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Already Know What Insurance Policy You Want? Here Are 4 Main Channels To Make Your Purchase

Where you buy your insurance from does makes a difference.

This article first appeared on fundMyLife, the platform that connects you to the right advisers.

You’ve done your homework on which insurance policy to buy. You’ve read through every article in finance media sites like DollarsAndSense, scoured through every HardwareZone forum post, and tried all the financial calculators out there. Now that you’re equipped with all the knowledge you need to make a decision, it’s time to buy the policy you want. Wait a minute, who to buy insurance from?

Fortunately for you, there are plenty of places you can purchase your policy. You can get your policy from tied agents, independent financial advisers, personal bankers, and if all else isn’t your cup of tea, you can even do it yourself (DIY). You might be wondering if each of these places makes a difference. Spoiler: it does. In this article, fundMyLife looks at the different channels where you can purchase insurance.

#1 Tied Agents

What Is It?

Tied agents are appointed representatives of one single insurance company and thus can only sell policies from their respective companies. They also form the most common of agents you will encounter out there.

Is It Any Different?

They are unable to sell insurance from other companies. That means if you want to purchase products from other companies, you’d need to engage another tied agent from a different company. There are pros and cons regarding that.

In addition, due to the fact that they can only sell their company’s products, there is an impression of biasedness. However, the best ones can offer their opinion regarding competing products and tell you the pros and cons of products outside their companies. Make sure you do your own homework as well.

#2 Independent Financial Advisers (IFA)

What Is It?

Independent financial advisers, as opposed to tied agents, have access to a greater variety of products from several companies. Their draw is that they can recommend you products from different companies and provide comparisons for these products. Thus the term “independent” in their titles.

Is It Any Different?

The variety provides flexibility for your financial needs. However, don’t buy too strongly into the whole we-are-independent branding they commonly espouse. Just as you have great tied agents, you also have lousy IFAs. You can have the most “independent” of IFAs, but the independence counts for nothing if they’re terrible at what they do. If the IFA is terrible and they have access to five companies’ products, it also means you have access to five times unsuitable products.

As such, it’s important that you do your homework as well.

#3 Personal Bankers

What Is It?

Once in a while, you will get a call from your bank asking if you’re interested in purchasing insurance. On other occasions, it can be when you’re meeting your relationship manager in the bank and he/she asks if you’ve bought insurance yet. Banks occasionally form partnerships with insurance companies, e.g., DBS and Manulife, UOB and Prudential, etc. In these partnerships, banks act as a distribution channel to capture consumers.

Is It Any Different?

To some, it is a good way to do everything at once – banking, insurance, and investments all under one roof. There is an advantage in getting your insurance via a bank. Innovative bank accounts such as DBS Multiplier involves the purchase of insurance through the bank. We wrote something on the account, by the way.

However, the turnover rate in the banking industry is notoriously high. When it is time to claim, be mentally prepared to do some legwork to correspond with the assigned representative in the bank. In addition, when the partnership between an insurance company and the bank ends, you’ll also have to do some legwork to contact the representative from the insurance company.

#4 DIY

What Is It?

DIY, as its name suggests, refers to you getting insurance without the need of any external human parties, i.e. agents or advisers. The DIY approach depends on what sort of insurance you’re purchasing. Certain kinds of policies are relatively straightforward. Personal accident and travel insurance are examples of this class of insurance. Those, you can purchase online.

For other insurance policies like direct purchase life insurance, some insurance companies do not allow you to purchase online. In those cases, you typically have to trek down to the company’s office to get your insurance.

Is It Any Different?

The DIY insurance experience is divided into two parts: the purchase and claims. Typically, the purchase experience is hassle-free and easy if it is online. After all, in the age of e-commerce, user experience is everything. However, the second part, claims, has more variability. The claims experience of DIY insurance depends largely on the company representative you’re assigned to.

For direct purchase insurance, we wrote an article on the pros and cons of direct purchase insurance, and questions you should ask yourself before you purchase a DPI.