Insurance during a recession
The recession in one form or another is already here, at least that’s what all the economists are declaring. How will the recession affect the insurance market?
Insurance is one of the most complex utility products that can be purchased in Israel today.
When we buy insurance, we purchase a promise from the insurance company to pay the insurance premiums when the insurance event happens, while we, the citizens, will pay the premium.
What happens to insurance services when there is a recession? Are there no accidents in a recession? Is it worth canceling insurance? The answer to that is probably negative.
The answer to what can still be done will be divided into two levels:
At the family level: the family during a recession tries to reduce monthly expenses as much as possible.
In car and home insurance, which are often rigid products, it is not possible to completely reduce – perhaps on the margins, we can take on a higher deductible, limit drivers, reduce coverage, and this with the aim of slightly reducing the premium. However, most of us still do not want to be exposed to the harsh statistics of house break-ins, car theft, and accidents.
What can be done? This is the time to call your insurance agent, who will explain to you the multitude of standing orders that you have signed, and in addition to the car and apartment insurances, also go over the health, life and savings insurances of all kinds.
What’s more, if you already have to save, you should lower the payment for long-term or medium-term savings in order to help the current cash flow. Also, you should write a reminder in your diary for the day after the recession to restore the level of savings because this is our future.
Business insurance: This is also the time to call the insurance agent and re-enter all policy conditions. If the business has reduced activity, reduced turnover or inventory, fired employees, etc., it will be possible to find the required sections in the insurance and reduce them accordingly, thus saving money.
Insurance is like electricity – we all need it and use as much as we see fit. This is true both during a recession and during a boom in the markets. That is why we will continue to purchase an insurance product defined as a rigid product even during a recession. Some argue that it is the opposite – in a recession we would not want to add worries or expose ourselves to risks beyond the risks of the period.
It is important to remember that it is not recommended to reduce insurance coverage (such as death / health / serious illness insurance), because when we get out of the recession and want to return the reduced coverage, there may be a situation where our health is no longer as normal as before, and then there will be many limitations. Also, the premium may become more expensive, for example: long-term care insurance purchased a few years ago is much cheaper than the new plans that are sold today.