A guide to choosing the right insurance

Humans live with countless dangers other than death. Insurance is essential to prevent the collapse of your family due to unavoidable accidents, such as minor illnesses such as colds, serious diseases such as cancer, and traffic accidents, both large and small. Insurance provides financial support to help people escape from various dangerous situations they face during their lifetime. However, despite the benefits of insurance, you should be cautious when purchasing. Then, we will look at what types of insurance are and what precautions to take when purchasing insurance.

 

What is insurance? A goalkeeper who prevents unexpected danger!

 

 Danger always comes without warning. That's why you need a goalkeeper to protect the back door, right? That's insurance. Currently, a relatively large number of people in Korea use insurance. Korea's insurance market is the 7th largest in the world, with the insurance coverage rate per household reaching 97.7%. 

year	amount	year	amount
1995	9,328	2004	27,093
1997	10,892	2005	29,625
1998	12,938	2006	31,635
2000	17,276	2007	33,927
2001	21,034	2008	35,734
2002	23,372	2009	36,810
2003	24,938	2010	37,366

It is an insurance that many people have, but you have to be very careful when buying it. What are the tips and precautions for choosing insurance?

Choose a strong insurance company

 

Insurance is a financial product that, once purchased, should be with you for the rest of your life. That is why it is advisable to choose a safe and robust insurance company when purchasing insurance. If the insurance company goes bankrupt and disappears, not only will you lose coverage, but the premiums you have paid up to that point will evaporate. In fact, there are cases where insurers go bankrupt, but this has never happened to such an extreme since the government comes forward and transfers all contracts to other insurers without change. So you don't have to worry too much about whether your insurer will go bankrupt. However, if this happens to you, you will be worried and you will want to choose a safe insurer. Let’s take a look at the criteria for choosing a strong insurance company.

 

① Choose a company with a high profit margin!

The insurer's profits come mainly through two channels. There is a case in which the insurance is low while receiving a high premium, and a case in which the received premium is managed well. In the first case, the insured will be relatively at a loss, but in the second case, the insurer's finances will be strong so that the member's assets can be safely protected. That's why it's better to choose an insurance company with a high profit margin rather than whether it's profitable or not. You should choose a company with high profit margin and efficiency rather than the size of the insurance company.

 

② Check the return on asset management!

Insurance companies receive premiums from subscribers and invest them in various financial assets to make a profit. And it is a structure in which a portion of the premium is paid as an insurance amount, combined with the received premium, and the remainder is used as its own profit. In fact, since insurance companies have monotonous investment targets, such as bonds, there is not much difference in asset management returns between insurance companies. However, recently, a certain amount of investment is also made in the stock market, and there may be some differences depending on the management ability, so it is better to choose a company with a high return on asset management.

 

③ Consider the interior rather than the size!

Large insurers are generally known to be lucrative and safe. But unconditional blind faith is not allowed! Just as the world's largest insurance companies suffered bankruptcy during the last financial crisis, we need to get rid of the prejudice that large insurers are safe.

 

④ Check if the solvency ratio is high!

When a large-scale accident suddenly occurs, the insurance company will receive a request for a large amount of insurance payment, and the insurance company must sell its assets to raise cash. An indicator of this ability is the solvency ratio. The metric is said to be 100% when an insurance event occurs for all of the insured and the insurer can sell its assets to satisfy all claims. Financial authorities are obliged to ensure that each insurer has a solvency ratio of at least 100%. As a result, most insurance companies currently have a solvency ratio of over 200%, and the higher this ratio, the better the company. It is recommended that you check the solvency ratio before signing up.

 

When choosing an insurance company, you need to carefully check the items to be considered when purchasing insurance. Let's take a look at the items to check.

Checklist for choosing good insurance!

 

First, check the type of insurance. - Check whether it is a life insurance product or a non-life insurance product

Second, check the warranty. - Check exactly what risks are covered

Third, check the insurance period and payment period. - Set the insurance period and payment period within the possible range based on lifetime income and survival period

Fourth, check the insurance premium. - Check the insurance premium that suits your circumstances

Fifth, check whether the insurance product is renewable or not

 

Once you have selected the insurance products to purchase, there are several things to consider about each insurance. Is it complicated to ask? Insurance is a type of contract, called an insurance contract, and is a legal act between the insurer and the insured that promises to compensate for damage in the form of insurance money. For this reason, the contracting parties must be careful so that the contract can be concluded correctly and reasonably with each other. So, let's take a look at what you need to look at by dividing it into life insurance, non-life insurance, and auto insurance.

