3 Incredibly useful tips to know BEFORE buying Life Insurance

Posted 7 July, 2016 by Clearly
in Educate Yourself

For a first time buyer of Life Insurance, it can be tricky waters to navigate.

From the policy terms to riders to clauses, to the issue of affordability and even form filling – it can seem overwhelming.



But that is perfectly normal. Many would be buyers of Insurance are put off by the perceived complexity of this industry, and its common to put off purchases for months at a time. Or even forego the idea of getting insurance altogether.

That’s where we are here to help.

Other than visiting our incredibly simple learning resource for life insurance, here are 3 additional tips that will make your first purchase go all that much more smoothly.


1. When in doubt, contact the Insurance Company for more information


A wonderfully simple contraption that works!



You’ve read up on the product. It seems quite attractive and suits your needs.

Your agent spent an entire afternoon explaining the gist of the plan, and what benefits it brings to you.

But there are just so many terms that seem so foreign. Perhaps one or two nagging doubts still linger and play on your mind.


Policy Loan? Cash Back? Are they more or less the same thing? I get to take money out of my policy right?

Non-guaranteed projections – do they represent an upper or lower limit to the actual thing? Just how much money can I actually get in the future? Where in the world did that figure actually come from?

Distribution Cost? Woah! A cost? But my agent said I don’t have to worry about that. Should I be? But why shouldn’t I be concerned about a COST?

Has my agent actually told me everything I need to know about this plan? How can I be sure?



That’s what hotlines are for.

Because buying a Life Insurance policy is an important financial decision, don’t shy away from getting to the bottom of the matter before making your decision.

Financial Advisors (or Insurance Agents) are ultimately paid by commission, which means at least a vested interest in you purchasing a policy. So in their zeal to persuade you, certain things could have been explained in a more “creative” manner.

Whereas the Life Insurance Companies (or more accurately, the Call Centre Executives) have less of an incentive to give creative replies but answer your questions in a more matter-of-fact way.

This tip ensures you clear your doubts, paving the way for a purchase – everyone wins. But we apologize to the Call Centre Executives in advance!


2. Consider splitting up one big policy into a few smaller ones


Who would have thought pizza is like insurance? So much more delicious when you slice it up



You are about to buy a big insurance plan. It could be a Term plan, Whole Life, or Endowment, even Investment Linked Plan.

The premiums look affordable to you right now, but you are concerned about the future – what if you lose your job? Perhaps you may have plans for a sabbatical break – with reduced incom .

Or you could have a big financial commitment looming up which dries up your budget for insurance. Won’t that jeopardize your Insurance plan?



Break up the bigger policy into smaller, bite sized pieces. For example, instead of signing up a Whole Life Plan costing $500 a month, simply split it into 3 separate (but functionally identical) policies. Perhaps for $100, $150 and $250.

This immediately lets you have more flexibility when, or if, you need it. If ever you face tough economic times, you have a choice to lapse (stop) either one of these policies while keeping the rest going. This will ensure that your financial loss (and reduction in insurance coverage) will be kept to a minimum.

By buying several smaller policies, you have given yourself wriggle room when tough times come. All you may sacrifice is a *tiny* bit of coverage – because some insurers give bulk buy “discounts”.

But isn’t that a small price to pay for flexibility? We certainly think so.


3. Always be truthful, and remember that no detail is too small


Full disclosure is needed out of the courts as well

Full disclosure is needed out of the courts as well



You’ve sat through the presentation, understood your needs, examined your options, and are ready to make your purchase.

In the mass of forms to fill (either on paper or electronically), there is a pesky section that asks about your medical history and lifestyle behavior:


Do you… engage in sports of a dangerous nature? E.g. scuba diving, motor racing.. etc?

Are you… receiving or considering to receive medical treatment from a doctor or any reason?

Have you… done any tests such as X-ray, ultrasound, CT scan, biopsy etc?

Have you.. ever smoked during the last twelve months?

And a whole host of questions that follow.


You can’t help but think:

Hmm. Wouldn’t smokers pay more for the same insurance? Who would know that I smoke? I just smoke socially anyway.

Scuba diving considered a dangerous sport? Oh please!

My knee X-ray 3 years back was because of a sports-related injury, it has nothing to do with insurance.

If I declare all these, won’t I have to pay more? And I don’t even agree with the validity of these questions anyway! Besides, it will just delay my application, and I am not going to drag out some dusty X-ray that has been long forgotten.

Not as if the Insurance Company can prove all of these, right?



Always stick to the truth, no matter how much of a pain it is. Again, because Life Insurance is an important commitment – to you and the Insurance Company.

Yes you might pay a little more.

Yes you might be obliged to provide that dusty, non-related X-ray.

Yes you may have to wait for your application to be approved.

Yes you may need to answer a lot more annoying questions which (you feel) may not have any bearing on your purchase.

But for sure, you will thank yourself for all this trouble when the time comes. Read about a cautionary tale about a woman who neglected a small tick here.

If ever you need to make a claim, that is when all this honesty serves to help you. Because you have declared everything “fully and faithfully”, you stand to receive your stated policy benefits.

Else, your claim might be disputed – and or even rejected, which leaves you right where you started. Without the benefits of insurance.

NB: The entire Insurance Policy application process (ie the part where you fill up forms) has to be done with the utmost care and transparency, not just the medical declaration section!


To cap it all off


Life Insurance can seem like a daunting financial decision to make. But with a little more research and time spent, it is the best step that one can take towards financial stability.

We hope that this article has presented some Life Insurance buying tips that will be of good use – and would love to hear from you if you have other tips to share.

As always, your comments are most welcome!


www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

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