Retirement Annuity

A retirement annuity is a contract by which an insurance company agrees to provide you with a stream of income during your retirement years. Generally, a retiree may need about 60% of his/her last drawn salary to maintain his/her existing standard of living during retirement.

The Employees Providence Fund (EPF) contribution can be an important source of retirement income, but a study by EPF also showed that majority of contributors spent all their savings within three years of withdrawal upon retirement. Retirement annuities ensure that you are taken care of for the rest of your life.


Why Should I Buy Retirement Annuity?

• To ensure lifetime income, removing uncertainty and problems should you outlive your financial resources.

• To guarantee income payment for your loved ones after your demise.

Choosing An Annuity

When it comes to choosing the right annuity:

• Check all the options offered by various insurance companies

• To ensure lifetime income, removing uncertainty and problems should you outlive your financial resources

• Be aware that income payments you receive will depend on the amount you pay to purchase the annuity, your age when you purchase the annuity and your gender

• Know that the type of annuity and its benefits determines the amount received during retirement

• Buy the annuity plan that best suits your needs

Common Types of Annuity and Benefits


Immediate annuity

The income payments begin within 12 months after you buy the annuity. This is suitable for those who are about to retire or have already retired. The premium is paid as a lump sum at the time of purchase.


Deferred annuity

The income payments begin more than 12 months after you buy the annuity. You may buy this type of annuity plans at any time during your working years. The premium can be paid as a lump sum, which will be left to accumulate with the insurance company, or you may make a series of periodic payments up till your retirement.



Common Types of Benefit Options


Level annuity without guaranteed period

Pays a fixed regular income as long as you live.


Level annuity with a guaranteed period

Pays a fixed regular income for the rest of your life, or at least for a guaranteed period. Example: A person purchases annuity with a guarantee period of 10 years, but dies after 6 years. The annuity payments continue to be paid to his beneficiary for the remaining 4 years. If the person outlives the guarantee period of 10 years, he will continue to receive the income payment for as long as he lives.


Increasing annuity

Pays an income which increases each year at a specified rate to partially protect your income from inflation. With increasing annuity, the starting income is normally lower than you would get from a level annuity, but it will provide you with better income some years later in your retirement period.


Joint-life annuity

Pays an income for the rest of your life, and then continues to pay the income to your partner for the rest of his/her life, after your demise. However, income to your partner may be for a reduced amount.


Saving For an Annuity

It is advisable to start saving as early as possible during your working years to build enough funds to provide you with a worthwhile income when you retire. However, should you have a savings arrangement that enables you to do so, it is still possible to purchase an immediate annuity upon your retirement.

Alternatively, you may want to consider purchasing a deferred annuity if you wish to pay a smaller premium,where the premiums paid earlier in life will be invested by the insurance company to provide for your retirement income.


For more details, please download the booklet on retirement annuity or contact an insurance company for assistance.

Download Booklet Here


Source: http://www.insuranceinfo.com.my/choose_your_cover/secure_your_future/retirement_annuity.php?intPrefLangID=1

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Things To Note: Life Insurance

Buying life insurance for you and your loved ones helps provide some financial security in times of hardship. The money from your policy will be paid to your loved ones when you pass away or to you should you suffer a total and permanent disability throughout any course of your life.


