Key Pointers for Insurance Shopping
Insurance is an instrument that covers you in the event of an incident, accident, illness, or even death. There are many types of insurance around, and even those of the same type can vary in terms of their charges, levels of cover, and excess calculation methods. So how can you go about sniffing out the perfect insurance package for you?
Your Exposure to Risk
Look no further than yourself as the starting point of your evaluation. How high are the risks to yourself and your dependents should smething befall you? Are you the sole bread-winner? Are you working a dangerous career? Or are you simply a thrill-seeker who relishes active, risky hobbies? If you’re more docile than anything mentioned above, you can probably get away with a shallower and therefore cheaper insurance cover; otherwise, you might want to search for a package with better coverage in case of anything untoward.
The Insurance Coverage
It’s best to compare apples with apples when it comes to insurance shopping. After all, what’s the point of comparing, say, a third-party vehicle insurance and a comprehensive one when they don’t even provide the same amount of coverage? Instead, compare a few packages in terms of what they cover – as well as what they don’t, just so you won’t be caught in a sticky situation where your insurance doesn’t cover your predicament – then make your choice.
Your deductible refers to the amount you’ll need to pay before your insurance policy kicks in and pays the arrears for you. For example, if your deductible is RM2,000 and your claim is worth RM20,000, you need only pay RM2,000 on your own. The lower your deductible, though, the higher your premium will cost you because your insurer will have to foot a bigger bill whenever a claim gets through. The health of your emergency fund may well be the determiner of how much you’ll be paying for your insurance: the healthier your fund, the higher your deductible can be, and the lower your premium. Remember that in most cases you’ll have to pay premiums for as long as the insurance remains active, so be sure to weigh the short- and long-term pros and cons before you take the plunge!
The Insurer’s Voluntary Excesses
Insurers also have their own ways of making their policies look more enticing, and one of those ways is manipulating the price tag you see. One way is to play around with the insurance cover. Another one is to set a high voluntary excess level. Voluntary excess level refers to an amount of any claim that’s not covered by your insurer. That means you’ll be coughing up that amount, not your insurer. Basically, voluntary excess plus your deductible equals the amount you have to pay when you claim. For example, if your deductible is RM2,000 and your voluntary excess is RM1,000, you’ll need to pay RM3,000 when you claim.
Beware of Bundles
Bundles are convenient, and in many cases we accept the bundles without further thought. Did you shop around for your car insurance when you bought your new car, or did you leave that to your car dealer? Taking a bundled deal means that you have one less thing to think about, but you might end up with the poorer end of the deal for it. You might be offered travel insurance when you book your holiday, or payment protection insurance when you purchase products off a catalogue. Unbeknowst to you, cheaper, better deals are just around the corner if you’d just take some time to search.
Consider Informed Haggling
Do you already have an insurance provider? If your answer is yes, sometimes you might be able to pressure your insurer into giving you a better deal or upgrade to your existing package by doing a bit of sleuthing and comparing the offerings from their competitors. Insurance companies would hate to lose you, and if you have enough clout, you might be able to push down the cost of your renewal quote once you show proof of a cheaper quote in the market.
Read Your Policy
A lot of information is spelled out (though many of us would consider it ‘hidden’) in your insurance policy. Don’t wait until mishaps happen before you find out what’s not covered by your policy! Moments of strife are not good times to be scrambling for that policy document you’ve signed but never read. Read it – at least the summary of the insurance cover, if nothing else – so that you know exactly what you’re being covered for.
Get an Expert Adviser for Unique Circumstances
Do you have atypical ircumstances that make insurance shopping difficult? It might be worth your time to consult an expert adviser about them before you purchase any insurance, just so you’re sure that the insurance can really cover you when the need arises.
With all these key pointers in hand, are you ready to start insurance shopping yet? It’s never too late to start!