4 ways to buy insurance – which is best?

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Do you know that other than going straight to the insurance agent your friend referred you to, there are many other ways you can purchase an insurance policy? Which of these is the best way and how do you spot a good agent? Here, we’ll give you some tips to ensure you’re in good hands:

  1. Buying insurance from a bank

Yes, other than setting up a savings account, there are many other products a bank can sell to you. Do you see those bankers sitting in a cubicle when you visit a bank? Yes, those are the sales guys who can sell you all sorts of financial products(some which you do not need at all). And yes, insurance policies are one of them.

But you know what? This is probably one of the worst place for you to buy an insurance policy. Why? These people have a sales quota to meet, and they are known to be hard sellers. Let me share with you a story about how my Mum nearly got conned…

My mother once went to a local bank to open a savings account. While she was there, the salesperson at the bank encouraged her to open a specific savings account where you get to earn a higher interest rate if you hit a minimum spending on your credit card. Sounds quite common, right?

So my mum told the lady that she may not hit the minimum spend every month, but the banker told her she can “invest” in a product that uses $500 from her account every month, so she can qualify for higher interest rates! Luckily she called to check with me, and I told her to get out of the bank.

Well, what does this experience tell us? Probably not the best place for an agent to sell you something you really need.

  1. Agents tied to a specific insurer

There are two types of financial advisor/planners in the market – those which are tied to a specific insurer, and independent financial advisors who can sell across brands. If you ask me, I would say buy from a “tied agent” only if you already know which specific policy you want to buy. Why limit yourself to one brand only when you can pick and choose from other brands?

It’s a little like a doctor who can only prescribe you a certain brand of medicine, would you go for it?

  1. Independent Financial Advisers (IFA)

I might be biased here for my experience so far with IFAs have been good. What I like is that they take time to understand their clients’ concerns and look at insurance as one aspect of financial planning, not just as a product. They also take time to educate their clients on the different types of plans available.

Many people have the impression that because IFAs have access to so many products, they may not have in-depth knowledge about the individual plans. In fact, many of them are able to point out the difference in details when comparing a similar policy from two different insurer.

I’m not saying that all IFAs are good, but rather, many of them seem to be more knowledgeable about insurance products as a whole.

  1. Buying Insurance online

With the rise of Insuretech in the last few years, some savvy Singaporeans are going online to purchase insurance. On one hand, some of these “new-generation” insurers offer a fuss-free solution, I do feel that not everyone is ready to go for this option even if some claim to offer lower commission compared to a traditional financial advisor.

What’s more, taking a policy from an agent also comes with a service – someone to help you with your queries and claims if there is a need to. Someone to remind you to review your policies annually or at key moments in your life; I doubt buying insurance online provide such personalised reminders.

At the end of the day, buying an insurance is a long-term financial commitment. No matter which option you choose, remember to do your own homework as well since you are fully responsible for your own protection!

 

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