Eric:'Peter, you know a lot about insurance. I'm looking to get some life insurance for me and home insurance for the house. Do you have any recommendations?'
Peter:'So, you're looking to get two insurance policies? Are you going to be the policyholder for both? Both will be in your name?'
Eric:'That's right. I'll be the policyholder.'
Peter:'The first thing is to only get a policy with a reputable company. An insurance company that has a good reputation, because you don't want to take any risks. You then have to decide what type of cover you want the insurance policies to have. What things the insurance company will pay for when or if you make a claim, ask them to pay for something. In some policies you can choose full coverage or partial/liability coverage. Full coverage is when the insurance company will pay for everything when you make a claim to them. Partial or liability coverage is when the insurance company will only pay for a part of the cost and you have to pay the rest.'
Eric:'So the premium I pay, the amount of money I pay each month for the insurance, will be less for the partial coverage than for the full coverage?'
Peter:'Normally, yes. Also, a really important thing that you need to do Eric, is to read the terms and conditions for the policy.'
Eric:'That's the insurance policy contract information, which people often call the small print?'
Peter:'That's right. It's important to know what types of things are not covered in the policy and you will be liable for. What things are not the legal responsibility of the insurance to provide/do. It also contains all the information about the fees that you have to pay for obtaining an insurance policy. You know the additional costs like processing the application or for administration.'
Eric:'I'll have to look at that.'
Peter:'Also, it's important to see what the exemptions are in the policy. That's the situations the insurance company aren't liable for paying you money when you have made a claim. For example, an insurance company won't pay a claim on car insurance if you are doing an illegal activity at the time of damaging your car.'
Peter:'It can be a nasty surprise if you don't know what the exemptions are. Also read about the policy cancellation terms and conditions. In what situations an insurance company has the right to terminate an insurance policy. If you miss paying them a premium one month, they could cancel the policy. Most companies offer a grace period of between 14 to 30 days. That means the insurance policy will continue to cover you for between 14 to 30 days after the insurance company has not received a premium/payment. After that grace period, the policy is cancelled/terminated.'
Eric:'I didn't know about that.'
Peter:'A lot of people don't. Also, check when the expiration date is. That's when the insurance policy cover finishes, the last day of coverage.'
Peter:'Some types of insurance policies are tax deductible. That means you don't have to pay income tax on the amount of money you pay for the insurance policy. You can do that with private health insurance. So, it'll save you money.'
Eric:'A lot to think about. Thanks Peter.'