Getting Insurance
What is the best way to get insurance?
The best way to get insurance is to meet with a professional insurance agent or broker. That person is going to talk to you, find out what your needs are, and have your agenda in mind before his own agenda. He's going to come up with some suggestions, and you're going to say, "gee, this is great" or "we need to make some modifications". There are other ways to get insurance; you can go on the internet. But it's always best to deal with somebody that's professional and someone you really trust.
What are the pros and cons of buying insurance directly from the insurance company?
Of course you are free to buy insurance directly from an insurance company either on the internet or on the telephone, but meeting with a professional who you trust could be the difference between having your insurance at the proper amount or not.There are certain types of insurance provisions you may not know anything about and you might miss the boat by not being properly or adequately covered. One of the bad things about getting insurance directly from the insurance company is when you fill out the application, you may not fill it out properly. You may fill it out with questions. For example, it might ask when the last time you had a physical was and what happened, and you might say that you had a heart murmer or you weren't feeling well, or you had chest pains bothering you. The insurance company would read and you might be declined. Whereas an insurance broker will ask more probing questions. You would say nothing happened, the doctor said I have a clean bill of health. That type of information should be put down on the application so that the underwriter in the home office has a clear picture of what your health condition really is.
How do I evaluate an insurance company?
There are several rating agencies just like report cards. There are companies called A.M. Best and Standard & Poor's. These are big institutions that look at the solvency of an insurance company, the claims paying ability, what the company is investing their money in and the claims ratios, and what they do is at the end of the year, give that insurance company a rating. So, there's Standard & Poor's, there's A.M. Best, there's a company called Fitch, one called Weiss, all these companies are specialty companies that do nothing else other than evaluate the benefits of various insurance companies. And then they give you a report card, so that's one way to evaluate if an insurange company is the right insurance company. Also, you can talk to professional people, and your friends who might even be with that same insurance company; you can ask how'd they handle that particular claim, and what kind of rigormoral they had go through before they paid the claim. Those are the kinds of things that you might want to do to check on your own if you think an insurance policy with a given company is going to be a good one.
What is a "claims ratio"?
Claims ratio is the amount of premiums that an insurance company collects with the amount of claims they pay out. So if an insurance company is paying out too much compared to how much they take in, that might lead the company to be insolvent. So later on, the insurance company might come back and go out of business, and of course we don't want to be with an insurance company that's gonna go out of business. It doesn't happen too often, but those are things that you'd want to look at.
What is the difference between an "insurance broker" and an "agent" and what can they do for me?
How do I choose an insurance broker or agent?
One of the most important things about shopping for an insurance broker or agent is how long have they been in business. If they've been in business two or three years, their expertise probably won't be as good as someone who's been in business 15 or 20 years. You also want to know if they have any professional designations. For example, in the life insurance business there's a CLU, which stands for chartered life underwriter, or CHFC, chartered financial consultant. There are certain designations that you should look for when you're shopping for an insurance broker. The best way to choose an insurance broker or an agent is through referral. If you have a really good friend or professional person that's in your life, ask that person, "What person should I go to for insurance - life insurance, disability insurance or homeowner's insurance?" That person might have a 10 or 15 year relationship with the insurance agent or broker and they can say, "When I had a problem with my flood in the house, that agent came to my aid right away." That's the kind of insurance broker you want to deal with.
What can a broker or agent do for me after I buy insurance?
If you have changing needs in your insurance portfolio your broker or agent might come to you and say "We need to up this insurance". For example, let's say your building is worth twice as much as when you first insured it. That broker might say "Now is the time to change the coverage, otherwise you are not completely insured." So, a good broker is going to come back time and time again to see if your changing needs are being met properly with the insurance coverage that he sold you. Sometimes you have a problem with a claim. This is one of the biggest issues with insurance brokers. You have a claim problem and the insurance company doesn't seem to be handling it properly. Well, the insurance agent is getting a commission. That's what he is supposed to do. He is supposed to go work for you for your benefit and contact and scream at the insurance company if he has to to get your claim paid properly because that is what you have been paying your hard earned dollars for for years. That's what a broker does for you.
What do I do if I have a problem with my agent or broker?
The first thing to do is to contact them and to find out what they're going to do to solve your problem because sometimes its a mistake that the agent or broker made and they can fix it for you. Sometimes, however, they can't and if they don't then you have to take other options. For example, you could complain to the insurance company that the insurance agent represents. You can also go to the insurance commissioner if you think that you've been wronged and ultimately, you may have to think about using a lawyer. I've had many clients who've had problems with other insurance companies or other brokers and I've helped them acquire the proper attorney to fight for them.
Is it more expensive to buy insurance from a broker or agent than directly from the insurance company?
An insurance agent or broker gets paid by a commission. The insurance company gives them a commission based on the size of the policy, what kind of policy it is. The price you pay for the policy is the same whether you have an agent or you do it on your own. A lot of people think that if they go to a health insurance company and buy a health policy, if they do it directly that they are going to pay less premium, but actually the premium is the same whether they buy through an agent or not. Insurance companies would love to have no agents, because then they wouldn't have to pay any commission. In reality, however, they get most of their business from agents and realise it's a necessary price for doing business. Every business would love to have no employees but you need employees and people who will promote your business. Alongside that, you want an agent that sells a product based on your agenda, not his own. The insurance company pays me directly. You don't pay any extra premium for doing business with me or with any agent. The insurance companies completely compensate us without taking money out of your pocket.
Is price all that matters when I'm buying insurance?
If you found two companies that were highly rated meaning that they had very good financial credentials and exactly the same policies, then I would say price is all that matters.
Are there any kinds of insurance that I should avoid?
There aren't too many insurance policies that you should avoid, but typically I don't recommend people buying these life insurance policies that you see on TV. When you look at what they really are they're $5,000 life insurance policies that are very, very expensive and in today's world those policies are inadequate. There's also cancer policies that are typically duplicate insurance; if you have a good health insurance policy you probably don't even need these extra policies. Again, a good insurance broker listening to you, talking to you, finding out what your needs are will probably tell you whether or not you need to have a kind of insurance policy, so I would recommend having somebody give you some advice.