 

Things to consider when purchasing life insurance

 

① About mid-term cancellation

If you have purchased life insurance and need to renew it midway, you should carefully check whether you will be able to receive the premiums you have paid. In most cases, your refund may be less than the premium you paid, or even none at all. Therefore, the contractor can withdraw the offer within 15 days from the date of making the offer. However, in the case of a diagnosis contract, group contract, or contract with an insurance period of less than one year, the subscription may be withdrawn without penalty within 30 days from the date of subscription.

 

② About the subscription

When filling out an application form, all questions must be written truthfully, and the application form must be written by the contractor himself. It should be noted that matters orally notified to an insurance solicitor, etc. without being written in the application form have no effect. When subscribing for an insurance contract, the policyholder must inform the insurance company truthfully about all questions on the subscription form.

 

③ About insurance terms and conditions

How many people read the terms and conditions when signing up for a lot of internet sites? It is no exaggeration to say that most people ignore these terms and conditions. However, when purchasing insurance, you must know only the core contents of the terms and conditions. This insurance policy is essential for all insurance, not just life insurance. However, it is true that the contents of the insurance policy are lengthy and burdensome to read. In that case, it is recommended to read the insurance product description of about 10 pages provided by the insurance company along with the insurance policy. The manual is a summary of the terms and conditions. The key contents of the manual are the contents of insurance and cautions related to payment of insurance money. Please at least read this.

 

Things to consider when purchasing non-life insurance

 

① Things to check before signing by hand

- Insurance accident coverage: You need to check what kind of accident you want to be compensated for and check whether the product is appropriate.

- Whether or not there is a refund for cancellation and details: In case of cancellation in the middle, check whether a refund is possible and, if possible, whether it is less than the premium paid so far.

- Sincere explanation of the designer: It is necessary to check whether the designer has an explanation for the damages that cannot be compensated and the terms and conditions.

- Verification of personal information: In the case of accident insurance, insurance premiums may vary depending on occupation, so it is necessary to check whether the information is accurately entered.

 

② Faithful fulfillment of the duty to notify

- Obligation to notify: A duty for the policyholder to notify the insurance company of important matters related to the reason for payment of insurance benefits, such as medical history and occupation, or that may affect the insurer’s decision to conclude a contract prior to the conclusion of the contract

- Violation of the duty to notify: Even if an accident occurs, you may be disadvantaged, such as not receiving insurance money or prematurely canceling the insurance contract. Also, oral communication to an insurance agent has no legal effect.

 

③ Check the reasons for canceling the insurance contract

- If the company does not provide a copy of the terms and conditions and subscription form

- In case of not stating important contents of the terms and conditions

- If the contractor does not hand-sign the application form

In the case of the above, the contract can be canceled within 3 months from the subscription date and the premium paid can be returned.

 

Things to consider when purchasing car insurance

 

① When you sign up for car insurance, you need to check the range of drivers who are covered by insurance, that is, you can drive.

 

* The range of family members who can drive when subscribing to the family driving limited special contract   Named insured Parents, adoptive parents, and step-parents of the named insured Parents, adoptive parents, or step-parents of the spouse of the named insured person The common-law spouse or common-law spouse of the named insured person Children born through legal marriage, children born through de facto marriage; adopted or adopted daughter, step-child Daughter-in-law of a named insured Son-in-law of named insured (including spouse of step-child)

 

② Precautions after contract

Changes after the insurance contract must be notified to the insurance company without delay. During the insurance period, if the policyholder's address, vehicle type, vehicle use, structure, registration number, etc. are changed at the time of the insurance contract, the change must be immediately notified to the insurance company and approved, and there is no disadvantage in receiving compensation in the event of an accident.

 

③ If your vehicle is damaged

If your vehicle is damaged, you must pay the amount equivalent to the deductible set at the time of signing the insurance contract. If you choose a higher self-pay, insurance premiums will be lower, but in case of an accident, the amount you will have to pay for car repairs will increase.

 

We learned what insurance is, how to choose the right insurer and insurance, and precautions to take when purchasing major insurance. Risk does not go away once you have insurance. I think our attitude after joining is also important. This was Kim Yong-moon, the 7th FSC policy alert.

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