10 Things That You Are Not Told By Your Insurance Agent
Here are 10 things that your insurance agent won’t tell you
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There’s a famous saying, “Never step out of your home without life insurance.” While this saying cannot be disputed, another question arises. Who will help you avail life insurance and other insurance plans? The friendly insurance agent, of course. In this article we will discuss 10 things your insurance agent won’t tell you.
1. Insurance agent recommends endowment plans
People buy life insurance in a rush, close to the end of the financial year, just to save tax. Many insurance agents recommend endowment plans, knowing people blindly purchase them.
These insurance cum saving plans have high premiums, earning insurance agents a good commission. Never mix insurance and investment. You are better off availing a term life insurance plan which is pure-risk cover and charges low premiums. If the policyholder survives the term, premium is not returned. On death within the policy term, nominees are paid the sum assured.
2. Insurance agents show the maturity value of the policy
Insurance agents portray maturity value of the policy against premiums to make a comparison. Premiums are paid in the initial years of the plan and maturity amounts are received over a 5-10 year period, or as a lump sum towards the end of the plan. The insurance agent should showcase actual returns through internal rate of return (IRR), as it shows the net present value of the benefits at different points in time and then compare with the initial investment.
3. Insurance agents never disclose their commissions
Insurers do not invest the entire premium paid on endowment plans. A huge portion goes to insurance agents as commissions and administrative costs, which the insurance agent neglects to tell you.
4. The insurance agent doesn’t talk about policy surrender value
Endowment plans charge a hefty amount in premiums. On not being able to pay policy premiums, you may be forced to surrender the plan. You get almost nothing on surrender in the early years of the plan.
5. Insurance agents never tell you about term life insurance plans
Term life plans offer maximum risk cover for minimum premiums. Insurance agents get very low commission as most plans are sold online. So they neglect to mention them.
6. Insurance agent hides critical clauses
The insurance agent doesn’t mention hidden clauses and exclusions. Non-disclosure or wrong disclosure of facts can lead to rejection of claims. If you have concealed critical information like excessive smoking, neglect to mention another life insurance plan, nominee’s claims could be denied. Do note that death by terrorist attacks is not covered by most plans. Always enquire on the exclusions as insurance agents neglect to pass on information, critical for a hassle free claim settlement.
7. Insurance agent never mentions buying life insurance online
The insurance agent doesn’t mention buying a term life insurance plan online. If you ask him about it, he says these plans are costly if purchased online. This is far from the truth. Buying insurance plans online have lower operational costs as compared to buying offline, as insurers don’t have to appoint an agent. Savings in cost are passed on as lower premiums on life insurance plans.
8. The insurance agent doesn’t mention the free-look period
This is one thing the life insurance agent won’t mention. The free- look period. If you have availed a life insurance plan and are not happy with the terms and conditions, return the plan within 15 days of receiving policy documents and claim a refund.
9. No medical tests required
The insurance agent might lure you to avail a life insurance plan, saying, No medical tests required. It’s in your best interests to undergo a medical test before availing life insurance. If you hide a health condition, the nominee’s claim would not be settled.
10. You don’t have to worry about premiums
The insurance agent tells you not to worry about premiums. Just pay them monthly or quarterly. The truth is you end up paying much more with monthly instalments and also lose out on discounts.
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Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.