6 Questions You Should Always Ask Your Insurance Agent

Insurance jargon got you scratching your head? Say no more! These six straightforward questions will help you decode your policy like a pro.

Understanding insurance jargon and policy terms is undoubtedly overwhelming, especially if you have no prior knowledge. Before you purchase a policy, it’s always important to know everything about your policy, from the coverage levels to making a claim.

And that’s where your insurance agent comes in. They are here to advise you on the best policies that suit your needs and help you understand the ins and outs of your policy. Beyond just a salesperson, they should assess your holistic financial situation to help you make informed financial decisions.

Want to make the most out of this relationship? Here are six questions you should ask your insurance agent to help you get the most out of your insurance protection.

Table of contents:

• What are you licensed to do?
• What can you do for me? 
• What is the cash benefit/surrender value for my insurance policy? 
• What insurance plans do I need to have for comprehensive coverage?
• What kind of insurance portfolio would you suggest for my needs?
• What is the process like when I purchase insurance?

1. What are you licensed to do?

Understanding what your financial consultant is licensed to do is essential in establishing trust and confidence in their expertise. By asking them this question, you get the extra assurance that they are professionally trained to offer advice on what policies you might require and how to manage your financial portfolio better.

They will also be knowledgeable about Singapore's specific insurance regulations and offerings.

One way to find out is to get hold of their name card. It should feature their Monetary Authority of Singapore (MAS)-issued representative number. Next, perform a search on the MAS Register of Representatives to find out what they are licensed to do. 

This transparency helps you build a solid foundation with them, as you know that you can rely on them for expert advice and recommendations.

2. What can you do for me? 

This question will prompt your agent to convey the services they can provide, be it selling you insurance plans, offering specialised advice on what investment products to purchase or providing a holistic assessment of your financial situation.

Financial consultants usually also give you a detailed plan to work towards your financial goals while addressing your current financial situation, risk appetite, time horizon, urgent needs, dependencies, and so much more.

They should also regularly review your insurance plans to ensure you are adequately protected against unforeseen circumstances.

By understanding the full extent of your agent's services, you can leverage their expertise to optimise your insurance portfolio and proactively address any gaps in coverage.

When it comes to Prudential, their team ensures that your needs are a priority. They can help you design financial plans that paint a comprehensive picture of your and your family’s financial goals and any strategies you have set to accomplish them. 

These financial plans will be reviewed periodically to reflect new or changing priorities (like marriage or family planning), including the progress towards hitting their goals.

There is a 6-step process they engage their clients with:

Step 1: Establish Financial Goals & Objectives 

Step 2: Gather Relevant Data on the Current Financial Situation 

Step 3: Analyse the Data 

Step 4: Develop Recommendations 

Step 5: Implementation of Recommendations 

Step 6: Review the Financial Plan Periodically

3. What is the cash benefit/surrender value for my insurance policy? 

For life insurance policies or other forms of permanent insurance, understanding the cash value or surrender value is essential.

A policy's surrender value represents the amount of money you will receive if you cash in a policy that consists of a savings or investment aspect. Note that this cash value will only accumulate after a few years, and once the bonus is declared, it will form the guaranteed component of your policy.

If your policy has a surrender value, you can apply for a policy loan with an annual interest rate charged to the loan amount or the outstanding balance starting from the loan date.

By asking this question, you gain clarity on the financial implications of your insurance policy beyond its death benefit. Your agent can explain how the cash value accumulates over time, any associated fees or penalties, and how it fits into your long-term financial planning goals.

4. What insurance plans do I need to have for comprehensive coverage?

Achieving comprehensive coverage goes beyond just purchasing a single policy. You may require separate insurance plans tailored to different needs, like an integrated shield plan (IP), critical illness insurance, personal accident insurance or disability insurance. When you consult your insurance agent about your lifestyle, assets, and potential liabilities, you can identify the types of coverage you need to safeguard your financial well-being comprehensively. 

