Ask Me Anything: 6 Answers to Your Frequently Asked Questions About Insurance

Insurance could be a little bit confusing as it concerns the most important areas of your life. That’s why we want to lessen the tension and confusion by providing answers to six of the frequently asked questions about insurance. 

We’ve carefully selected questions based on our research, experience and interaction with policyholders. This is to help you make the best decision and get the most out of your policy. Of course, our expert and experienced insurance advisors are always ready to help sort through the clutter. 

These questions are also expected to serve as a conversation starter when you talk to an insurance agent. Let get right into the answers to frequently asked questions about insurance policies; 

1. Can I Have Two Insurance Policies? 

As enticing as it may appear, you should avoid it. Despite paying for two separate insurance policies on the same event, you will be paid claims by only one of the insurance firms. It’s illegal to even file claims with two insurance policies at the same time. 

It is also possible to find yourself in a duplicate coverage scenario unknowingly. To avoid this situation, you should find out if it’s possible to switch your policies to just one insurer. You are likely to even get discounts on your premium by switching to a single provider for all your policies. 

2. What Does Homeowner Insurance Cover?

At its basic level, homeowner’s insurance is financial coverage for your home, personal belongings and personal liability. This is to ensure that there are enough resources to repair or replace your home and personal belongings in the event of fire,  theft, or other accident or natural disaster.

The coverage could also extend to replacing property of someone else accidentally damaged by you or any form of injury sustained by a visitor in your home.

3. What Is The Difference Between First-Party and Third-Party Insurance

If you’ve heard your insurance advisor talk about a first-party or third-party as it relates to insurance policies, here’s what it connotes. In a first-party insurance policy, dealings is solely between the policyholder and the insurer. In homeowner insurance, when there’s fire, the policyholder is expected to file claims. 

In third-party insurance, there’s another individual outside of the policyholder and the insurer. For example, if you cause an accident on the freeway, any individual affected by the accident will file a claim against your insurance company. 

4. Is Life Insurance An Investment?

No need to sugarcoat things; insurance is not an investment. However, you can look at life insurance policies as a form of investment. In the words of Forbes’s Steve Parrish, life insurance is an investment, one that you will benefit from. 

Due to the tax benefits accruable to life insurance, this can also be considered an investment. 

5. How Does Term Life Insurance Work?

This is the simplest and basic form of life insurance. A policyholder pays a premium between 10 to 30 years. In the event of death during this period, the family is expected to get a cash benefit. 

It’s a contract between a policyholder and the insurer for a specified period. The contract specifies a certain cash benefit that is payable to the policyholder’s beneficiary upon the insured’s death. 

6. What Is The Difference Between Term Insurance and Whole Life Insurance?

Good financial planning should factor in both term insurance and whole life insurance. While there are differences, you should own both if you can afford them. While whole life insurance provides you with investment return and protection, term insurance guarantees the financial future of your loved ones. 

Term life insurance is quite cost-effective as you get high cover at a low premium. This makes it ideal for those who need protection and coverage for a defined term. On the other hand, whole life insurance covers a longer tenure, as long as 100 years, with maturity and death benefits.