They hang out in droves at MRT stations and roadshows, waiting to pounce. When they’ve identified you as their prey, they make their approach, innocently asking you to fill in a small job-related questionnaire. Some of them take the direct approach, asking flat out if you’ve thought about financial planning. These are insurance agents, and to many wary Singaporeans, they’re best avoided.
But one day, you might actually need their help. That’s because you actually do need some types of insurance.
While you should never feel obligated to buy insurance from any agent you agree to meet, having a chat with one can be a good way to familiarise yourself with the various types of insurance and to understand how they work.
When do you do speak with a financial planner or insurance agent, don’t just sit there and let them feed you information.
Remember, that meeting might, for them, be an opportunity to sell you something. But for you, it’s an opportunity to gather some useful information. You’ll get a lot more out of that appointment if you have asked yourself the right questions beforehand. Here are 3 questions you should ask yourself:
What is the difference between health and life insurance policies?
There’s an infinite number of insurance types out there. Heck, movie stars and supermodels often get their body parts insured.
But at this stage, you don’t need to care about those other insurance types. The main types of insurance the agent will be selling are health and life insurance. And these also happen to be the two types of insurance you’re probably going to need most.
So first you need to know how insurance in general works, and then what are the differences between these two types of insurance in particular.
Before you meet an insurance agent, make sure you’re aware that:
- There are various situations you can make a claim from either type of insurance – e.g. health insurance covers hospitalisation, life insurance will not.
- Claims payouts are either a lump sum or have expenses reimbursed depending on the policy.
In this way, you can go into the meeting prepared, and you can ask the
What are my most important goals in life?
Financial advisors these days tend to lead the conversation and ask you about your life, and what your goals for the future are. This is good because these are important questions you should be asking yourself anyway. However, the problem comes when you have yet to ask yourself these questions and the agent starts leading the conversation.
This may result in you not having the time and opportunity to truly reflect on what is important to you. Now, a good financial advisor will be more than happy to give you the time to think about these things, but maybe it’s better if you thought about them now.
Here are some questions you’ll want to ask yourself:
- Do you plan to have kids and start a family?
- Do you have aged parents who depend on you financially?
- Do you participate in any risky hobbies or lifestyle activities like jumping off cliffs or doing longboard stunts blindfolded?
- Are you a spender or a saver?
The agent will be able to advise you on things like whether you need a more elaborate medical insurance plan with riders, and whether life insurance is a necessity for you right now.
How much can I afford in premiums?
Say you meet an agent and they’re pushing a certain policy, and you’ve got to admit it sounds pretty good.
But before you sign up for the policy without a second thought, always make sure you are 100% sure exactly how much you will need to pay and when.
You see, the agent would be happy if you signed up for the most expensive policy available, since that would mean higher commissions for them. That’s why unless asked explicitly, he might not be motivated give you a detailed break down of how much you’ll be paying. It’s up to you to ask.
For instance, if you’re buying medical insurance in the form of an Integrated Shield Plan, you will no doubt be told that you can use Medisave to pay for part of your premiums.
Go one step further and find out how much will be deducted from your Medisave account, and how much you’ll need to pay up front at your current age. The premiums will also rise as you get older, so you want to ask the agent for a table detailing what premiums you’ll have to pay at what age.
The same applies for life insurance. Premiums go up as you age, and you’ll want to know how much you’re looking at paying not just now, but also in the future. Also make sure you know the difference between term, whole life and investment-linked life insurance policies, and how the premiums you pay for each will differ.
Once you’ve got the answers to these three questions, you’ll be more prepared to meet any financial advisor.
What are your biggest questions about insurance? Let us know in the comments!