As a financial adviser, I've firm belief that protection planning should come first. Occasionally I encounter that one or two persons who don't seem to register the risk and it makes me wonder how many others are out there. In this article, I'd like to share some frustrations and in the process also highlight the risks from my perspective.
I do not need protection plans now...
There are certain life events we can schedule, such as when to buy a house, get married, go to school and perhaps even our retirement... but I didn't know we can schedule when we will fall ill. If this was really in our control, why not schedule never falling ill? In my ideal world, I'd like to buy hospitalisation, critical illness or death plans 4 months before I fall ill or pass on so that I can maximise my money. The trouble is, despite my 4 year vintage as an adviser, I haven't cracked the code on the perfect timing to buy insurance.
It's not worth getting insurance if it does not cover my existing illness...
Which leads me to frustration number 2. Largely because people think they can decide when they fall ill, they only start exploring insurance when they realise they do not have this power. Usually this realisation happens because something happened to their health. All of a sudden, there's desire to get insurance except when exclusions and loading occurs, they decided that insurance isn't worth it again. If you run a restaurant, and you know this guy has a proven track record of not paying for his meal, would you sell him food? The logic is the same with insurance companies, they will not insure a known risk.
What these individuals fail to realise is how lucky they are because there are many others who can't even purchase a plan because their uninsured illness is so severe they are excluded from ALL other conditions. If you end up in a situation where you still can consider exclusion and loading, you're considered the luckier few. Put it this way, for this group of individuals who have the special ability to foretell when they need insurance, it's not like insurance was a consideration before the illness anyway...
Sometimes, it's not about pre-existing illnesses. It's a matter of being overweight or underweight and I'll buy insurance after I either lose or gain weight.
If we go back to basics and assume we agree that we do not have a crystal ball to foretell when we will fall ill, and we also agree that the primary basis of insurance is to protect us just in case we do, then shouldn't we get insurance as soon as possible and not when all the stars align? In the first place, the desire to hit the ideal BMI prior to insurance purchase is because of exclusions and loading. This shows the potential risk that individuals in these groups are exposed to.
What I feel should be done would be to get coverage first and if these individuals successfully lose or gain weight, they can reapply for new insurance or to appeal to re-look at the current terms. Technically, if one waits till they hit the ideal weight before they purchase a plan, they will pay the price based on their age and health status then. However, if they encounter some health issues prior to that, then they run the risk of not being able to attain coverage or lesser terms at more expensive prices. On the flip side, if they purchase insurance now, they would at least get covered.
If you would like to explore insurance coverage or if you very much want to purchase insurance but are concerned about the terms offered, you can reach out to a trusted adviser who carries multiple insurers. You can also drop me a message if you like.
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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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