Taking Cover. What insurance agents don’t tell you

Insurance agents have been an irreplaceable part of the insurance purchase process since time immemorial. And in most cases, instead of reading the document and fully understanding what we are getting into, we find it easier to just sign up based on what the agent says. The result is that when it is time to raise a claim, you realise you don’t get what you were promised.

On an average, a regular conversation between a customer and an insurance agent is all about premiums. Most people look at insurance as another investment option, so premiums and returns become central to their understanding of the policy. But there are many things that you should not ignore while buying a policy, especially exclusions. To buy an insurance plan that can cover you during a financial emergency, take note about exclusions. This will help you understand the policy better and get you more value for money.

Only details can save you from buying an ill-fitting policy. If you are buying health insurance, for example, you may be told that it covers your hospital bills. Beware of such statements, otherwise you will find yourself caught amidst jargon and objections at claim time. Ask for limits, hospitals covered, diseases covered, etc. Read carefully about exclusions and see if it suits your requirements. Some policies cover a particular treatment only after a few years of purchasing the policy. Make sure you understand such clauses.

An insurance agent might go into a sales pitch that includes at least one fancy item and weave a rosy picture. The truth is you might not even require it, but you may get caught up in the pitch. Moreover, these come with a higher premium cost.

So, assess carefully what you actually need. For example, in a car insurance plan, you may be promised 24x7 assistance, towing service, etc. You might end up paying a higher premium for a service that you’ll hardly use.

No insurance agent will ever tell you that his commission is the primary reason behind him pushing one policy over another. Remember that an insurance agent is just a salesperson.

Besides, agents don’t reveal the percentage of your premium that the insurance companies take as a processing surcharge. The lesser this amount, the better it is for your investment. So, take care not to end up paying higher processing fees due to ignorance.

It is a nightmare to run behind an insurance company to get your claim settled.

The worst scenario is your claim getting stuck in unwarranted objections. Your agent cannot rescue you as he has no role in claim settlement. It will be done according to the policy clauses and the insurance company’s processes. It would be wise to ask about the claim settlement ratio of the company and compare it with other insurance companies.

This will give you a fair idea of how efficient the company is in claim settlement.

The writer is Group CMO, Policybazaar.com

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