First, some definitions:
Insurance = Basically, you pay an amount of money to an insurance company on a regular basis, so that if something bad happens, they foot the bill.
Premium = Your regular payments to the insurance company. They could be weekly, fortnightly, monthly or yearly - Whatever you prefer.
Policy wordings = The specific list of things that are covered under any given policy.
Claim = When something bad happens, you tell the insurance company (make a “claim”). They then look at your policy wordings to check you’re covered for that event, and then accept or deny the pay out.
When you think about it, insurance is actually a great concept, as long as you get it right.
Good insurance is when you have the correct cover for your unique circumstances. And if/when something bad happens; the insurance company pays out like you thought they would.
There are a lot of examples of bad insurance, but some of the most common ones:
Wrong cover – you think you’re covered for things that you’re not.
More cover than you need – You end up paying more than necessary for your circumstances.
The whole point of paying for insurance is for it to work at claim time.
Some insurance companies get a bad reputation for not paying up when someone makes a claim. For example, you think your medical insurance covers you for the expensive medication, and you only find out it doesn’t, once you’ve been diagnosed with cancer. This comes down to people misunderstanding what their policy does and does not cover.
Using an adviser means that you’re much more likely to get the correct insurance (at the correct level) but most importantly, if you need to make a claim, your adviser will go to bat for you, and deal directly with the insurance company to make sure they pay out.
Further, your adviser will touch base every year to see if you need to change your insurance policy so it continues to meet your needs, i.e. getting married, having a child, purchasing a new home etc.
And remember, you don’t pay a cent for your adviser’s help - they just get paid a fee by the insurance company for setting it all up. Your insurance will cost the same regardless of whether you use an adviser, so it’s a bit of a no brainer.