A delightful part of my work while writing the Cover Note column is responding to readers’ questions. They want to know which policies to buy, how to weigh options, claims, queries and problems in getting them resolved. There is significant post-purchase dissonance.
As often as not, this is because they haven’t applied their minds and have made sub-optimal decisions.
My heart goes out to remorseful buyers as they seek solutions to correct the error. I have been there myself.
Some errors can be corrected; some others can, but with lost time and opportunity and/or monetary sacrifice. Some just can’t be corrected. When it can be set right, it’s better to do you homework so that you migrate with the least financial damage.
In all cases, if events have overtaken you, that is, if a loss has taken place, then you just have to claim as per the policy and live with that reality. Having said that, let us see what can be done in various cases.
The simplest errors to correct are vehicle policies, personal accident policies, and home policies.
These are annually renewable and you can transform the profile of your protection entirely. Just choose a different set of risks to cover, different sums insured, more of this cover, less of that, opt for a flood cover, or not. You can also change insurers or intermediaries. You may have to spend some quality time on phone or in person to protect your no-claim bonus on vehicle policies.
Life insurance policy choices seem to lead to the most regrets. Hard-sell may be the biggest reason for it. Remember, hard-sell works only on a soft target. Don’t let that be you.
You can hardly turn around without being bombarded with life insurance marketing and advertising material. Yet, much hand-wringing relates to having bought an endowment policy, for example, and realising after a few months or years that a term policy would have been more suitable.
Confusion, an untold fear, or just a knee-jerk reaction to pesky harassment a.k.a. selling and marketing leads to a blind belief that the policy touted is the best; and two, accept the fallacy of insurance combined with investment returns.
Life insurance is a case where less is more. Just focus on the one key benefit of risk protection. For returns, invest elsewhere, including in investment type policies, provided your risk protection requirement is taken care of.
You get only one chance to get it right with a life insurance policy because it is a life-long commitment and who knows what the next moment brings.
In life and annuity policies, there is no mid-course correction without a cost.
Abandoning the policy is the worst choice. If you need to migrate, start your research from scratch and also find out your cost of migrating out.
Health insurance is somewhere between the two. You need not discontinue the policy, but can tweak your coverage at the annual renewal. You can usually expand the cover also, sometimes with riders, which are modular. You can increase sum insured and work out the waiting period for pre-existing conditions for the enhanced cover. Best of all, you can port the policy from one insurer to another.
All said, an insurance purchase decision is worth getting right the first time around. Makeovers are messy, can cost money and time and, in the worst cases, leave you high and dry at a time of need.
So, take the time and use those ‘little grey cells’ to investigate what the optimum cover you need is, and where and how you can purchase it to your benefit.
(The writer is a business journalist specialising in insurance & corporate history)