Important Provisions To Remember

Understanding important provisions in your life insurance policy

Premium This is the money you pay to the life insurance company for coverage. Bonus This is the extra money paid with the final benefit for participating policies. However bonuses are not guaranteed and depend on the performance of the insurance fund. Policy Loan You may take up a policy loan on condition that your policy has a cash value. Interest will be charged on your policy loan. Reduced paid-up If your policy has acquired a cash value, you can choose to stop paying future premiums. The policy will continue to remain in force but the sum assured will be reduced. Suicide Nothing will be payable to a nominee if death was due to suicide within a period, usually one year, as stated in the policy. Free Look You may cancel your life insurance policy by returning it to your insurance company within 15 days after receiving the policy documents. The premium that you have paid will be refunded to you. Assignment You may transfer your life insurance policy to another person or organisation on condition a written notice is given to your life insurance company. Confidentiality of Information All your personal information including medical information is confidential and your life insurance company is strictly not allowed to divulge such information to third parties. Reinstatement A lapsed life insurance policy can be fully reinstated within a period of time and under certain conditions. Exclusions These are risks that are not covered under the policy Cash/Surrender value Your policy will acquire a cash value (or surrender value) when it has been in force for a minimum of three years. This value will be paid to you when you cancel your policy. However, you will lose this cash value if you surrender your policy before the maturity period. Grace Period If payment for your monthly premium is pass due, a grace period of 15 days will be given for you to settle your payment. For other frequency of payments such as semi-annually or annually, the grace period is 30 days. If payment is still not made within the grace period, your policy may lapse or be subject to reduced paid-up or automatic premium loans. Automatic premium loan Some life insurance companies will automatically advance to you the premium amount when you do not pay your premium within the grace period on condition that your policy has sufficient cash value. However, you will be charged interest on the outstanding amount of your premium loan. Incontestability The life insurance company cannot dispute the validity of a life policy after the policy has been in force for two years. If the insurance company refuses to pay, it must prove that the policy was obtained through fraud. Terms and conditions These specify your rights and responsibilities as well as that of the insurance company.

Buying Tips

Tips on buying life insurance

Be sure to buy from a company through an authorised agent
Buying life insurance is essentially buying future financial security for your family. Licensed insurance companies are listed in Bank Negara Malaysia’s website or should you need to find out more, contact the Life Insurance Association of Malaysia (LIAM).

Shop around for rates
Seek premium quotes and proposal from more than one insurance company and compare them. Be sure to compare among similar policies as not all insurance policies have similar benefits.

Understand the scope of cover, terms and conditions of the policy
Make sure you understand all provisions in the policy and if necessary. ask for explanations from the insurance company. Be careful if you are told that bonuses or dividend scales are guaranteed.

Avoid unwanted additional coverage
Do not be pressured into buying "packaged" products that may contain fixed coverages that you don’t need. However, you may opt to add additional coverage or rider of your choice at additional premium which is better value for money.

Make sure the life policy recommended is right for you
Carefully study your agent's recommendation and ask for a point-by-point explanation to make sure the policy suits you.

Always check the date the insurance becomes effective
The date the insurance goes into effect may be different from the date the company issues the policy. Be sure to ask your agent for the effective date of your insurance.

Fill in your application carefully
Never sign blank proposal or application forms. Ensure all information filled in your application is
complete and correct to avoid delays or even denial of claims.

Make sure premiums are paid to company
Make sure your cheque or money order is made payable to the insurance company and not to your agent and insist for a receipt immediately as proof of payment.

Read your policy when you receive it
Life policies have a "free-look" period of 15 days from the date you receive it. Therefore, use this opportunity to assess the policy to make sure this is the right policy for you.


Advising Your Nominee

Importance Of Making Nomination

The purpose of buying life insurance is to ensure that your loved ones are protected financially should anything happen to you. Therefore, making a nomination in your insurance policy will speed up the process of disbursing your funds to your loved ones.

When can I make a nomination?

If you are 18 years old or older, you can nominate an individual or individuals to receive the policy funds upon your demise. Your nomination can be made at the time you apply for your policy.

Who can I nominate?

You are free to nominate whoever you wish. However not all nominees will receive the funds beneficially or for their own use. For more information on who you can nominate, download our booklet.

How do I make a nomination?

1. Fill up a nomination form provided by your insurance company. Be sure to fill in the correct details of your nominee such as name, date of birth, identity card or birth certificate number and address.

2. Ensure that your form is signed by a witness who is 18 years and above who is not your nominee.

3. Have your insurance company endorse your nomination or the policy document for validation.


What happens if I don’t make a nomination?

If you do not make a nomination, your loved ones will have to obtain a Grant of Probate letter or Letter of Administration of Distribution Order to receive your policy fund. However there are certain circumstances under which an insurance company can make payment to a claimant without any of the above mentioned documents. To know more, download the booklet.

Source: http://www.insuranceinfo.com.my/choose_your_cover/things_to_note/life_insurance.php?intPrefLangID=1#content3

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Life Insurance

Buying life insurance for you and your loved ones helps provide some financial security in times of hardship. The money from your policy will be paid to your loved ones when you pass away or to you should you suffer a total and permanent disability or loss

Income Tax Relief

You can claim for tax relief of up to a maximum amount of RM6,000 per year for an ordinary life policy. This is inclusive of any contributions you have paid to an approved retirement benefit scheme such as the Employees Provident Fund or other pension scheme.

