Questions you should not ask your Insurance Agent

“Can I have a ‘special discount’?”

While it may be tempting to ask your agent if he can give you a break on your premium, the plain truth is he can’t. Your agent can look for ways to save on your premium such as higher deductibles or lower liability limits, or he can investigate discounts the company offers, but he can’t just say “OK, I’ll knock 20 bucks off because I like you,” even if he makes up the difference himself. This is called “rebating” in the insurance world, and it’s illegal in many states. If your agent is caught doing this, he’ll most likely be looking for another line of work in the very near future. That is, if he’s not making license plates at the state penitentiary.

“Can I pay for this life insurance policy in cash?”

In the past, some shady characters have used life insurance applications as a money laundering mechanism. They’d make an application for life insurance with a cash payment, then turn it down on their “free look” rights. The insurance company then sends them a check for the money as a refund. Boom, instant clean money. Life insurance companies and law enforcement have since gotten wise to this, and any attempts to pay for life insurance to cash sends up big red flags. Many companies won’t accept cash for life insurance or annuity products in any amount, period. Write a check or get a money order instead.

“I just had an accident. Can you lower my deductible?”

While policyholders have the right to change policy terms, neither they nor their agent can change them to affect a prior claim. Your agent could lower your deductible or increase your coverage for any future claims, but for anything that’s already happened you’re stuck with what you had.

“Do you really need to know about a bankruptcy I had 15 years ago?”

If your agent asks you a question for underwriting such as “Have you ever filed for bankruptcy?”, answer truthfully. A 15-year-old bankruptcy won’t affect your premium, but failure to disclose it may result in the underwriter denying your application on the grounds of misrepresentation if she finds out about it (and she probably will).

“I bought a car two months ago and totaled it before I could tell you about it. Is it covered?”

Probably not. Whenever you buy or sell items on your insurance, especially vehicles, let your agent know as soon as possible to avoid any problems. Also, when you finish making payments on a vehicle or other major purchase you insured, tell your agent so she can remove the lien holder from your policy. Otherwise the lien holder will remain legally entitled to any claim on that property.