One would virtually have to write a full-blown thesis on Life assurance in order to address the aspect of saving money on insurance premiums. However, if the following steps are followed the insured can get the best product to suit him/her at a reasonable outlay.
Buying insurance is like buying a promise. You must make sure of what is contained in the promise (contract). It is not uncommon to ask for a pro-forma or sample policy of the policy that you have decided to buy. If you have gone through the steps that are explained here, you can ask the broker to supply samples of the final two between which you want to make your choice.
It is preferable, but not absolutely necessary, to use a broker instead of the sales reps from individual companies.
Get the broker to declare that he has no vested interest in any of the companies that he/she recommends. Also get a statement of what percentage of his/her business goes to the companies that is recommended. This will give you a reasonable indication of how his/her submitted business is spread in the market place.
If you consult with reps from various companies, you must take note of how they analyze your situation and needs.
If apparently outlandish tactics or recommendations are used, grill him/her a bit to get as much information on the methods used and how it applies to your situation. You must judge the consultant/adviser as much by the quality and thoroughness of analysis as by general demeanor and product recommended. Many companies have comprehensive literature available on life insurance; ask some of the better-known ones to supply this to you. Study the information so that you can ask informed (intelligent) questions.
Step number one is to make sure the consultant has a formal qualification or membership of a recognized industry related body. The fact that a person is a chartered accountant, or attorney, does not necessarily make for a good insurance adviser, or good estate planning. Insurance advisers are specially trained in needs analysis and their product training runs non-stop as long as they remain in the profession.
The proper recommendation of a suitable product for a specific need is not as simple as it may appear to a layman. Also it is not just meant to achieve a sale, but must be a foundation or framework that the client can build on or change without great cost as times goes on. If you just want to insure a simple one time single need like a term of five years, you will simply request quotes from as many companies as you want and compare price and cover. If you want to plan a proper portfolio, you will want to follow the steps set out below.
Step two is that the adviser will (or should) want to get as much relevant financial information as possible. This will include, but is not limited to, Assets, liabilities, precise information on your will to help him/her with estate analysis and or planning, your income profile and your family’s projected requirements in case of death or disability of the insured. Information regarding existing insurance cover and employment benefits is also essential.
The consultant will next prepare a written analysis, either while interviewing you (rare) or back in his/her office. A preliminary report will then be discussed with you on a second visit. The latter, of course, depends on how complicated your affairs might be. If it is relatively straightforward you might get a full report with recommendations, quotes and a whole bunch of explanations of how each recommendation will benefit you. The preliminary report is meant to clarify for yourself and also the consultant that your information is correctly understood and to make corrections where necessary. Once you and the consultant have a clear picture of the needs and problems, a final written recommendation accompanied by quotes and explanations will be presented.
Hopefully by this time you have accustomed yourself to the idea of how the analysis and planning was done and you should have a clear picture of what is required. You will also, meanwhile, have done your maths to see what your disposable regular income will allow you to spend in this regard. You will therefore quickly be able to decide which of the suggested plans you can afford.
At this stage a choice will be based on what premium you are comfortable with. Then the choice will be made between term, variable or universal life. If the recommendation also includes retirement or investment solutions the best combination of products can be chosen from different companies. Often combined products can be chosen, like: For family income needs together with some measure of retirement provision one can choose a retirement annuity type of plan with a high component of life cover.
Most people find that buying life cover separately from retirement provision works out better. This being so because the management charges a company takes for a combined product is not always easy to understand. Furthermore, two separate products can more easily be adjusted or individually terminated without affecting the other component. This is especially handy when one suddenly has a drop in income or job loss.
Once you have that part clear in your mind, you will sit down with the consultant and once again grill him/her on the whys and what-for of the recommended plans. The plans must be comparable; in other words, if the two of you have concluded that all you can afford at this stage is a term insurance running over five or ten years, then only two such plans must be compared from two insurance companies so that apples can be compared with apples.
Depending on the needs of the insured, various riders can be or should be added. The so-called double-death benefit can be added at a small extra fee. The policy will then pay double the straight sum-assured in case of death by an accident. This can even be boosted a bit further by having befits paid out in case of loss of use of limb and the senses; Every added bit will of course increase the premium.
The one major aspect that out-dates an insurance portfolio and often causes people to think they have paid too much or had wasted their money is a radical change of circumstances. Such circumstance can be job loss; occupation changes a sudden large inheritance or any other occurrence that changes the regular pattern of the insured’s personal financial situation. If you had been in an apparently safe job situation for fifteen years and your employer suddenly goes bankrupt, your retirement provision profile will almost certainly not be what it was before the occurrence. Or, maybe you had nice employee group coverage as a fringe benefit, which suddenly disappears into thin air.
Unfortunately people will always wander whether they have not perhaps wasted their hard earned money on insurance. However, by planning thoroughly together with a properly experienced a qualified adviser, you can’t be too far off the ideal.
Lastly, when the policy is issued, read through it thoroughly and if anything is not hundred percent clear, get the adviser to explain it in writing.
This article is only meant as general advice on how to go about obtaining insurance. Circumstances differ from person to person. Therefore, always do due diligence in your choices. Once you’ve made your choice, stick to it. Don’t listen to the jabbering crowd of faultfinders that abounds in the world.