Insurance companies provide peace of mind for policyholders, but it is important that all customers remember that they are profit-oriented companies and your personal interests are not their top priority. Any insurance company will profit from every opportunity to make money from its customers. An insurance company’s primary source of income is the premiums it charges its customers.
The premium is the cost of keeping the policy active. The premium is collected by each company on a regular basis. The policy holder must pay the premium promptly. Delay in payments can lead to penalties such as a fine, or even the termination of your policy. A lapse in payments can result in the cancellation of any premiums that were paid earlier. In order to reinstate yourself, the policy holder may have to renew the whole policy.
A few agencies have been selling policies at exorbitant prices in recent years. These companies that claim they are consulting firms fail to ask the important questions like salary and mortgage details, which are necessary to determine the right coverage. This problem could be solved by making insurance sales more transparent. It is not, however, in everyone’s best interest. Insurance companies have been lobbying Congressmen and women to make sure that, despite all the benefits of transparency, the law remains opaque.
The insurance premium, which is often not disclosed by the sellers, can also be very volatile. Rates can change between billing cycles. A driver who has had an accident in the past will pay a higher premium than a regular driver. A driver with a history of accidents will have to pay a higher premium since insurance is required in many states.
Insurance premiums can also be very subjective. These premiums are based on statistics and extensive research. A policy holder who smokes may have to pay twice as much as a non-smoker. A few companies have a clause that reduces premiums if the policy holder changes their lifestyle. This argument will need to be supported by medical evidence. Market trends can also cause premiums to fluctuate.
It is not always in your best interests to inform you about all the pitfalls that come with buying insurance. Understanding not only the omissions but also the motivations behind insurers customers will help you make informed decisions about your insurance needs.