9 Sneaky Things Insurance Agents Try To Hide From You

It is one of those unwritten laws of society today. With the relentless rise of medical costs, every adult needs to buy insurance for themselves, and even their families, so that an earthquake of a medical bill will not bankrupt them one day.

I’m writing this on the back of looking through the hospital bill of an uncle who suffered a bout of stroke.

And although the bill of over $20,000 will probably not bankrupt him if he had to settle it with cash in the bank, the same cannot be said of a lot of people who lives paycheck-by-paycheck making ends meet.

If suddenly suffering a critical medical condition does not put fear into you, maybe the thought of getting into an accident will.

These things also depend on your personal lifestyle and type of work you do. Some jobs are just more hazardous than others. And some adventurous hobbies you enjoy are just more dangerous than collect stamps in your free time.

If you have wised up and finally decided to insure yourself, good for you. Because making yourself a financial burden on your family (should something bad happen to you) is certainly not a nice thing to do… especially when you could have prevented it with proper insurance.

In may cases, I’d even say that insuring yourself and your personal property is a responsible thing to do as an adult.

But before meeting your insurance agent to discuss new policies, it might help that you know a little about some of the things sneaky agents try to get away with by not disclosing them to you explicitly in person.

1) Free look period

For almost every insurance policy that is signed and sealed, there will almost always be a free-look period where you can cancel the policy.

For example, if you had just signed up for a life insurance policy, you might have a 14-day free look period where you can cancel the policy without incurring any drawbacks. You might not hear your agent talk about it. But you will find this minor term hidden within the terms and conditions of the contract.

As you can probably suspect, the reason why agents do this is obvious.

With the effort they have already put in to finally convince you to sign on the dotted line, the last thing they want happen is having the customer cancel the agreement with a simple phone call… and with nothing to lose.

You might think that there is little chance that you will cancel a policy so soon after signing up. That argument makes a lot of sense.

But sometimes you can run into situations where cancelling makes perfect sense. In those circumstances, knowing that you can easily cancel without regret can be invaluable in decision making.

Some situations include:

• Another insurer has finally responded to your inquiry with a better offer
• You have buyer’s remorse and feel that you have made a rash decision when the buying temperature was high
• You’ve learned more information about insurance and realized that you are better off with a different policy

2) The hospitals they cover

In the world of insurance and claims, the name of the game is “terms and conditions”.

Since the profitability of insurers depend heavily on collecting as much premiums as possible and paying out as little claims as possible, you’d be naive to think that insurers behave themselves based highly on moral values.

It would be a huge mistake on your part if think insurers will easily hand out claims without as much as a whimper.

And the manner they go about selling you insurance without insuring you is to hide a bunch of clauses and conditions within their policy terms. One of which that I encountered myself was the hospitals they cover.

The event concerning my uncle as I mentioned earlier flipped a switch in me. I decided to get more insurance for myself. And after going through a lot of packages and options available on the market, I decided on one.

So I called up my agent and made a direct request for that policy. I then found a tiny term listed in a comparison table referring to public and private hospitals. It was a reference to a footnote beside the word “approved service providers”.

Like any curiously concerned consumer, I looked to the footnotes to see what these approved medical service providers were. And to my amusement, the footnote broadly stated that ‘approved service providers refers to medical service providers that were approved by the insurer’. :S

There was no list of the service providers they cover.

I felt that there must either be a mistake somewhere or the underwriter was playing a joke with their prospects. So I look everywhere online to find the list of approved medical service providers and found nothing.

I raised this issue to my agent and was rebuffed with a response in the lines of “It’s all those public hospitals and clinics people know of”. I asked for a list and got none. Even on the meetup days later, my agent did not produce a list of all their approved providers.

I had always thought that insurers run proper businesses that have nothing to hide. This experience told me otherwise.

3) Insurance premiums that rise over time

This is something that has stuck in my mind for a long time. Because in my early interactions with agents, one of the sales rebuttals they use when I show a sign of delaying signing up till an older age was “But it will be more expensive the older you get”.

The sales manager who came up with this response to handle objections must have been a brilliant person. And he/she really deserve a place in the insuring hall of fame.

Firstly, this sentence can be argued in court to mean or NOT mean a lot of things. It is one of those things that is vague enough to get away with murder as long as you have a capable lawyer in your corner.

And more importantly, in the context of use, it implies that if you sign up for the policy now, you will enjoy a lower premium which will remain the same when age catches up with you.

This is not the case.

And I can see how useful and effective this statement is used in a sales pitch.

Medical insurance premiums tend to rise as you get older. So be careful when your agent creates the impression that you get a better deal by “locking in” the low premiums if you sign up for a policy when you are younger.

