Insurance: Commodity or not?

Personally, I agree with your mindset. If individuals are knowledgeable on financial planning and insurance-related content, then yes buying insurance can be as simple as buying a shampoo. You'll just need to compare prices and features across companies and find the best one.

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In fact, there is a company called FWD that is trying to remove agents from the picture, hence reducing cost. FWD will work for financially savvy individuals but may not be appealing to financially illiterate people.

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I personally believe insurance agents exist to serve the people who don't have any knowledge in financial planning, investments or insurance. That's where the agent comes in to provide advice, planning and guidance.

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Hi Anon, when you mean commodity here I'm assuming that it means a useful or valuable thing. By extension, insurance is pretty valuable because it protects you and your family from unforeseen circumstances. In which case only then is insurance valuable. If not one can see it as a sunk cost where you paid for premiums but got nothing in return.

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But that's the thing because if you fall ill then you get a payout and if you don't, that's great!

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Ultimately, insurance is a commodity where you will need to study the fine print when you buy one, especially with companies trying to one-up each other with new frills and features. Barring the fact that you have a personal relationship with an agent, you will still need to look at who can give you the best deal.

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So what you're perhaps missing is the idea that companies cater to different groups of people. Company A may not be as good as company M in say - renewal of term life insurance and vice versa for other aspects. I feel when it comes to the product itself, there's not much beyond the various features and claim times, so not to worry about what's missing from said mindset!