Things to Consider When Purchasing Your Insurance Policies

Good job on taking the first step to being a responsible adult. Yes, we’re talking about actually making a conscious decision to purchase the right insurance cover. The only problem is, now, you’ve been smacked in the face by a maze of confusing details, policies and jargons. The purchase the right insurance cover. The only problem is, now, you’ve been smacked in the face by a maze of confusing details, policies and jargons. The insurance industry isn’t making it easy for you to be an adult, aren’t they?

Purchasing Insurance Policies in Singapore

The problem is purchasing an insurance policy can be rocket science; it is a weird world where plus two is not always four. What you have to do is list out your requirements, shop around, understand the tiny details, grill and ask your insurance agent the right questions until you understand the policy in its entirety, and then choose the most appropriate one.

Insurance Policies Purchase Points

You can purchase insurance from:

• Insurance Company Office
• Insurance Company Agents
• Bank
• Financial Advisor Firm Representatives
• Insurance Broking Firm Staff

Purchasing insurance directly from the insurance company has its benefits because you can almost be sure the people you are dealing with are genuine. But, you may have to travel to the company offices repeatedly to complete all the formalities, and we all know that it’s something a busy routine may not always allow.

Watch Out For . . .

There are two main things you should look out for. Firstly, if the person or company you are dealing with is genuine. Second, if the policy takes care of your needs in a crisis situation. Look out for:

• Identity of the Intermediary: ensure the intermediaries are authorised by the Monetary Authority of Singapore (MAS). Such agents are required by law to disclose product information clearly:
• For life insurance, check the agent’s Financial Advisers Representative Number and verify it on the MAS Register of Representatives
• For general insurance, ask for the intermediaries’ nominee number and check it on the Agents Registration Board (ARB) website
• Complex Terms & Terminologies: can confuse you. Some agents might use them to impress you and then sweet talk you into purchasing policies you do not really need

Guard against this. Do not proceed until you understand all the details and double check if these meet your requirements

• Disclosure: of all known details correctly is essential because the insurance company has the right to deny your claim if you hide some information. Never sign an application form with missing or incorrect information
• Affordability Over the Long Term: because you have to pay premiums in addition to your routine expenses viz. bills, mortgage instalments and the like

This is one factor that can cause the discontinuation of your policy, a lose-lose situation as your funds are locked and you do not get the benefits when you need them

Then again, some policies build up cash values over time and if you terminate them because you can no longer afford them, you may receive a cash value considerably lower than all the paid premiums

• Exclusions: are absolute claim killers. These are the unfortunate events not covered by the policy. Read the fine print and do not purchase the policy if it excludes those very events you are looking to guard against
• Investment Linked Insurance Policies: are a great way to combine insurance and investment

However, these are expensive and the insurance part may only be a tiny fraction of the total premium. It may so happen that you get only a small compensation when disaster strikes

Do not purchase these if you already have funds invested separately. If you do buy them, ensure that the insurance part is adequate

• Changing Insurance Company: is a great way to strike a better deal. Just ensure, the new policy covers all the events that the old one did. Disclose the new medical conditions you may have developed after purchasing the old policy
• Claims Procedure: can be an enormous drain of time and energy struggling as you will be with the emotional and/or physical trauma after the unfortunate event. The devil is in the detail. Ensure you understand this process and its duration thoroughly
• Compare: because all intermediaries will most likely present only the brighter side and try to conceal the darker one, if any. The best way to get around this is to get an agent who sells the policies of numerous insurance companies

Keeping Track Of Your Policy

Your policy will help you deal with difficult times only if it is active when the untoward incident occurs. To prevent your policy from lapsing and to ensure that the validity of your claim is not diluted:

• Pay your premiums regularly and within the deadlines
• Check the insurance statements and letters the company sends you and understand them
• Do not allow your policy to lapse. If you are unable to pay premiums for some time, check out your options and work on them. Remember, a lapsed policy is a lose-lose situation

Finally

While we’d like to tell you that that you can breathe a sigh of relief when you’ve finally purchased a policy, well, you sorta can – but your responsibilities don’t end after purchasing the policy, they begin! Don’t tell us we didn’t warn you.