When You Change Policy Advise Agent

Agents move from one insurer to other insurance companies are common. After switching the workplace, the agent may persuade you to move your old policy to the new company. He probably will refer to the advantages of its new insurance product or company in an attempt to convince you to change the policy. Although it may be true, the real motive is generally because he wants to get commissions and sales achievements.

This practice is called twisting and often detrimental to customers because agents provide information that is incomplete, inaccurate or misleading representations about the consequences of the replacement policy. Twisting can also be an agent by persuading customers to replace old policies with new policies in the Vendor the same, but with good control in most insurance companies practice this is rarely done. Insurance companies usually charge a replacement rule (replacement rule) to prevent twisting agent to the company's internal products. In these rules, for example, commissions to agents and sales performance was canceled when the 12 months before and 6 months after the purchase of a new policy occurred redemption / cancellation policy of the same customers. For example, if you have a policy A that are redeemed / lapse in January, then purchase a policy B in March through the same agent, then the agent will not get commissions and sales credits from policyholder policyholders B because B is considered a continuation / replacement policy A .

Reimbursement policies among insurance companies is more difficult to control, despite the potential disadvantages for the customers alike. Oversight of this should be done by the institution which pervades all insurance. In countries that customer protection insurance is more advanced, the association requires insurance agents to ask customers fill out a statement confirming that the client understands the consequences or risks of his actions to change the policy.

What are the disadvantages if you change the policy?

There are several potential disadvantages when you change the policy:

1. If you cancel the old policy is whole life insurance or term level of fixed premium, you lose the difference in premiums. Insurance premiums continue to wear expensive in the early years to subsidize the premiums are less expensive in recent years. In other words, you pay more expensive premiums for your age at the beginning of coverage and pay less for your age at the end of the coverage. Cancel the policy in the middle of the road means you eliminate the "savings" that subsidy.

2. If you cancel the old policy contain elements of guarantee of payment (payout) as in the endowment insurance / annuities insurance and education, you are likely to be subject to redemption penalties. The amount of cash value that you get much smaller than if waiting until the due date of payment.

3. You will likely be subjected to more expensive premiums on new policies for your entry age and older in the underwriting process when you are known to have health problems or become more risky to change jobs, you will be charged an extra premium.

4. Cash value on the new policy will evolve more slowly because in the early years, some significant portion of your premium is used to cover the cost of acquisition (commission agent, commission agent manager, sales contests and other sales costs).

5. In the new policy, you will be exposed to the kontestabel longer valid up to two years. In those days, the insurance company reserves the right to refuse to investigate your claim if you are known to hide certain information at the time of application or when you die from suicide.

However, it does not mean that you should never replace your old policy with the new policy. In some cases, new policies may have a much more interesting features, terms and more flexible rules, a larger sum assured, premiums are cheaper, more bona fide insurance company, etc. so that the losses from the cancellation of the old policy covered the benefits of new policy. What is clear, ask and be informed that the full comparisons so you can weigh carefully before deciding. Changing insurance without careful consideration can lead to large losses.