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What makes good insurance?

Russell Hutchinson says there are six keys to good insurance and, in his opinion, they aren’t all about product.

Monday, July 15th 2013, 6:00AM

by Russell Hutchinson

  1. Good insurance is insurance you have. The insurance you have is better than the insurance you don’t have, meant-to-have, have-the-forms-for-but-not-filled-in, or meant to reinstate last month, or just expired. Insurance you have in force is insurance that could pay out.
  2. Good insurance is usually about protecting more than one person – covering two people in a relationship, two people in business, a family (including the kids with medical cover), or a group of people in business together. Although we are all familiar with the risks of, say, death, disability, or trauma happening to one person, we should really be worried about the risk of death happening to any one of a group – and that risk is much higher. In fact, when you consider those three items, for two or more people, the chances are greater than 50%.
  3. Good insurance is right for the client’s situation: covering the right things. It is just possible to imagine that simply covering a loan is very simple, or that some of the most motivated buyers will investigate their own needs. But for most clients their needs will be too complex and their knowledge too low to effectively cover all their needs without some form of advice.
  4. Good insurance is insurance that is properly supported by the adviser: all the fancy features in the world don’t mean much if the client is blissfully unaware of them – and therefore doesn’t use them. Heck, some clients even miss out on trauma claims because they forget that they have the cover. A poorer product supported by a great service can do better than the best product sold and forgotten about.
  5. Good insurance is also about choosing the right product for the situation. I believe that client suitability requirements probably make the situation much more complex than a case of just picking the best ‘product’ – as products perform differently for different people. Some benefits apply, others do not. Different clients have different perceptions of what is valuable.
  6. Good insurance is honoured when you come to claim –the attitudes of the insurer, their claims service, and their ability to meet the claim when it is made.

At least three, if not the first four, are all about the advice process. Of course product has a place – appearing at number five. Item six is about the insurer. But so far it still looks like good insurance is more about how you help the client than the other factors.

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