The insurance industry is a billion dollar industry. Given that this industry is dominated by several large companies, there is less of an obligation to focus on the client’s welfare. We’ll let you in on what exactly happens behind closed doors after insurance companies take your premium payments, so you won’t have to be shortchanged during your insurance shopping.It is important to be aware of any tactics that insurance companies may be up to. Here is a list of important details insurance companies don’t want you to know about.
Insurance companies profit when no claims are made
Insurance companies base their business around making sure you are well protected against untoward events, however, they are definitely not a charity. They are profit driven, meaning they will likely do everything they can to minimise claim payments, leaving you with less than you deserve. Insurance agents are likely to try to push policies that require you to pay more premiums rather then just what you need. What you can do is to engage in more research on the different policies offered by the different insurance companies, or even try Bandboo, an insurance technology platform that is not driven by profits from your premiums.
Payouts can be really really slow
Of course we all hope that the insurance companies at least care a little about our wellbeing. Don’t forget though, that as long as you make no claims, your premiums act as capital for them to make more money. The premiums on your policies are pumped into their investment portfolios to accumulate interest revenue. Therefore, insurance companies will wait as long as they can before paying out your claim because interest on that money is still generating them revenue until it is paid out.
It is better if you are insured by more than one company / agent
Insurance agents usually represent only one insurance company and in such scenarios, they are responsible for marketing their products only. The policy which the agent suggests as the best for your lifestyle might indeed be true for the company. However, other insurer’s may offer a more suitable policy for you. Remember, there are subtle differences between similarly tiered plans offered across all the insurance companies. Unlike dating, there is no stigma in seeing someone else on the side to get a second opinion.
Insurance companies prefer when you don’t know the detailed coverage that you may be entitled to
Firstly, the insurance companies get to save money on any claims that you were eligible for but were not aware of. Secondly, agents also get to save time on claims processes, which they can use to help insure more people (and their pockets). Either way, this means more money to invest in and grow their nests!
Insurance agents get most of their commission in the first year of your policy
Except for integrated shield plans, which earn commissions for as long as you pay the premium, most policies earn significantly less after the first year and don’t earn anything at all for your financial advisor after the fifth or sixth year. That means that the premium you’re still paying ? None of it is going to your financial advisor. The agent no longer has any incentive to care about your welfare, apart from genuine concern which not all may show.
Insurance companies don’t actually prioritise your welfare
Consider how your insurance premiums usually go up after a claim has been made. You have already paid them for insuring you but they are ironically penalising you for using their service. We encourage you to look for more insurance policies that serve you the most.
Although the above is said, remember that insurance is still important to ensure that you and your loved ones are protected. Most people should be covered by insurance that they can afford and can cover them to the best of their ability. The best insurance agent should have your welfare in mind, and the monetary benefit to them will come from the good advice and planning they give you.
Why not try Bandboo? As an insurance technology platform, we allow you to enjoy insurance coverage without having to go to an insurance company. Having a different concept from traditional insurance companies, we provide a platform for people within the community to insure one another. Bandboo does not profit from the insurance premiums that you pay, instead, we are sustained by a minimal $9.99 per month to bring our services and community to you. Learn more here !