• Being an insurance renegade or being insured: Is it worth the investment?



    A cynic would say that the insurance industry thrives on the possibility of a calamity taking place and builds fear in order to exist. This is why there is a possibility that you will be seen as a renegade or a wild rebel that gives two hoots if you are uninsured. Even banks and lenders would not give money to someone who is not insured.
    The flip side is the insurance industry provides a solution when a calamity hits, and saves people from unplanned expenses that could result in money problems. So is it good to be an insurance renegade? Conversely, is it worth being insured?

    When looking at developed markets like Hong Kong and Singapore, insurance penetration is much higher compared with developing economies like the Philippines. A key reason is the mindset of consumers, who are more aware of the benefits of being insured. The regulatory environment gives them confidence in the efficiency of claiming their dues in case of a calamity. In contrast, the mindset in developing markets is that insurance is an unnecessary expense. It leads to little benefit and incurs out-of-pocket expenses even before a calamity. This mindset leads to more insurance renegades in developing economies. While being a renegade saves you money upfront, it can wipe out all of your savings and leave you with nothing at all in case of a calamity.

    Investing in insurance products protects you from major expenses that will adversely affect your cash flow in case a calamity hits you or your family. It is crucial to understand the inclusions and exclusions when getting an insurance policy. For example, is “acts of God” covered by your policy? What are the coverage limits you are insured for? What calamities are excluded from your coverage? The elements of the contributions you need to make toward the insurance are also pivotal to gain the most out of your policy. Do you need to pay a participation fee for the claims? Are there any deductibles that need to be paid at the time of a claim? Reading the fine print of your policy will allow you to better understand the accidents you are insuring yourself from and know what you are covered for and what you are not covered for.

    Multiple companies will offer similar options when you’re looking around for the best insurance provider.

    Deciding on the right insurance company for you is important as the claims payment capacity that suits your needs. By asking simple questions, you can compare different insurance companies on their size, prior claims history, and inclusions. Paid-up capital is a good indicator of the size of the company. The Insurance Commission can also give you information on how many complaints are documented against the insurance company. This can help consumers get a better idea of which insurance companies hold back on claims.

    An interesting way to buy insurance is to understand how insurance is sold. An insurance company’s main job is to underwrite the risk they are insuring, which involves many actuarial studies and reports that look at the overall risk of their portfolio and where their investments lie. Usually, insurance companies don’t sell directly.

    They sell insurance through an intermediary network of agents or brokers who understand their products and sell to the open market. The fundamental difference between an agent and a broker is that an agent represents the insurance company and can affiliate themselves with a few insurance companies. A broker represents the customer and can affiliate the brokerage with any insurance company. This allows the broker to support the consumer at a direct level with no conflict of interest, as it is not associated with the insurance company. When it is time to pay up on claims, the insurance broker represents you but an agent will represent the insurance company.

    Getting insurance is crucial to securing your future and avoiding major setbacks in your financial plans. Comparison websites like Moneymax.ph are comparing products and summarizing markets for an easy assessment of the insurance industry. Make use of the online trends and ensure that you get the right deal for yourself and your family. Don’t be an insurance renegade and discover the benefits of being insured.

    Rahul Maira is the Vice President of Sales and Operations at MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.



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