There are types of policies that do have a level premium. Always clarify when you are in doubt.

4) Policies that overlap each other

If you ask me how much personal liability coverage I have, I won’t be able to answer you even though my policy states specifically how much the limit is.

This irony is due to the many overlapping areas that different policies cover.

For example homeowners insurance already have coverage for a whole lot of stuff. But agents will try to upsell you with policies that offers financial protection for things like home contents and fire.

Without going into the details, you will learn that they overlap each other in a lot of areas if you go through the terms line by line.

If you add them up, don’t be surprised when you find yourself having coverage on a particular area that seems ridiculously high.

Travel insurance is even worst. Just try go into the details and you will find that it overlaps your life and health insurance. You might not even have to buy it as your credit card used to pay for your trip already offers coverage to you for free. Sometimes packaged tour groups also have travel insurance included in your purchase.

5) Your group insurance already gives you great protection

Employees often don’t realize how much they are already protected by group insurance paid for by their employers.

In fact, if you are to do a rundown of your coverage, you might find that you don’t need to buy personal insurance at all for the things that matter to you. Many employees actually find these benefits as a good reason not to quit their jobs.

What a shock you might get when you find that the personal coverage you are thinking about buying… is redundant as you are already covered via the group umbrella which you are under.

Agents will of course play dump. And when they are caught with their pants down, they will pretend like you knew you needed more coverage for peace of mind.

Lame.

6) Available government subsidies

There’s good reason for agents to hide the availability of government subsidies from you.

Bringing a third party into the transaction can complicate things. And even if a deal does go through, it could result in a huge delay to closing. Other than that, having a customer pay cash can sometimes means a higher commission payoff to an agent.

If you are to just make a check with the relevant authorities in your state, you might find that you qualify for subsidies that can cut your premiums in half – half paid by the government.

Do make a check on site like healthcare.gov before signing up for any insurance policies. No point paying more than you have too.

7) Things you can get away with by not declaring

I’ve heard a lot of stories of how people got their claims rejected because they did not declare certain medical conditions.

Surely some of these stories are real. But the magnitude of how easy it is to get caught has been overplayed.

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Unlike auto insurance where your driving records are kept in a file somewhere, insurers don’t have a file with open access to your medical history… especially when you did not see a doctor about it.

Don’t forget that insurers are looking for every reason to cash in your checks then refuse your claims when the time comes. So they will consider every piece of information you provide to see where they can penalize you for. It’s not your job to make their jobs easier by putting your shortcomings on a plate.

I’m not asking you to lie to your insurer. What I’m saying is that you don’t have to declare things that have not been specifically asked about.

8) Things insurers can get away with by only mentioning it in the fine print

Don’t for a moment assume that you are covered when it comes to insurance.

Some of the common things from all sorts of policies that you might not be covered include:

• damage to property caused by flood
• accidents that happened in another state
• drunk driving events
• adventurous sports
• overseas childbirth
• claims associated with STDs
• mold damage at home
• termite damage
• sinkholes
• Acts of terrorism
• etc

A lot of them are in the fine print and footnotes. You might need a magnifying glass to read some of them. And in extreme cases, maybe even a microscope.

Insurers don’t leave out the little details of your policy. They just choose to keep them in the sea of words found in your contract. It is up to you to find them. And if you are out of luck, you might even have to spend time interpreting them.

9) You can get a discount

What I’m going to tell is a true story.

Some years back, I decided to go insurance shopping as I felt that it was about time to review my policies. I must have received quotes from as many as 5 insurers. After deliberating over the details over a week, I’ve narrowed down my options to 2.

After making follow up calls to the agents involved, I realized that the more attractive package was offered directly by an insurer. The other package that was making me think twice was actually offered by an insurance broker. As the broker managed to built a better rapport with me, I started to share the choices I’ve been considering.

Then he told me that their brokerage offer the “better” package too. It’s underwritten by the same insurer. Just that they are a brokerage for them. Sort of like a middleman. To make things even better, the broker offered me a discount! Going through a middleman turned out to be cheaper than going direct.

I wasn’t aware that there was a world of discounts concerning insurance policies until this fruitful episode. And somehow, I cannot imagine that a broker has the authority to give a discount while an agent cannot.

On another occasion, I signed up for 2 different policies with 2 different insurance agents from the same insurer. I learned later, that I could (and should) have got a discount for at least the second policy when I get both policies. It’s written right there in the flyers.

So instead of giving me the discount that I was entitled to, the agent chose to play dumb instead so that I have to pay a higher premium. I think they secretly know that this bout of mind-gaming usually ends with the customer not pursuing the matter.

The moral of the story is to ask for a discount. You never know what you are going to get.