Why Should I Buy Insurance?

• To ensure that your immediate family has some financial support after your demise
• To finance your children’s education
• To have a savings plan for the future so that you have a constant source of income after retirement
• To ensure that you have extra income when your earnings are reduced due to serious illness or accident

Choosing A Policy

When it comes to choosing a policy, always:

• Consider a policy that best suits your life stage
• Understand the scope of cover provided under the
  policy
• Be aware of the circumstances should you need to switch policies

Basic Type Of Policies

Term insurance
This offers insurance protection for a limited period only whereby the money is paid up if you pass away or if you suffer total and permanent disability.

Whole life insurance
Life-long protection and premiums are paid throughout your life and the money including any bonuses will be paid when you pass away or suffer total and permanent disability.

Endowment
A combination of protection and savings whereby the money will be paid at the end of a specific period upon your demise or if you suffer total and permanent disability.

Investment-linked
For investment-linked insurance, your premium is used to buy life insurance protection and units in a fund managed by the life insurance company. The benefits paid to you or your nominee will depend on the price of the units at the time you surrender your policy or when you pass away.

Life annuity plan
Series of payments paid to you until you pass away. Types of annuity include immediate annuity or deferred annuity.

Supplementary rider/cover
A rider is a supplement attached to the basic insurance plan such as endowment or whole life.

Mortgage reducing term assurance (MRTA)
An insurance protection plan that covers the repayment of an outstanding property loan to the financial institution in the event of untimely death, disability or critical illness of the borrower.


What You Need To Remember About Your Policy

• Keep a note of the premium due dates. Your policy may lapse if your premiums are not paid when due.
• Always insist on a receipt as proof of payment
• Make sure you state your age and other essential personal particulars correctly in the proposal form
• Review your insurance needs regularly
• Keep your policy document in a safe place
• Keep the basic information such as the life insurance company, policy type, policy number and the names of your nominees in a separate place.
• Always ask your insurance agent when in doubt of anything related to your policy
• Give full facts in your application fully and faithfully

Importance Of Disclosure

Remember to faithfully disclose all the facts in your application form. If your insurance agent fills out your application for you, be sure to read and understand the requirements carefully before signing the form. Otherwise, any non-disclosure of material fact can cause your policy to be void.


Source: http://www.insuranceinfo.com.my/choose_your_cover/secure_your_future/life_insurance.php?intPrefLangID=1&

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Dealing With Intermediaries

Who is an insurance or takaful intermediary?

An insurance intermediary is a person or a company that helps you in buying insurance. Insurance agents, insurance brokers and financial advisers are insurance intermediaries.

On the other hand, a takaful intermediary is someone who solicits takaful business or invites potential customers to enter into takaful contracts with operators. They are also known as takaful agents and takaful brokers.

What's the difference?

An insurance or takaful agent represents an insurance company or takaful operator and primarily sells insurance policies or takaful plans issued by the insurance company or takaful operator it represents. An insurance or takaful broker on the other hand represents the customer and advises the customer on the most suitable insurance policy or takaful plan. A financial adviser is an independent party that provides financial planning services to the customer based on the customers’ financial needs.

These differences are illustrated in the table below:


Tips on dealing with insurance or takaful intermediaries

Deal with an agent, broker or financial adviser with the following characteristics:

• Good knowledge of insurance and/or takaful products

• Understands your needs and interests

• Ensures you understand what you are buying

• Does not over-promise or over-sell

• Factual, not pushy or intimidating

• Delivers quality and timely service
• 
  

Protect your interests and rights:

1. Deal only with registered/licensed intermediaries.
2. Deal with intermediaries with proven track record or those with goodreferral from friends and relatives.
3. Be truthful about yourself and declare material facts.
4. Never be persuaded to sign on blank forms or anything you don’t understand.
5. Never be persuaded to lapse an existing policy to buy a new life policy.
6. Ensure that you understand the products you are buying.
7. Read the policy benefits and terms carefully, and compare them with other similar products.
8. Shop around to get value for money.
9. Buy only what you need and what you can afford.
10. Ask for sales materials, for example the sales illustrations, product pamphlets or customer fact find form (for life products only), and keep these documents safely.
11. When in doubt, always ask for more information from the intermediaries or seek clarification from the insurance company or takaful operator that offers the insurance or takaful products.
12. Ask for a receipt as the proof of premium payment and keep it safely.

