Using Insurance Agents or Brokers
Many people pick their insurance companies based on tips from friends – some of whom may also be insurance agents! It’s tempting (and comforting) to think of them as friends, but be sure to pick your insurance agent/broker carefully!
In Malaysia, all life agents can only sell products for 1 insurance company, while non-life agents can sell products for a maximum of 2 insurance companies.
Insurance brokers on the other hand, represent you and can source insurance products from many different insurance companies for you. You can then decide which insurance product suits your budget and needs the best. This might save you a lot of time and effort.
Here are some questions to ask your insurance agent/broker:
- What conditions/circumstances are not covered by this policy? Be very clear about deductibles, exclusions, limits and anything else which is not covered.
- Is renewal for this policy automatic? And what cancellation charges apply if I surrender my policy?
- What happens if my circumstances change and I have difficulty paying; e.g. if I lose my job?
- Aside from coming to the end of the policy term, what other factors might cause my policy to end/be terminated?
Here are some things to be careful about:
- Don’t purchase more coverage than you need: some agents/brokers may try to sell more life insurance coverage than people need, or push comprehensive medical plans on young or low-risk consumers.
- Don’t purchase whole products that you may not need: some agents/brokers may sell you whole life insurance because it has both insurance and investment benefits. Whole life products only give ‘expected returns’, which might leave your loved ones with less money than expected, so make sure you are aware of the risks before opting for a product like this.
- Don’t rely on everything an agent tells you: all insurance agents/brokers have to take an exam before working, but they won’t be experts on all financial topics. Always do your own research and don’t rely purely on what your agent tells you.
Besides selling, agents/brokers are also supposed to provide you with assistance on an ongoing basis so don’t hesitate to ask them questions about your policies. It’s also not rare to get a replacement agent/broker if your original one leaves the insurance or brokerage company.