Great! You want to get yourself and your family insured. My advice would be to get an adviser (can you use a smiley face emoticon in an insurance blog?), and I would be more than happy to help you and I won’t charge either. Check out my blog on the reasons to get an adviser and how to find a good one but if after reading that you are still convinced that DIY insurance is the best thing for you then here is a basic guide on what you need to do, from quote to claim.
This is in absolutely in no-way to be considered personal advice and is a general guide to some of the common steps you should take on your DIY insurance journey.
Remember though an adviser will do all this for you while you go and play sports, spend time on the boat, or relax at a BBQ.
1 – Work out what you want the insurance for.
Seems straightforward but some vital things need to be considered and here are some of the questions you should ask yourself. Remember insurance isn’t just about dying prematurely it’s about the cost of illness too.
- Do you want to leave your family a financial legacy in the event of premature death?
- Is money to support your children and your spouse important if you can’t work?
- How long do you want to be able to support them for?
- Is a lump sum better or would a monthly salary be better? or a combination of both?
- Will you need money if you are terminally ill?
- Who will own the policy?
- Do I want the premium to stay the same or can I afford the premium increase over time?
2 – How much cover will you need?
Now you know what you want to cover, how much do you want to insure each scenario for? This is where it really helps to have an adviser as they can be completely objective but if you go it alone it is essential that you get this correct. If you get this number wrong you could be under insured, which will cause financial hardship at claim and at that time it is too late to fix it, or over insured and paying too high a premium. So spend some time on this and be honest with yourself. Work out exactly what you are worth and what you will need.
An important thing to remember is inflation. Iif you earned $50,000 a year in 2000, by 2017 you would be earning over $86,000 and that is without any promotions or inflation busting pay rises. If you are 25 year old graduate earning $70,000 a year and have 45 years of earning ahead of you that could be a significant amount of earning power.
Don’t undervalue yourself.
3 – What policies will you need?
You know what you need protection for and how much. The next step is what cover will work best for you. I can’t advise you strongly enough to get an understanding of what each cover actually gives you and when it pays. The headlines give so easily but the small print eagerly takes away.
“What does that phrase mean at claim time?” Is a phrase you should ask yourself when reading policy documents.
Remember over 95% of claims pay, most of the ones that don’t are because there was no claim in the first place as there is a misunderstanding of what each policy actually covers.
4 – What company is best for you?
Now it’s time to find a company. Not all policies are equivalent, life cover is not just life cover, income protection is not the same across the board, so READ the small print and UNDERSTAND what it means, what are the bells and whistles, do you really need them?
Remember if you call an insurer or bank directly they will not give impartial advice, they WILL sell you one of their policies whether it works for you or not. There are policies that work better for people that do manual jobs than others, while others will be better for self-employed.
5- The Application Form.
This is the step that causes the most problems at claim time. Seems strange but it’s true. A successful claim can rest on the quality of an application. Remember a company will judge any omission of a disease or illness as deliberate even if it was an accident. People forget and miss out illnesses, misread questions or deliberately don’t answer. If that happens the insurance company can void the entire policy so there will be no payment. So get it right, call your Dr and get the notes, make sure you miss nothing out. Even if it is innocuous. More is best. Let the underwriter make the decision of what is relevant, not you and not the doctor. Start at the head and work your way down, don’t miss out anything.
Remember if you are thinking if you should include it, include it.
6 – The Offer of Terms.
The underwriter will come back with loadings and exclusions, when the company makes an offer. It is important to understand exactly what those exclusions mean and how they impact the policy. For example a mental health exclusion can mean anything from stress and anxiety to depression and fibromyalgia. It can mean that if you have cancer and it causes depression and once the cancer is clear the depression remains then a claim will stop. Be prepared to appealed decisions, it can be complicated and tricky and evidence will be required so make sure that you have what you need. It the company offers no underwriting then this should set off alarm bells as it means they will underwrite at claim time, when you are sick … or dead … and there will be no chance of appeal.
Occasionally exclusions have time limits and must be followed up. One company will have harsher underwriting requirements than an other. Some companies will allow claims on exclusions if there is an accident others will never allow a claim.
7 – Regularly review your Policy.
Regular reviews are par for the course for advisers. It ensures that the policy is still doing what it is intended to. Insurers regularly upgrade the policy wordings which will impact your cover if it doesn’t have guaranteed wording, so if you are DIY you need to keep on top of it.
Perhaps it’s time to review an exclusion, there may be a claim or benefit that has been missed. It is also worth going over the amount of cover as there may be changes, a mortgage paid off, a new child, a divorce, a pay rise and the amount of cover is no longer relevant.
8 – Claim time.
Insurance is all about the claim, so make sure you are prepared for any claim and ensure that you have all the correct evidence you need. If you think there may be a claim get in touch straight away and be prepared to wait. A claim can be held up as the company waits medical reports or further evidence. Be prepared to go on hold, e-mail regularly, get in touch with GP’s, employers, and occupational therapists to push the claim through. If you are on a claim then expect the company to demand regular medical lines and to visit and offer alternatives and support back to work. If you are ill this still must be done and if you are incapable then your next of kin has to take on the job.
Remember, you can always call me on 0800 Cover Yours and I’ll be happy to make sure you get the insurance that fits your needs and I won’t charge you a cent. Ever.