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insurance part 2: how to buy insurance

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

In my last post about insurance, I discussed different kinds of insurance in Israel.  This post will continue the topic of insurance and deal with how to buy insurance in Israel.

I hate trying on clothes.  To me, nothing is more annoying than getting undressed and dressed when the clothes you buy are supposed to be sized already.  That is why, at the ripe age of 22, I decided what size and brand of boxers, jeans, shirts and shoes I will be wearing for the rest of my life.  So when I buy jeans, for example, the process is pretty straightforward.  I check a few stores and see who has the cheapest pair of 38 x 30 blue wrangler carpenter jeans.  Nothing else interests me.  I may see other jeans, perhaps some nice shirts, but that is not what I want now.  I want these particular jeans.

Buying insurance should be no different.  First, you need to build yourself a policy.  How much life insurance do you need?  What kind of car insurance do you need? Etc.  Then you call up at least three insurance providers, get price quotes and choose the cheapest one.

But it’s never so simple.  Insurance agents are social beings who love to visit you in person in order to tell you horror stories and statistics that will scare the crap out of you (that kid at summer camp who told all the scary stories – he has a bright future in insurance.)  Obviously, these stories and statistics are designed to scare you into buying extra insurance that, when you were thinking rationally, you decided that you do not want.  Sometimes the insurance salesman is right; you may need more insurance.  But just because you need more insurance does not need you need to buy more insurance from him.  Once you decide you need more insurance, go back to step one, and reshape your desired policy and then call up a bunch of providers and find the best deal.

Like everywhere else in Israel you can bargain with insurance.  In this case you have two bargaining tools – BATNA and the amount of insurance you are willing to buy from one provider.

BATNA (Best Alternative to Negotiated Agreement) – Since you can call up a number of insurance companies and compare prices, you can also use one against the other in order to lower the price.  As you speak to each potential provider, get a direct phone number to call back the salesman.  This way, you can easily call back the salesman, tell him an offer you received from a competitor, and ask him if he can beat it.

Amount of insurance – Ask the insurance company how much he can give you off on your life insurance if you buy your car insurance or other insurance from him as well.  Offer each salesman the full list of insurance you need and consider different combinations of policies and providers in order to get the cheapest price.

A few guidelines for bargaining insurance: 

1 – You can insist on a price quote over the phone even if the insurance guy does not want to give it to you.  Of the 7 insurance providers I called to buy life insurance recently, only one would not quote me a price quote over the phone and even then, I was able to ask him “Company X will sell it to me for ₪ Y.  Can you beat it?”  When he told me he could not, I knew that no meeting was going to be necessary.

2 – Never get bullied into buying additional insurance.  Don’t be afraid to tell the insurance agent, “You’re right, I do need this insurance.  Let me price check and get back to you in a week.”  If he gives you a hard time, just make up an excuse and walk away.

3 – Make sure that you are getting the agreement you need.  Be sure that the policy you choose really is a bargain and not just you getting swindled.  Play out the disaster scenarios in your mind and compare them against the contract in order to ensure that you are covered.

4 – Insist on honesty.  An insurance salesman wants you to buy insurance; unfortunately, some of these salesmen do not care if the company will actually pay you in the unfortunate event.  One salesman kept trying to convince me to lie on the questionnaire and write that my wife did not have any surgeries over the past 10 years when I explicitly told him that she did.  His advice is very dangerous because if, God forbid, anything would happen to my wife, the insurance company will not pay because they will claim, and rightfully so, that she lied on the initial paperwork.  The insurance companies will do anything in their power not to pay you, so don’t leave out any details.

Have you ever bought insurance in Israel?  What has your experience been?

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