8 Most Basic Savings Tips For First Time Insurance Buyers
Every adult needs insurance. And in many instances, even children should have them. The irony is that we often don’t really realize how big an impact a policy will have on our lives until we run into a situation where a huge amount of money is needed, and it could have been covered by just a basic insurance plan.
By then, of course, it will already be too late.
In many ways, getting comprehensive coverage is the responsible thing to do so that your family will not have of bear the burden of your medical bills should you get into an accident. And if you are to die in a freak accident, your family might get a chunk of cash to tide things over. This is even more important if you are the sole bread winner in the household.
Maybe you have finally grown up to think about these serious life issues. Maybe your spouse is demanding that you get a policy to protect the family. Whatever the case, if you are an inexperienced insuree, or simply buying insurance for the first time, here are some timeless tips to help you work out a good deal for yourself.
1) Inquire with at least 3 insurers
Common sense tells us that we need to shop around in order to get the best deal no matter what we are buying. But because an insurance policy is not something we buy as frequently as those sinful bags of potato chips at the supermarket, we sometimes fail to apply this rule.
Many people actually purchase their policies without actually doing any market research. There’s nothing wrong with that. But few people will agree that that is a smart and savvy way to go about it.
The more insurers you go to the better. Just like the rules of managing money, make it a rule to get quotes from at least 3 different insurers. Only then, will you be able to compare policies against each other and pick out a package most suitable for you. Agents might even deviate or customize their policies for you when they realize what the competition is offering you.
2) Don’t buy more than what you need
The hair-pulling part with insurance is that there is always a “what if” scenario with every policy an agent is trying to sell you. This is even when some of them are the weirdest policies you’ve ever heard.
Make no mistake about it. An insurance sales representative will always attempt to sell you riders, add-ons, and upsells in the name of “more comprehensive coverage”. It is their job after all to maximize sales and inform you about how they can fully cover you. But if you are inexperienced, just buy the basics of what you need. You can always read up on the extras when you are free and decide later whether they are suitable or not.
3) Determine your deductibles
The concept of insurance is allowing you to claim expenses when you are in a bad spot. So you might be surprised when you find out that there are custom plans which will require you to pay some of you own money.
The people who came up with deductibles are some of the smartest people around. These people found that insurers would be taking on less risks if policy holders are to pay a certain amount of their own money. And this lesser risk can translate to lower premiums which would make their policies even more attractive to buyers. Lower premiums would then lead to higher volume of sales. It’s a corporate sales strategy written in the stars.
The gross mind-twisting part is that you will also agree that it would be a real long shot should you need to make claims on low probability events. So you don’t really mind the deductibles as the chances of paying for them are remote.
So now many policies come with obligated deductibles. You however, can request a higher deductible to take on more risks in order to lower the monthly premiums.
Assess your comfort level and weigh up the balance of deductible and premium before deciding on a plan you find suitable.
4) Become a super customer
I never put all my eggs in 1 basket. In fact, I buy coverage from 4 different insurers. That’s wacky. I know.
But if you have no qualms over buying all your policies from 1 insurer, you have some leverage in asking for discounts. Big consumer companies often reward their customers for being loyal. There’s nothing stopping you from asking about freebies and rebates when you have all your plans with them.
There’s no harm trying your luck.
5) Read the fine print
Even though insurance is somewhat a novelty product, it is also one of the most misunderstood products around. I would even bet that if you walk to 10 strangers on the street to ask them about their insurance polices, 9 and a half will not have a comprehensive idea what their coverage entails.
There’s nothing wrong with that. You can’t expect yourself to memorize the 1 million words contained in the terms and conditions of your policy. But at the point of agreement and acceptance, you must absolutely read up.
Ask your agent what are the key terms. And ask for clarification should you not have a clear understanding of what certain features mean.
6) Don’t buy the same policy twice
There are some instances when people buy duplicate policies from different companies so as to increase their coverage. If you need to double up, the odds are that you would know it with certainty.
Avoid knowingly or unknowingly doubling up, or even tripling up your coverage. You are after all, going for a basic coverage at this point. You can always top-up your coverage in future when you are certain you need extra. There is little probability that you will make any claims soon, let alone exceed it.
7) Don’t be a serial claimant
The more claims you make the more astronomical your premiums will rise.
The best example of this evil at work is auto insurance. It’s no surprise when you find your premium double at renewal when you have made a claim for workshop repairs in the last year. You would then question what does insurance do anyway.
But this fact remains. More claims equals higher premiums. So don’t make a claim for every little thing that you are eligible for. Insurers will inevitably bite back with vengeance.
8) Prevention is better than cure
We buy insurance policies to protect ourselves financially should bad things happen. But let’s not confuse that peace of mind with something else. You should still take care of yourself and your personal property. Avoid the bad stuff instead of confronting them head on.
Insurance is more of a backup plan instead of a weaponry. You are better off never having to make a claim then to depend on it for relief.