INSURANCE BLUNDERS TO AVOID

Choosing the right insurance can be a daunting task for most of us. It's not like buying a chair or a shirt or groceries. When you buy insurance, you're buying a promise. It's a promise that if something happens to you or your loved ones, insurance helps meet the costs.

However, there are many insurance products out there that come in a variety of forms and some plans are merged with other products to help you save money or grow your wealth. As such, it's easy for many to get confused or make a mistake when choosing an insurance plan. Here’s some common blunders to avoid.

Before purchasing a policy, always ask yourself why you are purchasing the policy. Generally there are several reasons that people buy insurance policies:

• Protect your loved ones against your death
• Protect yourself against permanent disability or critical illness
• General medical protection
• Forced savings and wealth generation
• Plan for retirement
• Plan for your loved ones future
• Protecting your home or business

It's important to know what is your priority and what you want out of your insurance policies and don’t be afraid to have multiple objectives because many insurance companies nowadays let you choose and customise the right policy for your objectives.

For example, if the reason you want to get insurance is for the protection element, then a savings policy isn’t the one you’re seeking for because most of the premiums paid will go towards a savings component. So, think through your objectives and list them down by importance to ease your decision-making.

Delaying Your Purchase

Buying health or life insurance is not something you want to put off. Yet many wait too long to get it, either due to a lack of awareness or it just not being a priority. According to Bank Negara statistics in 2018, only about half of Malaysia’s working population have some form of insurance.

Delaying the purchase of your insurance can dramatically increase costs. The reality is that your best chance of getting an affordable rate on your coverage is when you're young and in good health because policy premiums are going to go up if you develop health conditions or when you get older.

Too Much Coverage

A common blunder many make when it comes to insurance is over insuring oneself. It can be difficult to determine how much basic insurance you really need. If you are starting young, you will not need as much insurance, since you do not have as many assets.

There are people who are insured and do not know what they are paying for and sometimes they buy without knowing what’s important to cover first, then they end up with clashing coverage or can’t afford their premiums.

A life planner would be the best resource to give some advice and put you in the right direction with what you want to from your insurance policy. Otherwise, you can also do your own research online because there are plenty of reliable resources online.

Too Little Coverage

On the flipside, there are also those who under-insure themselves and it can be quite costly when you realise that your basic insurance will not cover your much needed expenses. Check your policy properly and consider the maximum amount your insurance will pay on your claims.

If you have health insurance, you should consider the maximum amount your policy will pay. You may think your current coverage may seem sufficient, but if you were diagnosed with cancer or another major illness, the costs of care might exceed that amount. According to a survey done by the Ministry of Health, cost of treatment for breast cancer is approximately RM395,000 in a private hospital. Considering the rising costs of medical treatment now, sometimes in the area of your health, more is better than less.

Basing The Quality Of The Policy On Premium Prices