4 practical tips in buying insurance
Credit to Author: RIENZIE BIOLENA RFP| Date: Fri, 31 May 2019 16:18:32 +0000
Having an insurance is important. It is a safeguard against financial shocks that can result from death or disability. It also supports the surviving family’s needs by being the source of funding, whether for daily expenses or schooling.
Having an insurance is a must. There are many insurance products in the market. A person may be overwhelmed with the choices, if not confused with which one to go for. Being objective financial planners, we help clients in choosing the product best fit for them. Here are somel tips:
Shop around
No insurance company has all the best products. Insurance companies are different from each other. Each of them has unique features, advantages and benefits. But as each person has their own distinct needs, they should know which one is best for a client. You can treat it like shopping. Look for an insurance product that fits your needs. For instance, if you are at risk for cardiovascular disease due to family genetics or lifestyle, you may want to look for insurance products that can protect you from this dreaded disease, as well as provide you with good features and benefits.
Look at pricing
In practice, we are very sensitive to pricing. An insurance product commands premium payments. We look at our client’s cash flow and see if he can afford the premium quoted. We get quotes from different insurance providers for term, variable unit linked/life and endowments. We then make a grid and analyze which one fits the client’s needs and budget, and gives the most benefit at the least possible cost. Normally, it is term insurance that offers the cheapest premium and greatest coverage so we recommend it for families that need coverage but have budgetary constraints.
Check your other financial goals
Insurance is just part of financial planning. It is one of the many tools for planning finances. It’s only one of the many things you might allocate resources for. Not too many people over-allocate cash in paying insurance that they leave no room for other financial goals. As financial planners, we map out our client’s other financial goals such as travel, retirement, planned purchases, even another child. From here, we assign priorities and then work with them in determining how much they can afford to set aside for insurance. There would be some push and pull in resources as the process is dynamic. But we surely do not allow insurance payments to severely impair other financial goals. Our simple philosophy says the client is not working just to pay for insurance, so balance all other financial goals with their current and future resources.
Work with objective, unbiased professional. Medical representatives (medreps) shall always push their products. It is their job and they get financial incentives for doing it. They will not push for other products. Same thing with insurance. Working with a salesperson from just one insurance company can make you blind to other products and solutions that offer greater benefits at a much cheaper price. If you are sick, you go to a doctor, one who is ethically-bound to give you objective and unbiased advice, one who is not bound to any product nor incentives, one who actually has your best interest first in mind. It’s the same with insurance. Work with professional financial planners who think about your best interest, not the big commission from selling a product.
Rienzie P. Biolena is a Registered Financial Planner of RFP Philippines. He’s also Chartered Wealth Advisor (CWA) and chief financial planner of WealthArki and Consultancy, a financial planning firm. Learn more about personal financial planning at the 76th RFP program in June 2019. To inquire, e-mail info@rfp.ph or text to 0917-9689774.
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