/or the people that rely on them who may be their family or friends against the unexpected. The most obvious one is that if you die before old age. If this happens, your dependents may be in financial distress, having to pay medical bills and funeral expenses. Owning insurance that can pay a lump sum will no doubt be a welcome relief for them.

Some of the unexpected that you would want to be prepared for include early death especially if you have dependents who would suffer, serious disability which will render you unable to work, and major medical bills if diagnosed with a long, serious illness.

I was shopping for the last one, and wanted a health insurance that will help in paying medical bills that can run up to a small fortune, and so I won’t be a burden to my family should this happen. Knowing the risk or risks you want to insure against will help narrow down your choices considerably.

#2 Compare prices, and make sure they are apples to apples.

The cost of health insurance surprised me, with premiums that are higher than the traditional life insurance. They also came in a wide range, making it difficult to decide but one thing I discovered is that the cheapest one is not necessarily the best option.

Apart from making sure that the insurance company is financially sound and will be around for many years until the time you will need them, you also need to compare their prices fairly. To be able to do that, make sure you have an apples to apples comparison.

Check about schedule of payments – is it one-time, over five or ten years, or you pay for life? If paying one time, or over 5 and 10 years, is this guaranteed, or you could end up paying more in case the policy dividends are unable to pay for succeeding premiums?

Look into the coverage as well. Some are cheaper because it will cover a shorter list of illnesses plus a smaller amount per dreaded disease or for hospitalization coverage. Do your homework to get the best deal for your insurance money.

#3 Buy as broad a coverage as possible.

Because we buy insurance to cover risks, you would want to buy a policy that will cover as broad a coverage as possible. Buy insurance that covers a wide number of scenarios. Don’t insure against just one type of accidental death, or one kind of serious disease.

If one policy insures you for 10 major illnesses, and another proposal will cover 20 major illnesses, I would buy the second option. Don’t be tempted by the savings offered by the policy that will cover you for 10 major illnesses. If the time comes and you find that your policy will not cover an illness you were diagnosed with, that’s one regret you will have to pay for painfully.

Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.

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Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.