Basic conduct of insurance or takaful intermediaries

When dealing with insurance intermediaries, you can expect certain standards in their professional conduct in handling your insurance needs. For instance, the intermediary is expected to:

• Present his/her Agent’s Registration Card to you when requested (applicable only for insurance agents). A Takaful agent whose registration has been approved by the Registrar of Takaful Intermediary has an Authorisation Card with all his or her relevant details.

• Exhibit good knowledge of the products and services offered by the insurance company or takaful operator. (In addition, insurance brokers and financial advisers are expected to exhibit good knowledge of products available in the market).
  

• Make an effort to understand your insurance or takaful needs and assist you in the choice of insurance or takaful products and services.

• Explain to you clearly the nature of information required in the proposal form and also the importance of disclosing material facts.

• Explain clearly the main terms and conditions of the proposed insurance contract or takaful plan so as to help you understand what you are buying.

• Draw attention to any restrictions and exclusions applicable under the proposed insurance contract or takaful plan.

• Follow up and provides continuous service to you, such as renewal of policy and provide updates on relevant new products.

• Provide assistance when you are making claims against the insurance company or takaful operator.

Source : http://www.insuranceinfo.com.my/learn_the_basics/dealing_with_intermediaries.php?intPrefLangID=1&

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Are You Covered?

We take care of our prized possessions including our home and our car. We even insure them because we don't want anything to happen to them. So why is it that most people fail to apply that same level of care and concern towards themselves? Towards their loved ones?

Of course, we don't expect bad things to happen to us, but life is unexpected. Insurance cannot make the future more predictable, but it can at least be there when you and your loved ones need it most.

Step 1: Think

S:What policies do you have? Have you taken any insurance for yourself or does your employer provide you with life and medical insurance? What about your family? Your spouse? Your children? Are they protected?

J:If no, then it's time to do some serious thinking about it. Think about how you're protected, and about what you need to protect.

Step 2: Do

Before you rush off and buy a policy just for the sake of having insurance, do some research. Not all policies are suitable for you. Different policies have different product features, benefits, conditions and exclusions.

Do your research and choose the type of policy that best suits your needs and life stage. Protect yourself. Protect your loved ones and get the most out of your money.

Can your family survive without you?

We don't like to think about it, but our time on earth is a limited gift. You might have prepared something to ensure that your family is well taken care of after you're gone, but have you done enough? Life insurance and family takaful can provide them with additional financial security, so that they can live comfortably after your passing. And with policies like investment-linked insurance and child education plan, your family may have the comprehensive protection required.

Do your loved ones need medical care ?

Injuries, sickness and disease can strike at any time without warning. Medical care hinges on getting treatment to the patient early and quickly. With the high price of modern healthcare, the treatments that can save the life of someone important to you shouldn't depend on how much you have. Don't let a life hang in the balance because of your finances. Let medical and health insurance or medical and health takaful take care of the hospitalisation and medical expenses.

Have you saved enough for your retirement?

You can't wait for the day when you can finally give it up for a well-deserved rest. However, even with the rate of inflation holding steady, money just doesn't go as far as it used to. Your life savings won't go as far as it used to either, and it's not fair to you. You deserve better.

Retirement annuity allows you to invest your money for retirement, so that in your golden years, the money which you worked so hard for all your life, will finally work for you.

Is your home protected?

Your house is possibly the biggest financial responsibility you will ever face, and there's no doubt you want to keep it safe; safe from natural disasters, accidents and theft. Home insurance and home takaful help protect your investment, your home and some of your belongings in it.

Do you own a vehicle?

If you own a motor vehicle or ride a motorbike, you are required by law to have motor insurance. But take the time to understand what motor insurance and motor takaful can do for you. See how the policies can protect your vehicle and help you in repairing and recovering your vehicle when accidents or crime happens.

