Insurance is a necessity in life.
The more possessions you have, the more insurance coverage you need.
Even if you do not have a house, a car, and other possessions, you still need the protection of health insurance, life insurance, and personal accident insurance.
However, most insurance policies you buy are not direct insurance.
What is the meaning of direct insurance?
Direct insurance means you buy directly from the provider, without going through a broker.
Many people buy general insurances from the broker. They do not utilize direct insurance. They find it troublesome to get a few quotations separately.
They prefer the broker to do the workfor them, and they just decide on the company to buy from.
Many companies do not use direct insurance as well.
They want the service of the broker to handle the claims. They like the broker to serve as the expert in handling claims too.
That is why direct insurance is relatively rare in the matter of general insurance.
However, with the advance of internet, many providers are setting up websites with free insurance quotation service and calculator.
The consumers can use the free insurance quotation template to get the monthly premium, and other information.
They can even buy immediately if they are pleased with the quoted rate.
That is why direct insurance is becoming more and more popular.
If everyone uses direct insurance, the premium will be lower, since the provider does not need to pay a commission to the agents, and brokers.
What are the disadvantages of direct insurance?
One of the disadvantage comes when you need to submit a claim. If you buy through the agent, the agent can help you to submit the claims. He also know what number to call when the claim takes too long to settle.
The agent can advise you on the wordings in the claim submission form, so that you do not unknowingly make a mistake in legal wording.
Most people have the tendency to write long paragraph when asked to describe an accident.
That is why direct insurance is not good for those who are not well verse in legal matter.
Another disadvantage is that you do not have time and access to little known but niche provider.
Many providers specialized in just one particular type of insurance. However, they have different departments to handle other insurance too.
You may know that some providers are good at auto insurance. What you do not know is that they also provide life insurance, and their rates are far lower than the industry average.
That information is known to the broker, but not to the general knowledge.
That is why direct insurance means you have the possibility of losing out in the long run. You are likely to seek cheap insurance quotation from those well known service providers. You do not know that other providers are cheaper and better.
Do you buy direct insurance? You can save money from direct insurance. However, be aware of the disadvantages as well.
Scheng1 is a passionate blogger from Singapore. Rich in every sense reveals my deep desire in enjoying life, and be rich in every possible ways. Personal Finance is about money, from making money to investing money. Retirement in Asia contains resources on overseas retirement.