A: “Hey, what are you up to this weekend”?
B: “Going to renew all my insurance polices with my partner at the kitchen table. We have blocked off a few hours Saturday and my parents are taking the kids”
A: “Damn you are so lucky! I did mine last month and it was sweet, soooo sweet! I love doing the health insurance comparisons especially. Do you want a hand? I could bring some Hobnobs”
This is not a conversation you will ever hear. Even taking out your insurance policy makes you groan, and not with pleasure. That is why it is so easy to leave your car/home/health insurance to automatically renew annually. The alternative is a lot of confusion.
So many people agonise about spending, saving and providing for the future that it doesn’t occur to them to think about protecting against risk.
Here are some things to consider when thinking about insurance:
- Determine what is important to insure. Don’t insure something because some fella down in the golf club was selling it. You can insure many, many things as you know but with a limited budget you may not be able to insure everything to the level you want. Pick your priorities, be comfortable with the reasons to insure. Is it your income, your health, your life or a good balance of these?
- Synopsise your policy characteristics: Get in control here. Find out exactly how the product works and synopsise it. Staple a blank page to the front of the policy explaining what it is and isn’t. You write out the explanation. This makes you research it or ask someone for the answer. When you blow the dust off the policy in 10 years there it is, your comprehensive explanation. No furrowed brows, no confusion and no sinking feeling.
An example of a summary for a life policy might read:
- This policy pays out €200,000 on either my death or my wife’s death to the surviving spouse.
- This pay-out is not linked to inflation and is fixed for 20 years so if either of us die at any time during the term there will be a pay-out.
- There is no savings element attached to this policy so after the 20 years it stops.
- The premium is fixed at €x per month.
- As it is a joint life first death policy it will pay out only once on first death. There are policies that pay out for both deaths but not this.
- We had no medical issues when taking out this policy, but we have an option to extend this policy before the term ends without giving any medical evidence.
- The policy is not assigned to anything like our house (we have mortgage protection to cover this)
- Cover started on dd/mm/yy and will finish on dd/mm/yy
- We took out cover with xx broker who did an analysis of the market at the time.
- We felt that……. whatever you felt.
Try it with any financial policies like mortgages, investments, pensions (you need a big page)
- What is the cost? If you want to be insured for more, for longer and with certain bells and whistles it will be more expensive. If you want less, you pay less. When I hear “life insurance is expensive” I always ask how much can they pay or what cover they want? Cover amount and term are the basics, but the financial services industry adds much complexity and choice to this. Ask will it do what you want it to do and only that.
- Ask your employer. Many people in employment have life insurance or income protection cover attached to their employment contract, or their pension benefits which will kick should the worst happen. Ask the questions of your employer and be clear on how you are protected. This may impact your decisions when considering another policy.
- Get a good broker. I cannot emphasise this enough. Get one you can trust, is honest and ethical and will even tell you if they cannot save you money. They will take away the pain and confusion on renewal date.
- Crack open the hobnobs, good job done!