FACTORS TO CONSIDER WHEN BUYING INSURANCE

We have all experienced the pain of doing away with a favorite piece of cloth just because it was not the right fit. You were not keen on your style, body shape, fit, material, price, and budget. So now you must sell or give it away because it does not suit your wardrobe, or it does not just fit.

Similarly, you will have to terminate your policy before its maturity if you are not clear on certain factors before purchasing it.

The insurance market is large, and insurers offer different plans and products. Buying insurance can be arduous, and choosing the right policy is essential because it will affect your finances, health, and well-being. This article illuminates factors consumers should consider when buying insurance plans.

What to consider when buying an insurance policy

To decide on the best insurance plan for you, here are some factors you need to consider:

1. Needs and goals – Understanding why you need the cover will tell you what needs to be in it. It will also help you when comparing policies. Consider factors such as your age, health status, financial situation, and dependents you may have. For instance, a young single individual may have different needs and types of coverage compared to a married couple.
2. Coverage – Insurance covers vary widely in terms of the coverage they provide. Research the different types of plans available (life insurance, motor insurance, health insurance, home insurance) and understand what each type covers.
3. Premiums – Compare premiums from different insurers to find the most competitive rates but remember that price should not be the only factor you consider. Ensure your insurance providers maintain a balance between cost, coverage, and quality of service. Cheaper insurance might seem appealing upfront but might cost you more in the long run if it doesn’t provide adequate coverage.
4. Cover limits – Coverage limits dictate the maximum amount the insurer will pay for claims. Pay attention to the coverage limits offered by each policy. Ensure that the limits will be sufficient to protect your assets and your family’s financial security.
5. Rider options – Insurance companies offer optional add-on coverages that can be purchased to customize your policy to suit your needs. Carefully review these options to determine if they are worth the additional cost based on your circumstances.
6. Policy exclusions and limitations – Be aware of any exclusions or limitations in the insurance policy that could impact your coverage. Exclusions may include pre-existing conditions in health insurance policies and natural disasters. Understanding these exclusions upfront can help you avoid surprises when filing claims.
7. Policy terms & conditions – Take time to carefully read and understand the terms and conditions of the insurance policy, including any limitations, conditions, or exclusions. Pay attention to details such as waiting & coverage periods, renewal terms, termination of policies, and requirements for filing claims. Reach out to your agent or insurer in case of any clarifications.

Choosing the right insurance is not easy. Always start by asking the right questions. Seek help from an insurance intermediary or financial advisor for guidance on the different types of insurance available and which one best suits your needs.

Keep these tips in mind. Remember to review your insurance needs periodically and adjust your covers accordingly where necessary.