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Are insurance products worth it?
Let’s face it none of us like paying for something that we hope that we’ll never have to use, but that’s insurance!
If you’re taking out a loan or a lease to buy a car, ute, van, truck, motorbike, boat, jet ski, caravan or motorhome then you’ll have a range of different insurance options available to you to protect your asset, your finance, your repayments and ultimately you. These include Comprehensive Insurance, GAP insurance, Loan Protection, Warranties and Roadside Assistance.
For more information about the various insurance products that are widely available click here.
When looking at the available insurance options you need to consider your own personal circumstances and what is right for you and your family. The checklist below will set you on the path to asking the questions that will help you to decide whether a specific insurance product is worth it for you.
LoanPlace.com.au is here to help you make sense of it all by providing you with information resources and connecting you with experienced professionals who will search their lenders to find the latest deals so that you get 3 Free Quotes to evaluate and compare.
10 Things to consider:
- How important is the asset to you? – Are you buying a new car that’s going to get the kids to school and you to work or are you planning to splash out on a jet ski that you may only use occasionally at the weekend? If the asset that you’re buying is something that you would really struggle to do without you may want to think about how you can protect it and yourself.
- Have you got cash savings to fall back on? – There’s a term in the insurance industry called ‘self-insurance’. It’s what happens when businesses and people assess the potential risks facing them and decide that they have enough resources to cover the costs should something go wrong. If your circumstances were to change or if something unexpected was to happen could you personally cover the costs? For example, if you were made redundant could you meet your car loan repayments and all of your other bills until you found a new job? If your motorbike broke down unexpectedly and you had a large repair bill would that be easy for you to pay? These are the types of questions that you need to ask yourself before making a decision.
- Is it actually an insurance product? – You may be presented with some protection options that look and sound like insurance products but actually they aren’t. Does that matter? It can do. General insurance products generally provide more protections for the consumer, like cancellation cooling off periods, cancellation rebates and dispute resolution processes. Make sure to check the terms and conditions before you sign up.
- Is it good value? – It’s always worth looking at the cost of the insurance premium compared to the maximum benefits that it will pay in the event of a claim. For example, if you’re being charged $1,500 for a product that will only pay out a maximum of $3,000 in the event of a claim then you may question whether it represents good value.
- Can you negotiate on price? – Is there room for manoeuvre on the price that you’ve been quoted? It can certainly be worth asking the question as the seller of the product may well have some control over the price.
- Is it mandatory? – If you are financing an asset and using it as security it is normally a condition from the lender that you comprehensively insure it. However, you still have choice over which company and product you use. Lenders or sellers are not permitted to make specific insurance products compulsory.
- Is peace of mind important to you? – If you’re the type of person that likes to be able to sleep well at night in the knowledge that if the unexpected, no matter how unlikely, were to happen you’re be protected, then you need to carefully consider the insurance options available to you.
- Can you include it in the finance? Check to see whether it’s possible to include the insurance premium within your finance. That way you can pay for it over the term of the loan or lease, which can make an insurance premium much more affordable. Sometimes what may seem like a large amount if you were to pay it in full upfront may only make a few dollars a week difference to your weekly repayment. Be aware though, that if you do include an insurance premium within your finance you will be paying interest on it.
- How long does it cover you for? – Is the term of the insurance product suitable for you and how long your finance term is or how long you intend to keep the asset? Avoid taking out insurance products that won’t give you adequate cover for your circumstances.
- What are the terms and conditions? – Always make sure to get a Product Disclosure Statement in advance of taking out an insurance product. That way you can check out the terms and conditions, including key information such as the level of cover, exclusions, maximum benefits payable, your cancellation rights and how the claims process works.
Our loan experts are generally also qualified to advise you on general insurance products. They can be a great source of information and often have access to a range of insurers to help you choose the right protection options for you.