Checklist to Own Insurance

takaful ikhlas

Since our financial circumstances and goals may differ, there is no "Rule of Thumb" or the perfect formula on what to own or even how much insurance to get. Engaging a Financial Consultant or Insurance Representative is important to know that they are prudent enough to offer their services and advise and put your priority first based on your current financial situation.

Here are some of the questions that you should enquire with your selected Financial Consultant or Insurance Representative:

1. What kind of insurance do I need?
2. What will my insurance policy cover?
3. How much insurance coverage do I need?
4. How much will I be paying for the premiums and will I be able to afford the premiums over long term?
5. What happens if I fail to make the required premium payments?
6. How do I make a claim?
7. Should I replace an existing insurance policy?

Before you own an insurance policy, you need to understand what decisions need to be made, the various alternatives available and the compromising essentials to the process. Your Financial Consultant can assist you to make the right decision but bear in mind that they cannot make and it is dangerous for them to make the decision for you. As a prospective client, you have the responsibility to determine your own financial needs.

What to consider before owning an Insurance policy?

1. What kind of insurance do I need?

First of all, you should understand on what are your needs and objectives. Upon completing the fact-finding process, you should be in a better position to have an overview on what kind of insurance should you own, whether or not it is for protection, savings, investment or retirement.

If investment is the topic in your mind, you should map out your risk appetite because higher returns come with higher risks. As for savings plans, focus on the guaranteed and non-guaranteed portions of your plan. The non-guaranteed portion can be revised in time to come and they depend on the performance of the company's life funds.

After you have owned your policy, it is important for your Financial Consultant to have regular review sessions on your current policies, needs and objectives because it will change over time.

2. What will my insurance policy cover?

The kind of coverage may differ from different types of policies.

Before you sign on the dotted lines to own it, your Financial Consultant should present to you a list of recommendations which includes the types of policies and its benefits. It is your responsibility to read through and be thoroughly clear of what your policies are all about. When you are in doubt, that where your Financial Consultant comes it. Ask them.

3. How much insurance coverage do I need?

The amount of coverage that you need will depend on factors such as:

1) How many dependents do you have?
2) Do you have any debts or mortgages?
3) What kind of lifestyle do you want to provide for your family should the unforeseen circumstances occur to you?
4) How much do you need for your children's education funds?
5) What are your investment needs?

Your Financial Consultant should assist you to discover your current financial situation and insurance needs. Unfortunately, not everyone have the financial ability to own all the insurance that they need immediately. With fact-finding process, your Financial Consultant will be in a better position to assist you priorities your needs and recommend policies to fit these needs at a budget that is most comfortable within your financial situation.

4. How much will I be paying for the premiums and will I be able to afford the premiums over long term?

The coverage that you decide on will determine the amount of premiums payable. You have to understand the current benefits on the basic policy and decide whether you are adding a rider to it. Some riders provides you with benefits like for example, your future premiums will be waived if an unfortunately event occurs and your policy will still be in force. These types of riders are useful to be attached to an insurance savings plan. Check with your Financial Consultant on the types of riders available that they can offer you.
However, if your policy does not have this benefit and it is difficult to continue owning your insurance, discuss with your Financial Consultant on available options for you to consider and cater to your needs.

5. What happens if I fail to make the required premium payments?

Normally, insurer will give a 30 - 31 days grace period which you can fund your premiums with no addition interest. If it is not funded within the grace period and your policy has obtained sufficient cash value, a policy-loan will be done against the cash value to fund the overdue premiums. Your policy will then be in-force but you have to pay interest on the loan.

Different types of policies and insurer differs from the style they handle overdue premiums. Check with your Financial Consultant.

6. How do I make a claim?

Contact your Financial Consultant and fill up a claim form which will be provided by them. Have the relevant supporting documents ready and submit together with the claim form.

If the insurer can settle your claim, a cheque will be issued generally within 7 days from the time they receive all relevant documents. However, if they are unable to deal with all or any part of your claim, they will explain to you in writing.

7. Should I replace an existing insurance policy?

Owning an Insurance Policy is a long-term commitment. Any decision to surrender or terminate the policy should only be done after careful consideration has been made.

Early termination of a policy may surface additional fees and charges. On top of that, you may be losing valuable benefits. Your health status might have changed and the level of protection may differ when you decide to take-up a new policy because declaration of all pre-existing illnesses and condition are mandatory and possible undertaking of medical examination.

If your financial situation deems difficult for you to continue owning your policy, consult your Financial Consultant for other available options for you to consider. It may be possible to reduce the sum assured to reduce the premiums with certain policies under certain insurer.

If your final decision is to proceed to terminate your current policy and purchase a new one, we would recommend that you do not terminate it first before your new policy has been confirmed to be in force. This is to ensure that you will have coverage if something unfortunate were to happen during the period.

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Article Source : Ashraful Ariffin