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Should I compare my insurance policy on price alone?

August 23, 2018



When insurance premiums change it’s natural to think are you getting the best value for money.  But, insurance should never be bought on price alone and here’s why….


The first consideration is to know the premium structure.  Most policy premiums step up as you age, i.e. they are age-based.  But some policies have a flat/level premium across the life of their policies, or until a specific age.  Long-term, you are usually better to keep Level Premium policies unless you have an immediate need to get as much as cover as you can, for a fixed outlay.
 

And there are other considerations too:

  • When will the cover expire?

  • Will it pay out earlier for a Terminal Illness?

  • Are there any Special Events included, e.g. you are able to increase your cover, without medical information required, if you marry, have a child, take out a mortgage, or get divorce.

  • What do the policy Exclusions say?  These can vary a lot between insurers and you must know these.  Some refuse to pay for certain hazardous pursuits, or countries visited. 

  • Can the insurer change the Policy Terms, e.g. as advances in technology change treatments?

  • Will your pre-existing health conditions be assessed at claim time, meaning serious uncertainty at a time of most need?

  • Have the premiums been reduced because of higher sum insured, or other covers like Disability or Trauma insurance have been included?


If you need help, here are some options:

  • Insurers websites usually provide thorough detail of their policies.

  • Organisations such as Life Direct provide policy-comparison information.

  • Insurance and Financial Advisers – many who specialise in insurance, pay a commercial research house to assist them to analyse policies.


Finally, you may wish to check out the insurance company’s financial strength for reputation paying claims.  There are many ways to access insurance products and the level of service and support will depend on the resources available at your preferred point of purchase.


So you can see it’s not just about price.  The price differences often highlights the product competitiveness between insurers, as well as the product simplicity offered by some.  Don’t be fooled into changing insurer, or your existing policy, before you examine the differences…..and any potential conflict of interest.


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