The media often likens personal insurance companies to used car salesmen, or lawyers. We outline some the common misconceptions plaguing the insurance industry.
Yes, there are a few bad apples out there that give the industry a bad name, but it is important to take what you hear in the media with a grain of salt, always do your research and always ask questions.
Unfortunately, the majority of media reports are simply a case of a client not fully understanding the definitions of their policy, or not disclosing critical information (whether intentionally or not), at the time of taking out the policy.
A great adviser will fight for you at claim time, guide you through the paperwork and liaise with the insurer to get the best possible outcome.
This is where having an insurance adviser is invaluable.
A good adviser will work to understand your needs, so they can work with you to determine which type of cover is the best suited for your situation.
A really good adviser will also ensure that you understand what you’re covered for (and not covered for), and assist with the completion of application forms.
A great adviser will fight for you at claim time, guide you through the paperwork and liaise with the insurer to get the best possible outcome.
While a ‘no-claims bonus’ is great in theory, when your benefit is a one-off payment (e.g. life and trauma insurance), this is not a practical approach. The hard truth is that risk insurance premiums increase every year. This is because each year you age, so your risk of claiming increases.
The hard truth is that risk insurance premiums increase every year.
If you pose a higher risk of claiming, then it stands to reason that your premiums will increase to reflect this. Conversely, as your car gets older, its value depreciates, so the cost to replace it is less. If you have a clean driving record then your risk of claiming is lower, resulting in a lower premium.
The CPI (consumer price index) is not the only reason your premiums increase. As mentioned above, they also increase with your age, and the insurance company’s underlying rates may change (usually driven by claims).
Medical insurance premiums also factor in the rising costs of claims with advances in medical technology.
Sometimes, this may be true. But, the age old adage of ‘you get what you pay for’ definitely applies. Bank products are typically not as comprehensive, and the underwriting process can be average at best.
Bank issued insurance policies can also come with some odd exclusions—like no cover if you are overseas—whereas comprehensive insurance covers you worldwide.
Don’t fall victim to the myths of insurance—if you make informed decisions, with the help of a good advisor, you’ll be able to say the above four examples are busted!
Want to find out if you've got the right level of insurance for your age? Check out our free insurance infographic below!