Caught up with daily life struggles and work, another whole year has breezed by us.
Given some time off from work, the end-of-year holidays present an excellent opportunity for us to take stock of everything that has happened. It’s a great time to reflect on what we’ve achieved as a person, to make new resolutions for next year; to look at our progress at work, to set new targets for ourselves; to count the returns on our investments, to ensure they are performing well; and to do many other reviews of our personal life.
One such review we should not neglect on is our insurance requirement. Many of us only try to recall our insurance coverage or get in touch with our agents after something has happened.
However if we look back on the past year, we would realize that much may have changed for us, and these changes may require updates to our existing policies.
In life, some of us could have gotten married, have a new kid, purchased a new home or, unfortunately, experienced a personal accident or mourned the loss of a loved one. In our professional careers, we could have gotten a promotion, a pay raise, took a new job or downgraded to a lower paying job as we approach retirement.
These changes in our lives may create a gap in our insurance requirements or make redundant some insurance policies we’re still servicing, which is why we should undertake a yearly review of our coverage and needs with our insurance agents.
If you’re in agreement and are considering doing so, here are five questions you should ask your insurance agent(s) when you meet them.
# 1 Do My Current Policies Provide Sufficient Coverage?
This is a simple yet extremely vital question we need to ask our insurance agents. As our lifestyles change or evolve with each year, we may develop some areas where we are over-insured and some areas where we are under-insured. This review will aid us in identifying these gap areas early.
An example of this could be your home contents insurance. If you had just gotten married, not only will you be adding new high-value items such as wedding jewellery, your spouse would also be bringing over most of her valuable possessions. At this juncture, you may also be contemplating a hefty outlay on extensive renovation works in the coming weeks. This may require you to increase your coverage level.
The same goes for your life insurance coverage. When you get married or have a new child, the amount of money you need to leave behind, in the unexpected scenario where something happen to you, increases. This is to fund your spouse’s ability to raise your child(ren) and the living and education expenses your child(ren) requires.
Asking this question allows you to take a comprehensive review of the updates in your life. This could cover situations such as increased travel for work, which may impact how you purchase travel insurance or whether your child has gotten a drivers’ license, which may mean it is time to include them for your car insurance. Even things like new hobbies, such as sky diving, or getting a pet dog may mean you should relook your coverage levels and types of coverage you’re insured for.
# 2 What if…?
This is another important question we need to ask our insurance agents, and get in writing if possible. We don’t all have the time or competence to read through our insurance policies and understand every single thing the lawyers of these multi-billion dollar companies have drafted.
The “what if” questions are meant to enable us to understand what will happen should a scenario arise.
“What if I fall sick, and need to visit the doctor?”
“What if I contract some of the diseases that have newly broken out such as Zika or Ebola, or others in the future?”
“What if I have a dental problem that affects my health rather than just the aesthetics of my face?”
“What if I miss a plane because I didn’t read the email informing me of a postponement of a flight while touring an area with poor reception?”
“What if our jewellery, and the relevant receipts, are lost in a fire?”
“What if my brother was driving my car when it got in an accident?”
“What if I decide to become an Uber driver next year?”
These are the “what if” questions in life. Many of us, even after buying insurance, still don’t have a clue about what will happen in these scenarios. To remind, inform and better prepare us for some of life’s uncertainties, we should ask these questions. This will also tell us if we have the right insurance coverage in place for our needs.
# 3 Do I Have Dual Coverage?
During the annual review, we should also bring up any insurance that our workplaces cover us to ensure we are not mistakenly over-insured.
By being mistakenly over-insured, we mean insurance that you actually need but are already covered with through other means, mostly due to your employers.
An example of this could be having excessive disability insurance. You could be covering yourself more than others, but at a necessary level, due to the nature of your work. However, your employers may some provide coverage in the case of your disability or partial disability. You could actually insure yourself for less had your agent known you were already covered by your employers.
Some times, you may be told that you require this comprehensive insurance because it will be an added “bonus” to your family or that you need it in case you change employers. If you do want to give your family a bonus, then this should be up to you, rather than your insurance agent.
And in the second scenario, if you change employers, it is likely that you have not claimed against this disability insurance and would still be able to get yourself covered individually, or if you’re lucky enough, your next employer will also provide similar coverage.
# 4 Are There Any Discounts?
Ask and you shall receive.
More like don’t ask and you’ll never receive.
Often, by talking to your insurance agent rather than for your insurance to be “auto-renewed”, you may be able to save a few bucks.
During your annual review, your agent may inform you that you’re entitled to some discounts for renewing your policies with the company. You may also, in the course of your conversation, bring up certain aspects such as being a good driver with clean record for a number of years or having installed certain anti-theft equipment in your home, this may reduce your premiums as your insurer deem the chance of you submitting a claim to be lower. In some instances, bundling products from the same insurers may also entitle you to a bulk discount.
Being conscious of the costs of your insurance is important as it may save you some money in the long run.
# 5 What About My Investments?
Many insurers would also have tried to sell us investment-linked policies at some point in our interaction. This may be because these products usually pay out the highest commission rates to the agents selling them.
On the off-chance that you did buy such a product, you should ask your insurance agent how it is faring. And to compare the returns they have delivered in the past two or three years against certain benchmark indicators such as the STI (Straits Times Index) returns, comprising the 30 best stocks in Singapore, or the returns the CPF (Central Provident Fund) OA (Ordinary Account) is paying.
At DollarsAndSense, we dislike such policies as they tend to over-complicate investing and underperform the simplest investments.
Your Annual Insurance Review
You should call your agent and inform him or her that you would like to review your insurance policies and requirements. This will allow your agent to be prepared for this discussion and to inform you of new developments or changes to your policies coming up for renewals as well as other requirements that you could look into.
While reviewing your policies, do bring up all your doubts and necessary talking points to ensure you are familiar with your policies. This includes knowing the premiums you are paying. It will also allow you to make a comparison with another insurance agent if you feel you are not being adequately served.
After this review, do not act immediately. Some times, agents may put the pressure on you to “sign up now!” to receive certain discounts or incentives. While not 100% true, these are usually signs of a poor product that requires some peddling from the agent. Take time to digest what you have discussed with your agent and think about your next steps. You may even want to compare your policy requirements with another agent.
What are some other questions that we should ask our insurance agents? Discuss it in the open Insurance Discussion SG Facebook Group with other like minded individuals.
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