We all hate being in a situation whereby we don’t have a choice.
10 pm curfew, National Service conscription and the mandatory working hours by your paymaster.
Even when you hit the retirement age, you are not allowed to blow all your CPF on your mistress in Batam but have to receive your own money in instalments.
On the other hand, having too many choices is the cause of unnecessary anxiety.
We struggle to make a choice because we have a fear of missing out (FOMO) on a better deal that may be just around the corner.
As a result, we spend way too much time and effort just to make a decision.
When it comes to life insurance, we face the same paradox of choice.
Imagine that you have been introduced to two or more similar policies?
How are you going to pick out the better one?
A quick fix will be to compare the prices.
After all, cheap is cheap.
And nothing beats cheap in your mind.
But that is not wise.
At least that is what Warren Buffet has said.
Price is what you pay. Value is what you get.
We figure that the Wizard of Omaha cannot be wrong.
Value should be the guiding principle, not price.
Let us guide you on how you may choose a policy that gives you the best value.
The primary benefit of insurance is the coverage.
That shall be our starting point.
Should you be unsure what types of insurance coverage are available, you may wish to take a quick detour to our Learn section to familiarize yourself.
Life insurance used to be simple.
You get a whole life insurance and protect yourself against death and total permanent disability (TPD).
Personal accident plan does exactly that and nothing else.
Like any commercial products out there, insurance policies have been fine-tuned over and over again.
Just think of any popular car model, you can be sure that it has been upgraded several times over the last decades.
In the same way, the current insurance products have more features than ever.
With riders, you can make any type of life insurance as comprehensive as it can be.
You have to identify what type of risks the plan is covering you for.
Term, TPD, Critical Illness (CI), Early Critical Illness, Personal accident, etc.
By knowing what each plan actually cover, you would be in a better position to pick out the more appropriate one.
Understanding the coverage type is not sufficient.
You need to write down how much sum assured each provides to make an objective valuation.
For example, a plan with a sum assured of $500k on critical illness is worth more than one with merely $100k on death, TPD and accident benefit.
Not all insured amount are made equal though.
Generally speaking, death benefits are worth more than personal accident benefit because the former is payable more often than the latter.
Another increasingly popular insurance trend is the multiple payments feature for critical illness plans.
You have to note the basic sum assured as well as the maximum number of payouts.
It is also vital to know the insured amount when it comes to early CI claim too.
The number of years that you are protected makes a difference to your premium.
Every insured year cost you a little more.
If you are looking at two plans with similar coverage and sum assured, this is an area that you may want to compare.
When it comes to participating plans, you have to look at the expected returns.
There are two components to that – guaranteed and non-guaranteed.
The latter is presented in your benefit illustration at a stipulated rate of 3.25% and 4.75% per annum.
Since we do not have a crystal ball to forecast the future, it is only logical for us to look at the guaranteed returns in order to judge which policy is better.
Some may have a different opinion.
It is up to you to decide which is more important – the money at hand or the higher potential returns in the future.
This is where service makes a difference.
Forget about credit rating – they don’t really matter.
More importantly, how do you rate the advisors that are selling you the policies?
You may be looking at two plans that are indifferent in all aspects.
How then do you choose?
You choose the agent who has given you all the technical details.
The one who is giving you ample time and space to make your decision, instead of employing forceful sale tactics.
In short, you pick the one who you can trust.
This is a judgment call that you alone must make.
Finalizing your decision
We make choices differently.
Some value the service of the consultant immensely.
Others prefer a plan with superior benefits because they can handle the financial matters on their own.
There is no right or wrong answer.
By going through both the tangible and intangible factors, you can have an easier time choosing the right policies.
Don’t be rushed into making a rash decision.
After all, an insurance policy is a life-long commitment that requires careful consideration.
To have the best of both worlds, we do have a nifty solution.
Head for our Compare section to sort out the technical aspects.
And if you do not have a trusty advisor, leave us your contact details and we will handle the rest.
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.