Should you buy insurance from your financial institution?
It very much depends what is on offer. And how much pressure you feel you are under to make the purchase.
ALWAYS get quotations in writing, and ALWAYS look around for alternative quotes. Get some professional insurance help if necessary to compare the details. If you do not get comparisons, don't complain if you find that better, cheaper cover is available elsewhere. Most people seem to make that discovery when trying to make a claim.
NEVER believe the pressure-sales tricks designed to get you to sign now - even if you will have a 'cooling off' period in which to change your mind. If you can't take time to get advice or think about the package, say NO.
ARE you being required to buy the cover? Many customers seem to be given the impression that purchase of a mortgage or a loan guarantee insurance is required if the mortgage or loan is to be approved, although the institution will say later "our customer chose to make this purchase with us.."
DON'T be bluffed into a purchase which will cost too much and not give you the cover you need. Ask for a clear statement whether or not the financial deal is conditional on buying the institutions own insurance package. Would another comparable package be accepted? GET COMPETITIVE QUOTES. Is the insurance really mandatory? Consider whether you really need the protection.
READ the small print - if it is not offered, ask for a copy of the policy and any sales material. It has already been argued frequently by institutions that non-payment under the insurance cover is entirely the client's fault, since the client 'did not meet the basic terms of the policy'. In all such cases of which we are aware, the client never had the opportunity to learn the basic terms of the policy...
BE AWARE that mortgage and loan protection insurances have detailed exclusions. If you are not actively in full-time employment without a hint of dismissal or redundancy, and in extremely good health when you take out the policy, you may find the cover will not pay out.
You may prefer to accept that insurance through your institution will be more expensive, but agree that it is worth it to deal with only one supplier if problems occur. On the other hand otherwise well qualified financial staff are rarely expert in insurance matters. It can hardly hurt to get a second opinion.
If problems do arise, do not accept any suggestion that the insurance company is a law unto itself - if you bought an insurance through an institution, they are the agent for that policy, and your first line of complaint if anything goes wrong.
Don't agree to talk to the insurance company direct - it is not your problem. Do report problems through any appropriate codes of practice to the Banking or Insurance ombudsmen, and to any customer bodies - especially NABC/NAIC.
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