The majority of us would like to think we are well informed, savvy consumers.
And that goes the same as well for insurance.
Conversation about insurance that I heard usually fall into two camps:
- those that were entirely clueless, that insurance wasn’t part of where they value to spend their time
- those who think that are savvy and would offer an opinion of “don’t do/believe in this. You should follow this!”.
My opinion is that the topic of insurance stretches so wide that most folks scratches the surface, especially for the supposedly well informed.
If you listen to these advice, the impact to your long term well being is not small.
It is not that you will buy a pair of shoes that goes very badly with your dress, and end up being ridicule by your friends.
You end up spending too much or not covered adequately for what you want. You end up not being able to put your money in something else that you valued more.
As a blogger, I find my view on insurance protection have shifted so much from being very confident that I am right, to being conflicted, to now knowing better how to handle it in a span of 12 years.
The most important thing is to find someone adequately trained to discuss your worries and concerns and critically think about it.
Not many have the bandwidth to do that, and not many can find reliable advisors.
So it is likely most end up being under insured or over pay for insurance.
I resigned to that idea that not everyone can be wealthy.
Shawn from Providend wrote up a piece recently answering what he thinks are some common questions folks have on insurance. I disagree with him that these questions are common but that is not the important part.
One question that is frequently asked is: How what are the insurance I need and how much.
Insurance adviser will want to let you know that there is no standard answer.
However, there are rule of thumbs. And here DIYInsurance provides the rough heuristics.
Most readers will zoomed into the amount needed, but I urge you to look at why do you need it and why you DON’T need it.
What might surprised many are the low priority to personal accident and pregnancy related insurance. Essentially also, the reasons that you need critical illness may also surprised many.
The monthly cost of such coverage is $220/mth. This happens to be an insurance package from various insurers as part of their young working adult protection package.
If you have friends who may be covered too little, or you think are spending too much and not covered adequately, this would be a good table to have a conversation about.
If you emerge from a planning session and have purchased protection from your adviser, yet your coverage does not look close to this, then its time to ask your adviser WHY. Is your adviser maximizing the commissions earned, or maximizing your protection needs.