Are you a frequent traveler?

When you are overseas, sometimes even life can go wrong, no matter what you do. Lost passport or getting hurt in a foreign country or worse. Travel insurance ensures that you and your belongings are secured and that you can always find a way home. Personal accident insurance and personal accident takaful gives you 24-hour worldwide protection, so you can be covered anywhere at anytime.


Source: http://www.insuranceinfo.com.my/learn_the_basics/are_you_covered.php?intPrefLangID=1&

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Types Of Takaful

The general takaful concept is you contribute a sum of money to a takaful fund in the form of participative contribution (tabarru’). You will undertake a contract (aqad) for you to become one of the participants by agreeing to mutually help each other, should any of the participants suffer any form of misfortune, either arising from death, permanent disability, loss, damage or any other such misfortunes as covered under the takaful you personally undertake.

The takaful protection plan is based on Shariah principles and offers many unique features to policy owners. There are two types of takaful businesses: family takaful and general takaful.

Family Takaful









The products under family takaful are:

• Family takaful

• Investment linked takaful

• Child education takaful

• Medical & health takaful

General Takaful









The products under general takaful are:

• Home takaful

• Motor takaful

• Personal accident takaful

Basic Principles of Takaful

• You must have a legitimate financial interest in the subject matter to participate in a takaful plan.

• A takaful contract is based on the principle of utmost good faith (trust), whereby you need to disclose all material information required.

• You can only recover your financial loss and not gain any profit as a result of a quantifiable loss.

• In determining the compensation, the takaful operator will identify the actual most important cause that brought about the loss.

• After you have been compensated for your loss, the takaful operator has the right to claim from any third party responsible for your loss.

• If a loss is covered by more than one takaful plans or insurance policies, the takaful operator that has made payment to you may call upon other takaful operators or insurance companies to contribute proportionately to the payment.

Source: http://www.insuranceinfo.com.my/learn_the_basics/types_of_takaful.php?intPrefLangID=1&

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Types Of Insurance

All too often we hear about various types of insurance policies without really understanding what they are and more importantly, what they protect. The truth is, there are two main types of insurance, namely life insurance and general insurance which covers different aspects in your life.

Life Insurance

Life insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. This protection is also offered in a Family takaful plan, a Shariah-based approach to protecting you and your family.

The coverage period for life insurance is usually more than a year. So this requires periodic premium payments, either monthly, quarterly or annually.

The risks that are covered by life insurance are:

• Premature death

• Income during retirement

• Illness

The main products of life insurance include:

• Whole life

• Endowment

• Term

• Investment-linked

• Life annuity plan

• Medical and health

General and Insurance

General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses.

The coverage period for most general insurance policies and plans is usually one year, whereby premiums are normally paid on a one-time basis.

The risks that are covered by general insurance are:

• Property loss, for example, stolen car or burnt house

• Liability arising from damage caused by yourself to a third party

• Accidental death or injury

The main products of general insurance includes:

• Motor insurance

• Fire/ Houseowners/ Householders insurance

• Personal accident insurance

• Medical and health insurance

• Travel insurance

Source: http://www.insuranceinfo.com.my/learn_the_basics/types_of_insurance.php?intPrefLangID=1&

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Insurance and Takaful Made Clear

What exactly is insurance?

Insurance is the transfer of risk by an individual, such as yourself, or an organisation, such as your business, to the insurance company. You or your organisation will thus be known as the policy owner. The insurance company receives payment in the form of premium and will compensate you in the event of losses or damages sustained by you.

Takaful is a protection plan based on Shariah principles. By contributing a sum of money to a common takaful fund in the form of participative contribution (tabarru’), you undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer a defined loss.

Both insurance and takaful have similar basic principles. For instance, the insured, such as yourself, must have a legitimate financial interest in the risk you are insuring, meaning you must suffer a financial loss when the insured event occurs.

You can also buy more than one policy or plan to protect a particular risk but in the event of loss or damage, you can only make one claim. The amount payable will then be contributed by the insurance companies involved. As such, you cannot profit from your general insurance policy or takaful plan. If you suffer a loss, you will be compensated accordingly and no more than that. You will be paid or ‘indemnified’ to the position you were in before the loss. However, if you wish to cover your life, you can buy more than one policy.

