Forward Planning: Insurance evaluation vital to avoid unpleasant surprises

We all have one form of insurance coverage or another, whether life, car, business, liability, fire, marine, engineering, personal accident, medical or any other type of insurance.

Before we obtain the insurance we generally hardly check and read all the policy conditions, exclusions and benefits. Once the policy is purchased, all we know is that we are insured. In many cases when accidents or sickness happen we find out that our insurance policy doesn't cover what we thought it did, or that it covers only a small part.

In many cases also the insurance company pays the claim and subsequently increases the premium at renewal time. Sometimes the policy may even get cancelled. To avoid all these unpleasant surprises, here is what you have to do.

Once-on-a-while have an insurance evaluation performed for all your insurance policies by a licensed and qualified insurance agent, financial consultant or insurance consultant. Let him/her review your coverage and check if it is adequate, if you understand what's covered and what's not and the most economical and affordable way you should be covered.

This insurance checkup proves to be not only very beneficial to the insured but also to the insurance company by evaluating and providing the right coverage and so adequately insuring their policyholders.

Life insurance for example is generally based on our earning power and income at the time of the purchase, which can mean many years ago. Our financial situation generally kept changing along the years with our income steadily increasing while at the same time our insurance coverage remained the same meaning that we have become under-insured with a reduced coverage.

Changes to the policy may be needed like to add, delete or replace a beneficiary. A special endorsement or instruction can be added to the policy if the beneficiaries are small children and a guardian is needed to look after them.

Our life insurance coverage should always be in direct relation with our actual financial needs, objectives and goals. Do I have a mortgage or a big loan that I need to cover? Should I have insurance coverage extended to my spouse or my children? Children insurance is a great vehicle to save money for college funding and the premium is very small and affordable. Children usually are very healthy compared to adults and thus very insurable.

Medical insurance, especially group insurance, needs a careful monitoring of all claims and policy utilisation.

The frequency of unnecessary claims made by employees and health care providers should be spotted early on with the help of your medical insurance company as you don't want your coverage to be reduced or limited at renewal time or your premium jacked up.

Read your policy carefully and ask your agent all the questions you need to ask. Take into the policy the coverage and the options that you really need. Maternity coverage for instance is not that necessary because of the fixed expenses associated with it (Dh5,000 to Dh10,000) and most medical insurances cover complications of pregnancy.

Take higher deductibles and save in the premium. Large claims and not small ones should worry you and comprehensive coverage is what you are after.

Choose a company that pays legitimate claims without a hustle. If you have any problem with your insurance, contact your agent and don't let him/her sell you the insurance and then just perform a disappearing act.

The general rules of insurance review and policy evaluation as mentioned above apply also to other types of insurance like the coverage of your business and your employees benefit programs, liability coverage, fire and other insurance coverage.

The safest and best method of evaluating or buying insurance is to have individual financial planning or business insurance planning established for you by a qualified insurance agent, insurance consultant or a financial planner.

Take your time to review everything with your consultant or agent, don't rush. The cost or the premium is not the most important factor in the purchasing decision; the range of benefits, and the insurance company strength and claim-paying ability are the most important factors.

Doing so will guarantee you the most comprehensive and effective way of finding and purchasing the right insurance and financial products. Insurance review is free most of the time, so ask for it!

< The writer is managing director of Gulf Insurance Consulting and a licensed insurance consultant and financial planner.