Sometimes, buying insurance can feel like you are being ripped-off your hard earned money. The reason is because you spend years paying premiums so that you can be protected when an unfortunate event occurs. But when you eventually file a claim, you are given the run around and treated like a beggar.
Well, insurance is still very important in spite of these challenges but to get the best out of it and stay ahead of the game, you need to know some hidden truths that your insurance company, agent or broker wouldn’t tell you.
10 Hidden Truths about Insurance That Agents or Brokers Won’t Tell You
Table of Content
- 1. It is all about the commission
- 2. Insurance premiums hardly ever drop
- 3. Bad credit score equals high premiums
- 4. We hate to pay claims
- 5. I have no control over claims
- 6. I have a sales target to meet up with
- 7. You can negotiate
- 8. I don’t understand all the terms and conditions of this coverage
- 9. Umbrella coverage would save you some money
- 10. This is how your premium would be decided
1. It is all about the commission
Forget whatever your insurance agent tells you, he/she is in it for the commission and would always put his own interest above yours. In the first year that you buy an insurance product and pay premium, an insurance agent stands to earn up to 20% of the value and would continue to receive commission for every year that you continue to pay premiums.
Therefore, the next time you ask an insurance agent to recommend the best insurance policy for you, keep in mind that he would recommend the one with the best commission rates and not necessarily the best product for you. Don’t be mad, he has to feed his family too.
To persuade you to buy, an insurance agent would probably tell you some crap about the possibility of getting your premiums reduced in subsequent years. Well, that’s mostly sales talk because your premium is likely to continue to increase and may never drop. Sorry, but he has to make sales.
3. Bad credit score equals high premiums
Well, have you ever thought of how your credit rating can hinder your chances of getting a credit facility? Well, you probably haven’t because you have no intentions of borrowing money anytime soon.
Very well then but are you also aware that your credit history is taken into consideration when setting your premium; and a poor credit history would mean that you have to pay higher premiums? You are not aware? You see, your insurance agent should have told you but he didn’t want anything that would discourage you from buying the policy so, he chooses to be silent about it.
4. We hate to pay claims
Insurance agents come to you with sweet mouths persuading you to buy insurance products and preaching to you about the dangers of not having insurance coverage. What they refuse to tell you however, is that insurance companies do not like to pay claims. The major way an insurance company makes profits is by paying fewer claims so, when you file a claim, they would try to look for holes and gaps in your claims in order to avoid payouts and reduce the number of payouts in a year.
5. I have no control over claims
Don’t take guarantees and assurance from an insurance agent. When an insurance agent tells you stuffs like “I can guarantee that you would be paid if you ever have to file a claim” Please, take that statement with a pinch of salt; why?
The reason is because it is not in his place to decide on issues related to claim settlements. Majority of insurance agents don’t even work directly with the insurance companies. Their role is like that of a marketer so, they sell and earn commission. Every other information they give you apart from information regarding the policy you are buying, may not be entirely reliable.
6. I have a sales target to meet up with
Insurance agents come to you bearing good tidings of insurance and trying to sell you additional products which are ‘beneficial for you’ but what they won’t tell you is that selling you those additional products or add-ons as they would call it, is their own way of trying to meet up with their sales target and earn more commission so it’s mostly never about you.
7. You can negotiate
Insurance agents often do not inform their customers that there is room for negotiation. There is actually room for negotiation for reduction in premium rates but that would mean a reduction in the agent’s commission so you just might not get to hear about it. But when next you want to buy an insurance product, try to negotiate; premium rates are not set in stone.
8. I don’t understand all the terms and conditions of this coverage
Have you ever bought an insurance coverage, thinking that you know all the terms, conditions and clauses and then when it is time to file claims, you find out that you were not aware of some terms of the contract? Well, insurance agents are mostly salesmen and sometimes, they have limited information about the products they sell.
It is now left for you, the buyer, to do your due diligence, ask questions and conduct investigations before you buy an insurance policy because relying solely on your insurance agent’s information may not get you all the information that you need.
Another thing that your insurance agent might not tell you is that lumping all your insurance policies together would save you a lot of money. If you have to insure your house, your car, your business, your life and all other assets separately, it would cost you way more than buying an umbrella policy which would cover all of your assets.
10. This is how your premium would be decided
Insurance agents might not tell you all the factors that are considered in deciding your premiums such as your age, your medical history, your job, credit history, job stability and a couple of hundreds of other variables.
Now, this is not an insurance agent bashing article, it is just intended to inform and protect the insurance buyer so that they can be armed with the right information that insurance agents might not reveal to them; information that can make claims filing and processing a smooth and successful procedure.