Insurance – Is It A Necessary Evil?

We have been focusing a lot on cost cutting in these difficult times and one of the areas that I want to encourage you not to cut is insurance.

Now, before we go any further let me reassure you that I am not a great fan of insurance companies.

The main reason is that after convincing you of the need for insurance and the time for a claim arises; suddenly they do not wish to pay and find all clauses in the contract to support their position.

In particular I find that for life insurance 7 out of every 10 agents will sell you a policy that you don’t need and will fail to explain to you how the policy operates.  In addition 9 out of every 10 persons do not understand how their policy works.

In spite of these reservations there is a need for insurance in these difficult times.

The main reason is that unless you put aside the funds that you would have used to buy insurance, most persons find themselves without money at the time of their greatest need.  It takes great discipline to put aside money for those difficult days when one will need it.  Most of us will spend it on other things forgetting the main reason for saving it in the first place.

Keeping that in mind there are some things that you can do.

For general insurance and car insurance one needs to shop around as rates vary significantly from company to company.

Remember also to look at deductibles when assessing the policies as these too vary significantly. For example some policies make you responsible for the first 5% of the claim while for others it is 10%.

For the area of life insurance consider buying some term insurance, this carries no investment amount and has no cash value but is significantly cheaper than other types of policies.

Just a special caution when it comes to universal type life insurance policies which are so popular these days.  Firstly, the premium is usually only fixed for one year and the charges associated with the policy are often increased each year raising your premium payment each year.

Secondly due to the higher commission rates paid to agents the cost of the life coverage is often much higher than other types of policies.

Remember also to review your policies regularly, what you needed at one time may no longer be relevant and what you need now may have changed from what you currently have.
Finally, remember that your broker or your agent is supposed to work for you. Let them do the investigation and advise you of what will suit your needs and remember to read the contract so that you know exactly what you are getting.

Feedback question:  Do you think insurance companies are providing a good service or are they only after your money?

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5 Responses to “Insurance – Is It A Necessary Evil?”

  1. worm says:

    Well from my point of view most of the insurance companies are in for the money as oppose to good service. I have had bad experience with my car insurance company for quite some time now. First couple years ago i insured my car in westmorland at NPG insurance broker, paid in full. When i came to Kingston, every month I had 2 be going back to the broker for a cover note. 12 cover notes later when i went to renew my policy, i was told that there was no record for me and that my documents went to two separate insurance companies so i had to renew as a new customer.

    Last October again i used back the same company and renew my policy, couple day later i got a letter saying that if do not take in a mechanical report my policy would be expelled. Got my report, took it in and up till this day i still have to be going back to the office for cover notes. So u see they don’t care about the customers but only care abut the cash.

  2. Bob says:



  3. Mighty says:

    Insurance can be a savior in some cases. Case in point, in 1997 i bought my first car. About a year later my friend borrowed it and totalled (crash) it. The insurance company N.E.M. repaid me for the car, without them i would not be able to fixed the car. I am not sure if the system in Jamaica is still like that, if it is big and expensive item should always be insured.

    IN the United States insurance companies are like leaches they suck your blood until you die. Whenever you have an accident and they are supposed to help they are never there, they rather pull you through the mud until you give up or they give you nothing for your goods. Here in USA they are criminals in collusion with government agencies sucking the life out of the masses. If you don’t pay you insurance for you car the report you to the the Drivers License Department the in turn suspend you license without investigating.

    I am speaking from experience this happen to me where i switch insurance company at the end of the year. About a month later i went to the DMV to change the address on my driver license. They then told me that my license was suspended for no insurance. I had to prove then that i had insurance. Because i switch insurance company they report me to the DMV that i did not have any insurance. They are high stake criminals criminals in general.

  4. Charlie says:

    We live in a world that takes on risk intended or otherwise. There are various mechanisms that are designed to deal with such risks. One such method is using actual science to determine the probability factor of future events. The principle is not foolproof but can act as a valuable cushion against economic upheavals. In Washington DC, my house was broken into and were it not for insurance, I would be singing a different tune. It’s a necessary evil.

  5. libby | life insurance says:

    I agree with Charlie. I’ve been fortunate enough to not need my insurance but with all the risk out there today I’m glad I have it to back me up.

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admin Posted by: admin March 5, 2009 at 9:06 am