Throughout my 5 year career, there are only 2 instances that are constantly recurring where clients would initiate getting insurance from me. This is why my personal belief is that advisors are here to stay and won't be completely replaced by robots, DIY, or online services. I believe that insurance is sold not bought. In this article, I'll share my experience.
To provide some context, insurance in the area of protection planning is very often something you pay for which you hope you'll never use. Hence, most people are unwilling to pay for insurance. If they grudgingly need to, it's usually with the hopes that the price can be as low as possible. While it may seem very reasonable that we all need some form of insurance to cover us in the event of unexpected health issues, my personal experience tells me that I'll need to bring up the topic of protection planning before clients consider getting themselves covered. On a normal day, nobody wakes up in the morning and say, "I want to buy insurance."
So what circumstance will clients self initiate getting coverage?
1. They encounter a close friend, colleague, or family member who have a serious illness and got frightened by the medical bill or medical experience
The only reason why people put off thinking about sorting out their insurance coverage is this optimistic belief that it'll never happen to them. When someone they know falls ill and they witness the entire recovery or treatment process, it becomes a reality check. Often one of the most common topic of discussion is the medical bill or aftercare cost. The other common topic of discussion is the medical experience. Do you want a personalized doctor or a rotation of doctors? Do you want private medical attention or public hospital medical attention? It ranges from ward treatment and even waiting time to get the results of your tests and scans.
Often when someone you care about loses their fight to medical illnesses, you will question yourself if you could have changed the situation had you more adequate resources.
2. They discovered through a medical check up that there's potentially something wrong with their health
2 years ago, I received a call from a client who bought a hospitalisation plan from me a couple of months before the call. I recalled very clearly I spent a lot of time trying to educate her about cash riders (at that time it was 100% coverage) and she was adamant on only using Medisave to pay for her plan. Thus she only had partial coverage. A few months later, she suddenly called me to ask for the cost of the cash riders and mentioned that she wanted to buy. After further probing, I discovered she was diagnosed with a cyst in her ovary and there's a chance she might need to go for an operation. When told that there's likely to be an exclusion on the riders, she decided not to purchase it. *FACE PALM*
Very recently, I received another random text asking if I was an insurance agent and the person mentioned she wanted to purchase medical plans. Upon ringing them up, I discovered they had diabetes which is a declined condition for hospitalisation plans.
Common Misconceptions That Result in Bad Decision Making
1. Now that I'm healthy, I just need to buy the minimum
Like the example I gave above, the client who only wanted to use her Medisave to pay for her hospitalisation plans and didn't want to involve the use of cash. This idea of having a tiny safety net is very flawed. If you really believe you won't fall sick, you won't buy any insurance. If you believe you might fall ill, you should plan with the fullest contingency because no insurer would be foolish enough to cover a known condition.
2. Delaying coverage because of exclusions/loading or choosing to totally go without coverage
If there's exclusions, that is already a fact because it's a known risk. Sometimes people think they will only buy insurance after they 'recover'. In my opinion, they should be celebrating that their condition isn't so serious till they are totally excluded from being able to purchase the insurance. At least, they still have the opportunity to be covered for other conditions. Also, the fact that there's a known risk in your body always indicates that there's a chance of lower immunity and higher risk that other possible conditions might develop. You should be rushing to get yourself covered by insurance and not staying chill about it. I really don't understand how is not getting coverage the wisest decision when there's a medical exclusion. Just because you can afford the medical bills for your manageable health issues now doesn't mean that the game of life has exempted you from the possibility of more severe health issues.
The right approach to this is to accept the exclusion and take up the coverage first. Most insurance coverage for serious conditions have waiting periods. If you chance upon a better offer from another insurer later, you can always make a decision to switch. Should you really recover from your condition, you can always appeal to reassess your insurance coverage later.
Moral of the Story
The biggest takeaway from these observations are that medical illnesses are real and can happen to anyone. We really don't know what's the likelihood that we will be the unlucky one to encounter some medical issue. The possibilities of medical issues that may have implications to insurance purchases can range from borderline high blood pressure to fractures or non cancerous growth in the bodies. Very often, clients tend to interpret minor health conditions as No Medical Conditions and expect insurers to accept them as standard but this is a flawed expectation.
To explain this, today imagine you run a money lending business. If someone has a track record of defaulting on payment, you definitely will not lend the person money unless it's with the intention of doing charity. What if you know this person needs a lot of reminders and coaxing to repay the money loaned, would you lend this person money? It's not a definite that you won't get the money back, but a blemish on their credit rating means that there's a higher possibility not to get the money back as compared to someone with a clean credit rating. What incentive do you have to take on the risk? Perhaps out of goodwill, you might be willing to lend this person with poor credit score money if he/she can put up some collateral to cushion the possibility that you can't get your money back.
In insurance it's the same logic. If a person has a known serious medical condition/or very telling signs of potential risks like cancer or diabetes, it's a straight declined. But if there's some issues which may or may not be deemed too serious, insurers will likely exclude/load the known issue and cover the rest of the conditions. This way, clients still get to be covered for other potential health issues and insurers will not be doing a definite loss making business.
Insurance is best to be gotten as early as possible. Not only is it cheaper, you are likely to have a clean bill of health. As an advisor, it really sucks to tell clients they have been excluded for xxx condition or they have been rejected by insurers. Very often, I feel the situation can be avoided as long as people pay more attention to their financial wellness. It sucks even more when clients are told of their need for coverage and make an informed decision to not be covered only to need it later. Usually the lack of affordability is a lie. If you can pay for your holiday, you can afford your protection plans.
Don't save hundreds only to pay thousands later!
If you haven't gotten your insurance coverage or isn't sure if you are adequately covered, please speak to a trusted advisor. Even if you have some existing ailments, all might not be lost. Drop me a message and I'll see what I can do to help you. Distributing solutions from multiple insurers has it's advantages.
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Disclaimer: The content created are based on my personal opinions and may not be representative to everyone or any organisation. If you have any doubts or queries pertaining to insurance or investment, please seek professional advice from a trusted adviser in an official setting. You may also reach out to me if you do not have a present adviser using the message box under 'Let's Talk'.
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