We all know that marketers can sometimes sugar-coat things to sell a product. But, other times, they are guilty of outright misdirection.
This also holds true for some insurance products, which mislead clients with false assumptions.
Watch out for these insurance marketing myths:
1. Price Is ALWAYS The Most Important Factor For Insurance
Comparing prices of various policies is definitely a must, but this shouldn’t be the only factor that consumers consider.
Rather, you need to focus on value-for-money: how much coverage you receive compared with the cost of the plan.
There is no point in choosing the cheapest plan when it has shoddy coverage. Some policies have so many conditions that you’ll likely never have a claim paid out.
The best thing to do would be to weigh up cost with the coverage that you require. There’s no need to go all-in on an exorbitantly expensive plan with bells-and-whistles you don’t need.
But, on the other hand, you need to make sure you are getting adequate coverage for your needs.
2. Cash-Back Bonuses Are Always Worth It
Some insurers offer pay-outs if you do not claim for a certain period of time. This leads to many clients rather paying the costs of small liabilities themselves.
The first flaw in this line of thinking is that you are, essentially, not claiming on the service for which you are paying.
While a small repair may be easy to cover, too many customers are losing money in attempts to remain claim-free.
In fact, according to Swinton Insurance, the average UK car insurance customer is spending an average of £251 (R4 309) more by paying for claims out-of-pocket. If they had just claimed from their insurer, they would have saved more money.
Sometimes, in the end, you are actually just saving the insurer money – not yourself.
1 Life Insurance also points out that opting for cash-back bonuses can sometimes actually raise your premium. This means you’ve spent extra cash on something that can easily fall away.
Furthermore, 1 Life says that most life insurance claims occur within ten years. However, cash back bonuses on life insurance policies usually apply to a 15-year period. As a result of this, you’ll usually be disqualified from the bonus.
“Cash-back bonuses serve one primary purpose – to lock you in for the long-term. It is a well-known industry fact that most policyholders lapse their policies within ten years, either because a policyholder can no longer afford the premium, or she has found a better offer,” the insurer says.
So, while a payout for remaining claim-free can be great, you will need to weigh up how much claiming versus not claiming will cost you. Don’t automatically pay for small claims yourself.
Also, don’t doll out extra cash to protect your discounts or bonus. You should calculate whether it actually saves you money.
3. It’s Better To Not Have a Middle-Man
Some insurers boast about cutting out the middle-man, allowing you to handle your claims directly with the insurance company.
However, this isn’t always the best option for the consumer.
While brokers and middle-men can sometimes inflate costs, they can also have precious knowledge that makes sure that you get a fair payment for your claim.
The less knowledge you have about claiming from insurers, the more likely you will struggle to handle your claim alone.
To find out more about this, see CompareGuru’s article on why having a broker can actually benefit you.
Do you know any other myths in insurer marketing? Let us know in the comments below…