Bundling, and other red herrings

Most of the insurance advertising budget is spent on things that don’t do anything to help you get what you need.  Pricing tool.  Accident forgiveness (which is basically just you paying for your accident ahead of time, thank you very much).  New vehicle replacement (again, they’re not doing this for free).  Bundling.  Do you know if any of these good for you?

Next time you see or hear an insurance commercial, ask if it relates to helping you select what’s best for you or whether it addresses their agenda of mass producing insurance policies at prices and with coverages they’ve already figured are good for them.

I’d immediately fall in love with an insurance company who’d say something like “Did you know our insurance policy puts a restriction on how much you can recover for theft of your jewelry, and that it doesn’t cover jewelry at all if you lose it?  We’ll help you decide if that’s okay for your situation, or whether you need to add a special schedule of coverage.”

darrenmcgraw

Another way to NOT talk about insurance

Yesterday an industry friend and I were talking about improving the manner in which we talk about what we do for a living.  We figure if we can better describe the role insurance plays in good financial planning, consumers might take it more seriously and they’ll be able to ignore the irresponsibility of so many messages our industry sends out to people.  I’ve talked about this before in an earlier post.

I explained yesterday to my friend that my philosophy is that insurance is the only financial product that provides resiliency against sudden financial shocks.  My friend added a bit more, believing that insurance can be the engine to drive a financial plan when a sudden shock interrupts the desired methods of achieving that plan.

I think that’s a good way to put it.  If the inputs to a financial plan’s technique are time and capital and there’s an interruption to either of those, insurance can put the financial plan on its back and keep going.  I like that.

The reason to ponder this isn’t for brochures or blogs, it’s to encourage families to take their insurance planning, insurance scrutiny, and insurance standards more seriously and to filter the noise that might otherwise lead them astray.

darrenmcgraw

The gray line between business and personal

Many business owners consider the line between what is commercial business and what is personal business quite gray.  The cars they drive personally but pay for through the business, the personal errands run by company employees, the use of company equipment/technology/inventory borrowed for personal use (and vice versa) are all examples.  And there are plenty more.

Many business owners don’t consider their lives divided between personal and business and instead see it all as just “them”.

It’s impossible to script “the way things should be done” when it comes to drawing a line between what is insured personally and what is insured commercially.  But it does matter because the quality of insurance differs greatly between the two and you’ll want to get it right.

With good listening skills and a committed work ethic, a plan to divide the insurance between business and personal is something that good agents are not just able to do, but they are also able to explain it so that you’ll understand and agree.

darrenmcgraw

Insurance: is it risk transfer or risk financing, and who cares anyway?

It might seem a small detail, but insurance is not a transfer of risk. Transferring risk means that you found someone else to bear your exposure to loss.  Financing risk means you’ve made an arrangement for someone else to pay for your losses up to an agreed upon limit and under certain terms and conditions.

The reason it’s an important distinction is because when you are selecting your insurance, you’re choosing both an amount you want financed (your limits of coverage and the scope of coverage provided by the insurance policy), and an amount you will pay for yourself (deductibles plus excluded losses plus amounts in excess of the limits of coverage you choose).  Anything beyond the insurance you’ve bought is still your risk and you haven’t transferred it anywhere.

Thinking this way may help you conclude that it matters how good the policy is (insurance contracts DO differ among underwriters), and what your insurance priorities are when selecting limits of coverage.

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