Perceived Cost vs Actual Price of Insurance

IM$avvy carried an article from The Business Times – What turns off Gen X and Gen Y on life insurance – which talks about the reasons why few Singaporeans aged between 20 to 40 wish to purchase insurance.

As stated by the article, a survey found out that most people are put off by insurance because of the high price tag they perceive insurance to carry.

Interestingly enough, the amount of money the respondents indicated they were willing to pay for insurance was either the market price or higher than the actual price of insurance.

Sadly, the article stops short of exploring the reasons why people have a misunderstanding of the actual cost of insurance, though it is not difficult to explain. Having a good idea of how the industry works, I can understand why people feel that insurance is expensive. The policies presented to them are indeed expensive!

The appetites of product pushers are getting larger and larger. The average price and type of insurance policies I have seen being proposed reveals nothing less than pure greediness. Family breadwinners already laden with heavy financial obligations are paying through their noses for inadequate coverage, and young working adults are being proposed overpriced policies that similarly do not insure them properly. Even undergraduates without incomes are not spared.

Moreover, there are also increasingly more and more “innovative” products appearing on the market with each passing day. With so many different kinds of policies that seeming offer coverage for everything under the sun, it is not difficult to see why there is this perception that insurance is this huge undertaking that costs a lot of time and money.

I usually encourage people in a politically correct way to consult a qualified financial adviser, but I think those who really want to insure themselves properly with at a sensible price should play it safe and consult me instead.

Then again, there are also a number of people who need to get real about the importance of proper insurance as well as financial planning as a whole, and the associated costs involved. They refuse to set aside a meaningful amount for insurance (despite being perfectly okay with other frivolous expenses) even if the cost is reasonable. Penny foolish, pound foolish; just all around unwise.

Thumbs up to keep me writing more!