According to the Mexican Association of Insurance Institutions (AMIS), in Mexico 70% of families that have life insurance manage to maintain their standard of living after the death of the main provider, avoiding debts and financial problems; and, every day, 25 million pesos are paid for hydrometeorological incidents.
Taking out insurance helps take care of your personal and family assets, however, the insurance industry has low penetration in our country. For example, while in Mexico, the average housing insurance rate is 26.5% (only 9.3 million of the 35.2 million existing homes are insured), Germany, Spain or the United Kingdom have an insurance level that ranges between 70% and 80%.
Perhaps two of the main reasons for this scenario are ignorance and distrust, since there is a prejudice that insurance is full of “fine print” that is difficult to understand and, therefore, it is difficult for you to receive the support they promise you.
In interview with +Money of Forbes MexicoPatricia Rodríguez, CEO and founder of Why Not, financial services consultant and author of the book Lady Futuristshared the myths and realities about an insurance contract and his key tips to ensure that the insurance you contract truly is a financial protection tool in the event of any eventuality.
The three fundamental aspects that you need to review in the insurance you contract
According to the specialist, there are three fundamental aspects to review in an insurance contract:
Cover of the insurance policy
In it you will see the conditions with which you contracted the insurance: sum insured, deductible, coinsurance and other specifications.
“Given that you are insuring your car, your house or yourself, the data must appear clearly and correctly, there should be no errors. You must carefully review the cover page of the policy which, from my perspective, is the most important point, there comes who the beneficiaries are or are and you must be very careful with the names, the percentages they will receive of the sum insured and the relationship”Rodríguez asserts.
Since currently you no longer receive this type of manual from your insurance, but rather an extensive file in PDF format, the ideal thing is that you print the document and make it available to your family and beneficiaries.
The general conditions
The second important point that an insurance contract contains is the one referring to the general conditions, that is, the accumulation of specifications: what it includes and the exclusions.
“Many people don’t like to read the information in a tremendously long PDF, but that’s what’s important. It’s believed that the small print contains the reason why your insurance won’t pay you, but that’s not the case. Contrary to myth, the exclusions and the most important things come in bold and, sometimes, even in larger print.”details the specialist.
The endorsement
The endorsement is an additional document that implies changes to the original coverage, which may involve modifying the insured amounts or incorporating new clauses.
The endorsement is not included in all insurance, it normally appears in medical expenses insurance or life insurance.
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Finally, Patricia Rodríguez highlights the 3 elements that will make the insurance you take out truly support you:
Don’t lie
The insurer or the insurance contract is made in good faith, this means that the insurer will believe everything you tell it. But if you lie about such important information and this is discovered, we are talking about a cause for termination of the contract, that is, they will not pay you.
Do not omit information
Check that your policy information is correct and complete. It has happened that the owner of a car with an insurance policy does not specify the version or model and that can be a problem.
Failure to keep the policy in force
It is very important to keep the policy in force, that is, that you pay it, because if you forgot to pay it and something happens, and it is not active, that is when you would not be paid. You must review the payments, many people charge their credit card and, sometimes, they forget to keep it up to date and the payment does not go through.
In short, the insurance company is going to believe you, it is going to pay you. However, if a lie or omission is discovered, it will most likely not be done.
Given the prejudices and myths surrounding insurance and its effectiveness, Patricia Rodríguez suggests using financial education, since insurance is an ally for the protection of assets.
“We all need a hand in difficult times, sometimes we do not have savings or the support of family or friends and insurance is there. I invite you to open the door to financial education to stay informed about all this practical and real information about how insurance works and the way we can take advantage of it. It can be tedious, but reading your policy, spending half an hour on it will make a big difference”concludes.
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