Buying insurance at discount? Think twice
This article warns consumers about the hidden costs of discounted insurance policies, noting that lower premiums often come with restrictive terms. It uses the example of a car owner who discovered their discounted policy excluded repairs at authorized workshops.
Why it matters
It highlights the importance of financial literacy and reading policy fine print to avoid significant out-of-pocket expenses during emergencies.
Buying insurance is commendable. Being a prudent buyer of insurance is even better.
That means more than bargaining for lower premium or looking for more benefits. Insurance is different from most products and services we buy. The price reflects the risks the insurer is taking and the cover and benefits offered.
So, when you pay less it is worth asking: what, exactly, am I giving up?
In the previous instalment, we saw how an insured, peeved at not getting a discount on a hospitalisation policy, decided not to renew. This meant losing accrued benefits and importantly, the cover itself.
We all love discounts. There is nothing wrong with wanting the best value from a transaction. The problem arises when we focus on what we save without understanding what we may be giving up.
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