We can’t imagine our lives in the modern world without Insurance. There are numerous of threats that can cause troubles and make harm to our property. Naturally, we want to feel certainty and have a peace of mind about their life, health, and well-being whatever hardship life prepares for us.
Getting an Insurance policy is a matter of financial terms you are willing to accept and the type of insurable events you want to put to the policy.
Health insurance is mandatory in many countries, while life Insurance is optional. The difference between terms and payments will be explained to you by any local Insurance agent. What he will not explain to you is what kind of pitfalls the Insurance may hide. So, before you will put your signature under the certain type of an Insurance policy make sure you are not heading into the trap of policy’s terms which many people have to face with huge regrets.
Here is the explanation in plain and simple words for you to know and ask you agent before signing and Insurance Contract.
Pitfalls of Life Insurance
- Wrong type of Life Insurance: the thing is there are many types of life policies and sometimes the terms vary significantly. For example, term life insurance is quite cheap and it only covers your life for the certain period of time. The whole life insurance gives you a lifelong policy, which means your relatives will get the compensation anyway after your death.
- Putting your minor kids as beneficiaries: many don’t think about that, but if your beneficiary is your kid who is still far away from the official legal adulthood, there is a chance you can die before your child is legally allowed to receive the money for your Life Insurance. In that case, the court will have to appoint the guardian for your kid’s money and that brings additional expenses for the attorney and court procedures.
- Owning your policy if you have the estate that exceeds non-taxable limits: this is, probably, the biggest pitfall, as people are unaware of the taxable estate they may have in a case they are their own Life Insurance policy owners. Find more about it here.
Pitfalls of Travel Insurance
- You should state every pre-existing medical condition you have. Even if you consider something not worthy to mention, it may lead to the refuse to pay you compensation in a case of troubles during your travel time. The Insurer has a legal right to get an access to your medical files, so you better mention every health issue you have ever had, whatever small and occasional it was.
- State the specific items you want to insure against theft during your vacation. Many people do huge mistake by having “general” travel insurance policy that includes a non-specific paragraph about the loss and theft. You should know that in order to get money for you stolen stuff you should specify what exactly you want to insure (a list). Furthermore, you should have and keep all the checks from the stores (to prove to the Insurer that you really own the items) where you’ve bought your items.
Pitfalls of Health Insurance
- When it comes to Private Health Insurance, it is crucial to disclose all your pre-existing conditions, illnesses, and seizures, whatever small or occasional. You should remember, it’s purely in the interest of Insurer to find any your mistake (deliberate or unintentional) in order to cancel your cover and save the money.
- Health Insurance doesn’t cover everything you may need, and the list or covered issues may vary from Insurer to Insurer, so the important paragraph may not be included and you won’t even notice that, assuming you are signing the typical Health Insurance Policy.
- If you will put all your dependants on the same plan you are risking of not having the proper medical help for each of your dependant as everyone has different needs and health risks. Instead, you should put your dependants on the same policy as you but under the different health plans.
Pitfalls of Corporate Insurance
- Refusing the “umbrella coverage” can save you some money, but not having it can turn your situation into a catastrophe in a case that something extraordinary happens. If there is a case where your company takes a vast and extensive loss, your extra-coverage can save your company, while premiums you pay for this extra option are quite tiny and totally acceptable.
- Mistaking the claims-made for occurrence-based policy may bring a lot of disappointment. A claims-made policy protects and covers your loses only if the claim is made during the term of the policy, while occurrence-based Insurance cover your loss even if the claim was not made or after the term of the policy expired.
- Not paying attention to a proper timing when it comes to noticing your Insurer may lead to a cover’s failure. Read carefully the terms of the policy, as some Insurers require you to notice them right after the event has happened and before the legal actions are taken by any party of the occasion.
Pitfalls of Property Insurance
- Make sure your Property, whether commercial or residential is insured against flood. This peril is almost always not included in typical Property Insurance policy, while policyholders are unaware of it. In order to have flood coverage you will have to have another, separate Flood Insurance Policy.
- Pay attention to limits your policy offers when it comes to coverage. You have to evaluate the cost of the property that you need to be covered in order to get the relevant and adjusted coverage if this property will be damaged (fully or partially).
Pitfalls of Homeowner’s Insurance
- Remember once and for all: the damage caused by a natural disaster is not covered by a typical Homeowner’s Insurance. Still, the majority of policyholders believe natural disaster is included in the list of covered perils. Don’t skimp on natural disaster coverage, as even the chances it can happen are small, that can cause an immeasurable damage to your home so without the coverage, you will not be able to restore the building or buy a new one.
- If you will not state the amount of your deductible specifically, it may turn into a bad surprise, as your deductibles may vary depending on the type of the disaster and the amount of coverage.