Your insurance or takaful contract is a contract of utmost good faith (trust). Thus, you as the policy owner need to disclose all material information required. If any of the relevant material facts are not disclosed, the policy may be invalid and you will not be protected against any loss or damage.

In addition, under the takaful plan, you can enjoy a share of the surplus from the takaful fund, based on a pre-agreed ratio if you have not made any claim during the year.

Where can i get an insurance or takaful product?

• You can buy an insurance policy or participate in a takaful plan

• Directly from insurance companies or takaful operators

• Through registered agents or licensed brokers
  

• From banking institutions that have bancassurance arrangements with insurance companies or takaful operators; and

• Via the internet

Useful pointers when buying an insurance policy or participating in a takaful plan

• Understand the policy or plan including the product features, conditions, benefits limitations and exclusions

• Ensure that the premium or contribution payable is affordable

• Ensure that the amount of coverage taken is adequate and suits your needs

• Ensure that all material facts are fully disclosed

• Deal only with registered agents/licensed brokers or directly with an insurance company or takaful operators

• Monitor the period of coverage and time for payment of premium or contribution

Source: http://www.insuranceinfo.com.my/learn_the_basics/insurance_made_clear.php?intPrefLangID=1&

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7 Common Insurance Mistakes

By Molly Greaves

1. Not shopping around- shopping around could make a huge difference in the price you pay.

2. Only comparing rates-You need to compare rates, and should also look at companies’ pay reputations. You can look at insurance companies and see how they rank with Standard & Poor’s or Fitch Ratings.

3. Not comparing agents-First make sure your searching only properly licensed agents, and then ask them what they bring to the table. Not all are the same and should be created equal. Some have huge hidden fees or personal motives with certain policies. Make sure you get referrals. And yes, take the extra step to check the referrals too =)

4. Not knowing your policy-What a bummer for people to only know their policy AFTER the unthinkable happens. It happens all of the time. Don’t let yourself become one of the statistics. Do an evaluation each year to make sure you always know. (Do this with your credit report too!) Learn what the fine print says. Many don’t even know what their deductible, nor do they realize what’s not covered until it’s too late.

5. Not buying certain types of insurance. Dont skimp on health insurance even if you feel like a million and ten bucks. Even if it’s just catastrophic insurance. Otherwise you could wind up with such medical debt that you can never get yourself out of it.

If you have dependents, you may want to consider LIFE INSURANCE. This will help pay the bills after a working parent dies unexpectedly. It’s cheaper to buy when you’re young and healthy. It’s also easier too.

Bankrate.com says that unless you have major assets to tap, think about getting long-term disability insurance. “It’s the single most important coverage for anyone who works.” They also claim that “Disabilty income is more important than life, even though it gets more press. If you become disabled and cant work, the long-term disability insurance can help keep you and your family financially solvent.”

I also advocate picking up long-term care insurance. Some people think they should wait until they’re closer to retirement, or that they need to be at least 50 years old, or something like that. The truth though, is that diseases like Multiple Sclerosis (MS) can develop at 30 or 40, so dont make the mistake of forgetting about that. You could be come “uninsurable.” And yes, that can and does happen to people.

Check your family history too. L-T Care Insurance can help pay for the cost of expenses assciated with chronic illness and help cover nursing homes, and in-home caregivers.

6. Buying unnecessary insurance policies-I know, I know. If you dont own a boat, you aren’t going to carry boater’s insurance. Just like I know that if you don’t have a house, you wont pick up homeowner’s insurance.

-If you have kids, they dont necessarily need life insurance. Although tragic, for most kids, you should be able to come up with the money vs. spending money monthly on insurance. It makes sense to have it if you have dependents. People that are single don’t really need it either.

-Use the rule of thumb that if you see specific illness insurance like cancer insurance coverage, to always check the fine print and really triple cross check out the agent and his references. You could just end up paying double.

-Dont buy Identity Theft Insurance until you check other policies you have first. Check you bank too. Many companies now have something like this built into them. Could save you some $$.

7. Not updating your coverage.

-I say evaluate this annually. If you’re home goes up in value, make sure you increase your policy limits.

