Wednesday, June 14, 2006

Lunch Talk: Insurance Purchase

I attended a law conference on doing business overseas at Meritus Mandarin Hotel today.

At lunch, I met a fellow corporate counsel from a top global telecoms provider. She asked me, "What should I find out when I buy an insurance policy?"

An internal auditor from a property development company also asked me, "When I buy an insurance policy, should I buy from an insurance adviser or directly from the insurance company?"

Much can be said about questions like these. However, I did not want to confuse them so I answered as simply as reasonably possible.


When buying an insurance policy, a person must first understand what his / her needs are.

One buys insurance for three key purposes: savings, investment or protection.

Having understood his / her needs, a person then needs to find a product that matches or most closely relates to those needs. This requires some legwork.

To understand an insurance product, one needs to take note of a few things:
a. what benefits does the product provide
b. what the product does not cover
c. what key aspects of the product that a person must know
d. how much to pay for the product
e. when and how to make a claim


Using an insurance adviser, especially one that has many years of experience, can save you a lot of legwork and help you quickly understand a product.

Such an insurance adviser may also be able to tell you much about products available in the market, and how one product compares to another. Of course, it is important to verify such advice. I have found that the best way to do this is to check the information against what other insurance advisers tell me or call the insurance companies directly.

The insurance adviser can also help you complete the necessary forms, have these submitted to the insurance company and collect the relevant policy contracts for you.

It is also important to buy from an insurance adviser you are comfortable with, since you are likely to return to him / her to purchase other insurance policies or when you need to make a claim.

In my view, buying from an experienced insurance adviser has one significant advantage. You are immediately assured that he's not a "fly-by-night" operation, which - unfortunately - is the case with some insurance advisers today. This is why some customers prefer to deal directly with insurance companies, and more insurance companies are responding to such preferences.

I also notice more experienced insurance advisers today handing over their portfolio of customers to another competent insurance adviser; sometimes, the latter is the insurance adviser's own child or some other family member. Basically, what this means is that you are less likely to be left alone, when you buy from an experienced insurance adviser!

However, if you are prepared to do the legwork yourself, going direct to an insurance company can save you some money. Some insurance companies are willing to give their customers a discount for going directly to them.


Visit the Know Your Insurance website.

Dharmendra Yadav

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