Tan Kin Lian's Blog: Tips on Buying Insurance

Monday, October 29, 2007

Tips on Buying Insurance

Insurance to buy:

1. Insure the potentially large loss, with a small chance of occurence. For example, the total loss of a property or vehicle or a large liability claim.

2. Compare the premium rates charged by different insurance companies for the same insurance product. Competition helps you to get a lower price.

3. Buy a product where the total claims paid by the insurance company represent at least 65% of the premium. You are getting a fair deal.

Insurance to avoid:

4. Do not insure a small loss that you can afford to pay from your savings, such as the Deductible on a medical insurance plan or the Excess on a motor insurance claim.

5. Do not buy any product that is designed to be different and are not comparable to other products in the market. It allows the insurance company to charge a higher premium, relative to the claim.

6. Avoid a product where the features are too complicated, and you are not able to determine the expected claim ratio.

5 comments:

Khiat Han Hwee Adrian said...: How are we able to determine the claim ratio by the insurance company. Pls advice where we can get the info. Thanks.; October 29, 2007 11:37 AM
Anonymous said...: Financial products that originate from the marketing department should be suspected and avoided . They are usually useless and don't cater to the needs of customers. These are lifestyle or concept products that carry high cost and are not useful as financial products.
They are designed to be confusing and illusionary so that the buyers have no idea of its actual benefits Benefits are intangible and have no value for money.Products like cashbacks.Revosave is one of them.They ensnare the buyers for long period.Buyers will have difficulty to get out without incurring huge losses. The high cost has gone to pay high commission to insurance agents to promote it. It is a sham product. Buyers must be aware of such marketing ploy that prey on your emotion and ignorance. Ignorance will not be a bliss when you soon find out what stupid cashback you get as compared to putting in the bank even without interest. There are many better ways to have liquidity. Put in the bank with low interest rate is far better considering the liquidity and real money present value. Putting in a money market is best with higher return than revosave and absolute liquidity. Buyers must be careful of those novelty gimmicks. Their main objective is to confuse you with those rubbish life style concepts.They are hollow and have no real value.; October 29, 2007 12:43 PM
Tan Kin Lian said...: Most of the competitively priced products, such as motor insurance and group health insurance, have claim ratios of more than 65 percent.

The private Shield plans have claim ratios of about 30 percent.; October 29, 2007 5:57 PM
Anonymous said...: Don't talk about claim ratios. Even simple questions you still get the run around from NTUC Income.; October 29, 2007 11:58 PM
Khiat Han Hwee Adrian said...: I agree with most points except no. 4 which I partially agree.

I'll advice people to buy the insurance to cover the deductible for Medical Insurance if the premium is fair. Such plan will give total assurance.; October 30, 2007 1:52 AM