Should I apply for an insurance plan?

Insurance is often one of those expenses we just brush off to the side because of several reasons. Some get intimidated with the general process of applying for an insurance plan while others may just see it as a waste of money. Regardless, if you have considered or are currently considering for applying for an insurance plan, below are 5 tips and a few reasons why you should go ahead and get one.

1. Relevance

One of the first things you need to clarify with yourself when buying insurance is to understand how relevant it is with your current situation.

For example, if you are buying a house, it may be more relevant for you to apply for a mortgage insurance plan. On the other hand, if you are more concerned about securing your family’s future in case something happens to you, a life insurance plan may be more appropriate.

When applying for any insurance plan, it’s also important to check that it is tailored to your specific wants and needs. Making sure that you are covered for all the specific risks you want to watch out for will help you go about life more confidently.

2. Amount of Cover

Once you have selected which insurance plan is the most relevant for your current situation, the next thing you should work out is the amount of financial coverage you need for the things you want to insure.

Working out the specific amount of cover we need our insurance plans to have can be quite confusing. Different potential expenses such as funeral costs, short-term debts, credit card payments, mortgages, tuition fees can pile up and overwhelm us.

Apart from these smaller potential expenses, there are also bigger investments that we may also want to insure as well. People generally agree that buying your first house is one of the most significant purchases we make in our lives. However, apart from paying for the house itself, there are also several risks that homeowners need to watch out for. Occurrences such as fire can completely destroy your house and its contents, hence the importance of having a competent home and property insurance plan.

Most people also forget about the most important asset that they own when buying insurance: themselves!

Everything in our busy lives grinds to a halt when we get sick or injured. Having a competent life insurance plan in place when you do get sick will help you focus on something more important than your full-time job: getting better.

3. Beneficiaries

Once you have decided which insurance plans you want to apply for as well as how much financial coverage you want to have, the next thing you need to figure out is the person or persons you want to benefit from the insurance. This means figuring out if “RIGHT amount is going to get to the RIGHT people at the RIGHT time.

For example, in the event of your unexpected death, even if you have been properly named as the owner of the life insurance policy, your family will not be able to claim the money that was insured until the probate process finishes. Probate is the term used for the process done by the court to verify the validity of a will. This process usually lasts for 6 months, which can potentially leave family out to dry if you aren’t prepared.

4. The Insurance Company

The next thing you should check is the reputation of the insurance company you are interested in working with.

As an example, several Christchurch residents experienced significant problems when they were finishing off their claims with some insurance companies due to the catastrophic earthquake. These companies have since received a bad reputation for their inefficiency and refusal to pay out claims.

Checking an insurance company’s rating is usually a good way to gauge its reputation. As a general rule of thumb, companies with “A” ratings have a great financial ability to pay all of the claims done by its clients.

5. The Claim

Although being able to make an insurance claim as easily as possible when trouble does happen is very important, doing so is one of those things that we hope that we won’t need to do.

Regardless, the whole point of applying for an insurance plan is to make sure that we will be able to sustain ourselves and our loved ones financially when trouble happens. Transferring the risk and weight of those potential losses to insurance companies helps keep our assets safe and gives us peace of mind.

When making a claim, having someone that can vouch for you is usually the best option. Most insurance companies have claim departments to help you get started. Also, helping you make a claim is also one of the key responsibilities of an insurance broker if case you happen to have one.

However, there are also times where you may need to make a claim yourself. If this is the case, here are some questions that you could ask your insurance to make the claiming process easier:

a. What process do they have for making a claim?

Most insurance companies allow you to make claims right over the Internet so that you can be done with the whole process within minutes. This is usually done for minor claims such as medical check-ups. On the other hand, claims for more serious insurance cases such as life insurance may require you to meet personally with a representative from your insurance company.

b. What specific information do you need to provide?

Each insurance plan may require different pieces of information. For example, when making a property claim, being to provide receipts for stolen items would be very helpful. On the other hand, making income claims may require you to provide copies of your salary slips instead.

c. Who will be looking after the claim?

Having only one point of contact is always the best option. This will help the insurance company representative to get to know you as a person instead of just a faceless number.

d. How long does the claiming process typically take?

This will help set your expectations as to how long you should typically wait and when exactly should you start following up on your claim.

e. Did you get the right amount of money?

If you feel that you are not getting enough money from your claim, it may be due to the varying opinions the insurance company’s assessor may have over the value of the particular item you are insuring. This usually happens for properties that come with different sets of models and types such as vehicles. In any case, if you feel that you haven’t been fairly compensated, you can always bring up your concerns with your insurance company.

Insurance helps secure your future

Although insurance does not do anything in preventing the trouble that may happen in your life, what it does is lessen the financial costs and general burden you may feel from replacing valuable assets in your life. This will help you have an easier time starting over when unfortunate events do occur and give you the peace of mind you need to go about your daily life more easily.

About the author

Tracey Hunter is the Co-founder and CEO of Love My Money and a specialist in personal wealth creation. She is an engaging energetic business person widely experienced in aspects of the financial services industry. Tracey holds a Bachelor of Commerce, is a Registered Financial Adviser and a noted businesswoman and public speaker. Her passion is to help as many people as she can to 'love their finances and change their lives'

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