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Claudia DoRego, Planswell

Insurance is a crucial component of any financial plan because it keeps you protected in the event of an accident, fraud, or other awful things that can happen in life. Whether it’s critical illness, disability, or life insurance, insurance’s job is to make sure that health problems do not also lead to financial wreckage. However, insurance is almost always sold by agents who work on commission. And while insurance agents are usually hardworking, upstanding individuals, they may not have your best interests in mind.

So how can you tell if your insurance agent is misleading you? Keep reading for a breakdown of some telling signs.

They pressure you to purchase a policy immediately

Beware of any insurance agent who is pushing you to lock in a policy before you’ve had time to consider any other options. They may claim that “this deal won’t last long”, but an ethical agent won’t try to rush you through this important decision-making process.

Using scare tactics to frighten you into applying for coverage with a particular plan is a clear sign as well. Some scare tactics to watch out for (and run from!) are:

  • If your agent states that you won’t be able to get any coverage if you don’t sign instantly.
  • If your agent attempts to confuse you with a dense and incomprehensible contract. It’s critical you understand what you’re covered for, and are aware if the contract has any obscure clauses.

They’ve quoted you a premium that seems incredibly low or is much less than your previous one

We have all heard the saying that if something seems too good to be true, it probably is. Unfortunately, this also applies to insurance premiums. Of course, the cost of insurance can and will vary from one insurer to another, but be suspicious of any quotes that seem uncommonly low.

To avoid this issue, make sure you receive several quotes before making a final decision – having a wider variety of options will give you an edge. It may be time-consuming, but this will allow you to get the best rate you possibly can. And if you need some help, Planswell can help you get quotes from several reputable insurers to get you started.

They’re pushing you to buy more coverage than you may need

Whenever an agent evaluates how much insurance coverage you should have, they will likely show you numbers that are much larger than anything you had ever imagined needing.

A shady insurance agent will play your emotional side, stating that you’ll need to provide enough income to your family for the next 20 years, while funding post-secondary education, paying off the mortgage, and leaving your spouse with a comfortable retirement fund.

But if you’re sitting there thinking that you only want a policy for a few hundred thousand dollars, don’t begin to doubt yourself. You’re probably right.

If you have other investments and assets, and your spouse is also employed, you’ll only need a fraction of the insurance coverage your agent may be suggesting. Life insurance is typically only necessary to settle final arrangements, medical bills, outstanding debts and maybe a few years of living expenses.

They tell you  insurance is a “good investment”

Many insurance products are sold as investments. They are also known as whole life insurance, segregated funds (which look very similar to mutual funds, but with an added insurance component), and universal life insurance.

The issue with these products is that the returns on investment are often quite low, due to high fees and commissions, paired with poor explaining on the insurers part.

In most cases, it’s much more beneficial to purchase low-cost insurance and low-cost investments and keep them as two separate pieces of your financial plan.

So you have you been misled?

It’s ultimately up to you to make sure that your insurance provider has your best interests at heart, and that you and your coverage are on the right track. Knowing if your insurer is misleading you can help you avoid potential financial pitfalls.

At Planswell, we promise that you’ll never have to worry about us selling you more insurance than you need, glossing over fees or leading you astray. Our team is salaried, so in direct comparison with the traditional industry, we are not motivated by the commission given from the cost of an insurance policy. We’re here to make any financial advice you may need fast, friendly and straightforward for you.

Planswell is a financial planning company. Grow your wealth. Manage your borrowing. Protect your assets. Planswell gives you a free plan that ties investments, insurance, and mortgages together so you can maintain your lifestyle throughout work and retirement.

Caitlin Wood, BA avatar on Loans Canada
Caitlin Wood, BA

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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