As per an expert from Prudential, comprehensive planning entails ensuring adequate coverage across various aspects through a range of insurance plans:

Hospital and surgical coverage is a foundational type of insurance, offering financial protection during hospitalisation, along with pre and post-hospitalisation medical expenses. Coverage options may extend to Singapore Private Hospitals or Singapore Restructured Hospitals A Ward, depending on your preferences. Typically, policies entail a co-payment requirement, but Integrated Shield Plans (IP) can supplement MediSave and MediShield, alleviating the burden of costly hospital bills.

Personal accident coverage provides financial assistance in cases of outpatient accidents, injuries, disabilities, or death. Moreover, certain plans may include additional benefits, such as a weekly income benefit to mitigate income loss resulting from accidents hindering your ability to work.

Critical illness insurance is indispensable, offering coverage across early, intermediate, and late stages of critical illnesses. It acts as a safety net by replacing income if you're diagnosed with such an illness. Experts often advise coverage equivalent to 4-5 years of annual income^[ to ensure financial stability during treatment and to cover unreimbursed expenses.

Gender-related illness coverage has gained significance, tailored to address gender-specific health concerns and covering a spectrum of critical illnesses. Some plans may offer complimentary health screenings, serving as proactive measures for preventive healthcare.

Disability insurance provides payouts in the event of disability, either as a lump sum or monthly benefits. These payouts can be utilised for caregiving expenses, rehabilitation, home modifications, and daily living costs, reducing reliance on personal savings if unable to work due to disability.

Death and terminal illness coverage ensures the financial well-being of dependents in unfortunate circumstances, offering payouts to cover their needs. A general recommendation is to secure coverage equivalent to 9 or 10 years of annual income to provide a sufficient safety net for loved ones.

5. What kind of insurance portfolio would you suggest for my needs?

There is no one-size-fits-all approach when it comes to creating a holistic and effective insurance portfolio. It requires assessing every individual’s lifestyle needs and financial situation to seek out the insurance plans that are best suited for you.

By asking your insurance agent this question, they would be able to customise a tailored portfolio for you that provides sufficient coverage yet fits within your budget. This collaborative process allows you to make informed decisions about your insurance investments to ensure you're adequately protected against various potential risks.

First, it would be good to look at one’s life stage and financial responsibilities. For instance, a young working adult may look into getting covered for Hospital & Surgical (H&S), Personal Accident and Critical Illness policies.

As one progresses in life and perhaps becomes a new parent, they can look into Life and Disability insurance as they now may have a property loan to insure against and have young dependents to care for. So, these plans are crucial in ensuring that their dependents and liabilities are considered in these unfortunate circumstances.

Transitioning into an older age, reassessing disability income coverage becomes pertinent to ensure adequacy in meeting living expenses, caregiving needs, and medical costs.

Regularly reviewing one's insurance portfolio alongside a Financial Consultant is imperative to effectively adapt to evolving needs and life stages. This proactive approach ensures that insurance coverage remains aligned with changing circumstances, providing comprehensive protection throughout life's journey.

6. What is the process like when I purchase insurance?

Understanding the insurance purchasing process helps to make the process less daunting and ensures a smooth transaction. 

When you ask your agent to outline the process, you understand what to expect from start to finish. Your agent can explain the documents required, the underwriting process, and any associated timelines or deadlines. 

Additionally, they can address any concerns or questions about policy terms, premiums, or coverage limits, allowing you to make well-informed decisions confidently. They will also be able to advise you on any declarations you’ll have to make about your pre-existing conditions to ensure that you are sufficiently and comprehensively covered.

This transparency fosters trust and ensures that you're fully prepared to navigate the insurance purchasing journey effectively.

Final words

In conclusion, insurance planning is in fact a dynamic process that evolves with life stages and changing needs, which can get very complicated. From foundational coverage in early adulthood to expanding protection when starting a family, each step is crucial for financial security.

By asking these six questions to your financial consultatnt, you will be able to make the most out of the relationship and gain invaluable insights for your financial planning.

This article is written in partnership with Prudential’s Agent, Ong Mei Qi.

Disclaimers:

1. The information in this article does not necessarily reflect the views of Prudential. Prudential does not represent that such information is accurate or complete and should not be relied upon as such.

2. This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Prudential Financial Consultant before making a commitment to purchase a policy.

3. Information is correct as at 25/03/2024.