Core principles: how to manage your insurance portfolio without losing your head
Managing your insurance portfolio correctly begins with understanding that you do not need to insure every risk. Instead, focus on events that could significantly harm your financial stability. On this page, we will learn the principles that can help you choose suitable coverage, avoid duplication and purchases made under pressure, and keep your insurance portfolio up to date and relevant over the years.
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Many of us collect insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. policies like points in a customer club — one through work, another from the bank when we took a mortgageA long-term loan for purchasing a property, with the property serving as collateral for the bank., and a third from a marketing call that "caught" us on a stressful day. The result is a disorganized insurance portfolio, costly duplication, and uncertainty about what is actually covered when it matters.
Before we examine the details of each policy, this section will give you protective "glasses": five principles that can help you make considered decisions, avoid beginners' mistakes, and save thousands of shekels (שקלים) over time.
How it works in practice: your risk-management strategy
Insurance management is not only about "buying protection." It is also about knowing what to buy and when to stop.
1. Insurance is intended to protect against catastrophes
The purpose of insurance is to protect you from an event that would devastate you financially, such as a serious illness, the death of an income earner, or disability and loss of earning capacity.
Not every unusual expense requires insurance. Sometimes it is better to pay out of pocket for small losses and reserve insurance for situations in which the expense could be especially large, such as a serious illness, costly medical treatment, an accident that causes disability, major property damage, or the death of one of the family's earners.
2. Do not buy insurance under pressure
One of the greatest pitfalls is an impulsive purchase. Insurance is a complex product, and you should not allow a sense of urgency during a phone call to dictate the terms. Before adding new coverage, stop and check what it actually includes and whether you already have it elsewhere, such as through your Kupat Holim (קופת חולים; health fund) or workplace.
Before purchasing insurance, stop and check:
What should you check before buying?
- What exactly does the coverage include?
- Do you already have similar insurance?
- What is the deductibleThe initial amount the insured pays out of pocket when making a claim.?
- Are there significant exclusions?
A considered decision can prevent the purchase of unnecessary or unsuitable insurance.
3. Do not cancel existing insurance before you have an alternative
When replacing a policy or moving to another insurance company, it is very important to make sure the new insurance has received final approval before canceling the existing policy.
In health and life insuranceProvides for payment of a sum of money to beneficiaries in the event of the insured person’s death., insurers carry out a process called Hitum Refui (חיתום רפואיThe process of assessing an insurance applicant’s medical condition in order to determine the policy terms.; medical underwriting), in which they examine your health. If you cancel the old policy too early, you may find yourself with no coverage if the new company excludes existing conditions or refuses to insure you.
4. Full transparency about medical information
When purchasing certain insurance products — mainly health, life, and long-term care insurance — the insurance company asks for medical information.
For the insurance to work for you when the day comes, you must be completely transparent with the insurance company. Providing partial or inaccurate medical information gives insurers an "escape route" when rejecting a claim. Your transparency is your best protection.
5. Review your insurance portfolio periodically
Remember that your life is dynamic: you get married, change jobs, buy a home, or expand your family. It is therefore advisable to review your insurance portfolio at least once a year. A short review can help you identify unnecessary duplication, make sure the coverage still suits your current circumstances, and perhaps even lower your premiums.
6. Compare existing insurance coverage
Insurance companies sometimes offer extensions or additional policies. Before adding new insurance, check whether the coverage already exists elsewhere.
For example, many health insurance benefits are available through health funds and Shaban (שב"ן; supplementary health services). A private policy sometimes adds coverage, but in other cases the coverage overlaps.
Comparing different policies can help you understand what truly adds value and what is unnecessary.
Frequently asked questions
Why is it important to check for duplication with my health fund?
Many health insurance policies overlap with services provided by a health fund through Shaban. A simple check can prevent you from paying twice for exactly the same service.
What happens to my insurance when I leave a workplace?
Group insurance usually becomes more expensive private insurance, or ends completely. This is exactly the time to review the terms and make sure you are not left without protection.
Can an insurance agent help me find duplicate coverage?
Yes, but remember that you can also do this easily through Har HaBituach (הר הביטוח). Combining a professional agent with your own understanding is the winning formula for an efficient insurance portfolio.
The bottom line
Managing an insurance portfolio correctly is not limited to buying a policy. It requires understanding your changing needs and maintaining the coverage over time. Basic knowledge and a little order in the paperwork can save you thousands of shekels per year and give you the most important thing insurance is supposed to provide: genuine peace of mind.