-For health care, I say review this annually too. If you’re married, make sure you cross check and make sure that you are covered under the most cost effective policy. Sometimes it actually makes sense for couples to have individual policies.

-When the kidos move out, hurry and call your insurance agent. They love knowing that the reckless teens are out of there. =) Once your kids get to college, make them get good grades, and when they do, hurry and call your agent back again. You’ll get a nice little reduction. Every bit counts.

Last thing- if you do an annual review, do it about 30-60 days in advance of renewal time so you can get a thorough evaluation. Plus, you’ll have time to add to your list so you don’t forget anything valuable.

Source: http://lifeofhappiness.wordpress.com/2008/06/21/7-common-insurance-mistakes/

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What is insurance?

Put basically, insurance enables those who suffer a loss or accident to be compensated for the effects of their misfortune. The payments come from a fund of money contributed by all the holders of individual insurance policies. In other words, individual risks are pooled and shared, with each policyholder making a contribution to the common fund. The contribution is known as the premium. Premiums are paid to insurers - these are institutions which accumulate the money into the fund from which claims are paid. The loss is in fact paid for by the policyholder making the claim and by all the other policyholders who have not suffered in the same way.

Insurers are professional risk takers. They know the probability of different types of risk happening. They can calculate the premiums needed to create a fund large enough to cover likely loss payments. Clearly, only a proportion of policyholders will require compensation from the fund at any one time.

So two important factors arise when calculating the premium. Firstly, the general likelihood that a loss will occur. Secondly, whether the particular policyholder is above or below average in risk.

Take three examples. In motor insurance a young person with a high powered car, or a driver with a long history of accidents will pay a higher premium than a mature and experienced driver with a modest saloon who has been accident free.

Similarly, the owner of a fish and chip shop will pay a higher premium for his fire insurance than, say, the owner of an office. The risk is greater, so the premium is higher.

Someone who is young, fit and in a risk-free job will find it easier to buy life insurance, and will pay lower premiums than someone who has a heart condition or is in a risky occupation.

Two kinds of Insurance

There are two different kinds of insurance - life insurance and general insurance. With life insurance you don't renew your policy each year. Instead, you agree to pay a fixed premium for a set number of years. In other words you enter a long-term commitment when you buy a life insurance policy.

What is the Difference?

General insurance pays out:

* if a car has an accident or is stolen;
* if a house catches fire or is burgled;
* if a holiday has to be cancelled;
* if someone is careless and damages other people's property.

Most life policies, on the other hand, pay out when an event happens;

* when someone dies;
* when someone survives beyond a specific date.

Anyone can buy life insurance but, of course, the premium will depend on your age, your health, and your occupation. Husbands and wives can insure each other's lives. However, you cannot insure the lives of other people unless you have a financial involvement in their life. This principle of insurance is called "insurable interest".

Insurable Interest

Insurable interest is a fundamental principle of insurance. It means that the person wishing to take out insurance must be legally entitled to insure the article, or the event, or the life. In other words, the happening of the event insured against, or the death of the life insured must cause the policyholder financial loss. Mr Smith would not be able to insure Mr Brown's house because its destruction would not cause Mr Smith financial loss. Similarly, you cannot insure the lives of other people unless you have a financial interest in the life being insured. The principle of insurable interest demonstrates the difference between insurance and a wager or bet.

General Principles

Other principles apply to all kinds of insurance.

* Insurance can provide compensation only for the actual value of property. It cannot cover the loss of sentimental value, for example.
* There must be a large number of similar risks so that the likelihood of a claim can be spread among other policyholders. It must be possible for insurers to calculate the chance of loss so that a premium can be set which matches the risk.
* Losses must not be deliberate and not inevitable. Clearly, you could not buy fire insurance for a house which was already burning nor life insurance for someone on his or her deathbed.
* Lastly, there are some risks which have financial implications so vast that they can be dealt with only by the state. These risks (mainly those arising from war or the major escape of nuclear or radioactive material) are normally not insurable.
* Insurance takes the risk away from people's lives and businesses. It brings peace of mind to the policyholder. In return for paying premiums the policyholder knows that, if the unexpected happens, financial compensation will be available from the fund of premiums.

Source: http://www.thesite.org/homelawandmoney/money/insurance/whatisinsurance

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