You Mean There Is More to Insurance Than Price?
Close your eyes and imagine a perfect world. Everything is free. No accidents happen. Life is a bed of roses. Now wake up to reality. In the case of insurance it is often true: “you get what you pay for.”
The way insurance companies advertise, if you did not know any better, you would think the sole criterion you should use when buying insurance is who can get you “insured” for the best price. In fact, insurance companies spend thousands of dollars trying to convince us of just that—which is sort of ironic, when you think about it! But once the lights go down, and Flo and the gecko and the glee clubs are gone…we all need to face reality.
That is where your insurance agent should come in.
Because the focus of insurance is not about buying “cheap.”
It is about buying protection. The right protection.
In the end, what you pay as a premium plus the cost of an unpaid claim is the real price of “cheap” or “basic” insurance.
Do not become a victim.
Gaps in coverage will get you, and they will nail you right in the wallet.
It is particularly frustrating to see this because a good insurance agent can put together a deal for you and your family that secures you adequate coverage without unnecessary overlaps or unfortunate gaps.
It goes without saying that you want the best deal for your insurance.
But you also recognize the hard fact that…
The best “price” rarely gets you the very best coverage or claims payment.
Do not get me wrong; I am not saying to disregard price completely. But if “cheap” guaranteed complete satisfaction for every customer, every hotel would be a Motel 6.
Besides hawking their wares based on price, you will notice another thing about insurance advertising: it doesn’t explain the coverage very well. Now, in a 60-second spot, obviously, it is tough to explain the ins and outs of a complex policy—but even in written marketing materials, many companies are big on “headlines” but soft on details. The result—you are trying to compare rates or purchase on the basis of the proverbial “pig in a poke.” It is not surprising that people are confused and unsure as to what they are actually covered for…even with a policy that looks really good on paper.
But who wants to buy a policy that is vague and undefined, or patronize a company that is so focused on name or brand recognition that they forget what an insurance company is in business to DO?
That’s why this book isn’t about any one individual company
When I wrote this book I wanted to write about how the industry REALLY works. I wanted to pull back the covers, cut all the crap, and expose the truth.
I wrote this book to be an easy-to-read
“What You Should Know About Insurance”
A 60 second commercial cannot give you great information.
Your brother-in-law is probably NOT an insurance expert either.
You would be surprised how many little details there are to selecting the right protection and Murphy’s Law will always come into play if you are ever faced with a claim unless you have spent the time to become informed and pick the right coverage.
Bottom line is…if…
1. You have not had an independent review of your policy by another agent in over 3 years.
2. You think switching insurance companies is a time consuming bother.
3. You have stuck your head in the sand and said “I’m too busy”.
4. You are afraid your agent will think you do not like him if you ask questions.
5. You had a bad experience in the past.
6. Your agent does not stay in contact with you by newsletters and annual policy reviews.
7. You have a new teenager in your home, bought a different vehicle, have a business, or any other life changing event in your life and your insurance has not changed.
Then this book is for you.
Insurance companies take a bad rap at times
It is possible you may have a bad opinion of insurance companies in general.
You may have had a personal experience that makes you to believe that insurance companies are not in the business of paying claims at all—but of refusing them.
Do you know friends of friends who were screwed over by an insurance company?
If you do not think highly of insurance companies, you are not alone.
In some cases, the insurance company does drop the ball. But the truth is there is a lot of good about insurance companies.
HARD REALITY: Not all companies are created equal. There ARE some better than others.
What would make us all happy?
That is easy:
· if the insurance company covered every loss you ever reported...
· if the insurance company paid your life insurance benefit regardless of the reason for death…
· if the healthcare provider paid your entire bill, regardless of pre-existing conditions or unexpected circumstances...
· if the auto insurance company paid for your damages on the basis that the accident caused you stress…
Who would not be happy with that? That would be great. We would all love to be paid for our stress!
In a perfect world, that is how insurance would operate. But—yeah, you know what is coming—we do not live in a perfect world. Insurance companies cannot afford to literally cover every single incident that causes you stress and/or loss. If they tried to do so, you know what would happen? They would all go broke—and fast!
Why is that? Because paying every single claim, no matter the circumstances, is not how insurance operates. These companies have to show a profit—or they have no proceeds from which to pay claims in the first place.
They play a probability-game: they, in effect, “gamble” that the majority of policies will never have claims on them…and price their policies accordingly. If the majority of policies did have claims on them, and all those claims got paid, you would not be able to afford insurance at all. No one would!
Spread the Risk, Limit the Loss
You know how I talked about this insurance operation being a “gamble”? That is because insurance is a form of risk management; it is a hedge against potential loss.
As the insured, you transfer the risk for a loss (big or small) to someone else.
The insurance company manages that risk and agrees to spread it across their entire customer base.
And places LIMITS as to how much is covered.
That is what your premium payments buy.
And the tradeoff for an affordable premium is the deductible—the amount you pay on your own.
All this only works because of the limits placed by the insurance companies on what will be covered.
If a certain incident is not coverable in a given insurance contract, that means the insurance company has determined that they cannot afford this type of loss—in effect, they cannot pay for it under these terms—and so it is excluded from coverage. But here is an insider secret: insurance companies have certain types of losses they specialize in covering. No one company can be everything to everybody.
It is the fine print in the policy.
The stuff that can cause severe heartburn when it is time for a claim…unless you have worked with your agent to be sure you are adequately protected.
The worse time for a surprise is when it is time for a claim.
And all this is important to know because?
Do not be fooled. The insurance industry may not be out to profit from your suffering, but they are in the business to make money, which is why your agent is so important. They become your researcher, your advisor and your advocate should you ever have a claim. Often your insurance is only as good as your agent.
So what to do if one company, or one insurance agent, comes to you with what looks like an offer that is far better than what you currently have? Just remember there is more to a “deal” on insurance than premiums alone; insurance isn’t just going with a “low bidder.”
In this book, I will be detailing some inside secrets of this industry: how to choose between insurance companies and insurance agencies—and what is crucial to know about the various types of insurance.
And so, at the end of the day, maybe you will be among those people who do not mind talking about insurance—or even shopping for it! The bottom line is, and will always be:
Insurance is all about protecting
you and your family
Look, we all do it: we chase dreams.
We plan for the future.
We build our “golden nest eggs” for our retirement years.
We do our best to cover the contingencies in our lives.
But what happens when a major accident or natural disaster occurs?
That is when—and why—insurance matters.
One trip by a stranger on the sidewalk in front of your house...
One distracted moment in a car resulting in an accident...
One error in judgment in your business...
One natural disaster…
And you could be facing hundreds of thousands of dollars in expenses. It would be life altering.
Insurance is not about “cheap”—and it is not about betting against your chances of loss.
In chapter 2, I continue to pull back the covers on the insurance company and agents.