Insurance Mistakes To Avoid18 May 2022
Insurance is essential because it financially protects you or your loved ones against unexpected events such as hospitalization, critical illness, or even the unthinkable. When it comes to something so important, it’s advisable to avoid insurance mistakes for better financial planning and proper coverage. To avoid confusion, here’s a guide to avoid those mistakes.
Delaying getting insurance
You may feel young, and that your insurance risk is very low. But so long as you are uninsured, uncertainty looms over your financial planning and financial worries can remain. Debts that accumulate such as from medical bills or inability to work can leave you or your family burdened. Some debts can even be passed on to your family members in the event of your absence.
As all of us get older with time, the longer we wait to get insured, the higher our premiums will be. That is why it’s important to get insured early. Especially when buying a plan with a fixed premium to lock down cheaper premiums. Our i2u platform provides suitable insurance for young adults due to its affordability and convenience. It includes life insurance (i-Care, i-FlexCover), medical insurance (i-Med), and critical illness insurance (i-Protect & i-Protect Plus). Get it online here.
Not thinking through on coverage
Assess your coverage needs. It depends on factors such as the number of dependents you have, lifestyle, income, and debt. As these factors change over time, it's advisable to review your insurance at least once a year. To learn more about how often you should review your insurance plan, check out our article here.
You may also want to find newer plans with better benefits. Don’t be afraid to connect with our agents and reach them through any of these channels. You may think going through an agent will make prices higher. In reality, our insurance agents will guide you to the insurance plan that’s right for you based on your needs and budgets which will potentially save you a lot of money.
Take also into consideration the premium that has to be paid to receive the coverage. In general, you’d want a lower premium for the coverage you are paying and avoid paying unnecessarily exorbitant premiums for your amount of coverage.
Try to avoid being overinsured or underinsured. Some signs you might be overinsured include when your coverage overlaps or when it’s too high compared to your needs. Signs you might be underinsured includes if your family has grown, your policy has a high deductible or elimination period, or you only have group insurance.
You also have to consider your coverage term. The longer your term length, the lower your monthly premiums. Your term length should account for your longest financial obligations (a mortgage, child-raising costs, or outstanding debt) and how much you can afford to spend on monthly premiums.
Still confused? Use our calculator to gauge how much coverage you need!
Getting inappropriate insurance
The important factors to consider when getting insurance are type, term length, premiums, benefits, and beneficiaries. For more information, check out our article How To Get the Best Out of Your Insurance Plan.
Although it is not necessarily wrong to own more than one policy of the same type of insurance, owning too many policies can unnecessarily overcomplicate things. It’s not easy to keep up with multiple policies, and you may miss your premium due date, causing policy to lapse. If you’re owning multiple policies at different times, you may see a wide range of premiums depending on your age and health at the time of purchase.
You don’t need to buy policies that you are not likely to use. Especially when you are young, you may not have reached your full earning potential and hence do not need to get every type of insurance available. For more information on our popular plans, check them out here.
If you believe you are holding insurance that is inappropriate, you can let the policy lapse, surrender the policy, or just continue with it until maturity. By surrendering your policy, you’re agreeing to take the cash surrender value that the insurance company has assigned to your policy. You may want to continue with it until maturity if you would get a maturity benefit which is a lump-sum amount.
Not informing your loved ones
This applies to life insurance. For your nominee to receive the lump sum, it’s important that they understand how to make a death claim. The nominee should have a copy of your policy documents so they can make a claim from the insurance provider. If there is no copy of a policy, the nominee would not know whether they can make a claim or with which insurance provider. On how to make a claim, check out our article here.
Keep these mistakes in mind the next time you are getting insurance. It’s better to avoid than to rectify mistakes. Do also check if you have made any of these mistakes. Most importantly, don’t let the fear of mistakes hold you back on your financial protection. Check out our popular plans to begin your financial protection journey.