If it’s cheap, will it be bad value?

One of the tried-and-tested ways of catching your attention is to announce that something is “cheap”. The trouble with this word is that it changes its meaning. Our experience tells us you get what you pay for. So, if you only pay a low price that usually means you get low quality. Although luck may be on your side and you find an inexpensive bargain, more often than not the result is bad value for money. Borrowing an example from across the pond, there once was an entrepreneur called Gerald Ratner who sold cheap jewelry. In 1991, he made a speech in which he spoke the literal truth, intending no more than a humorous take on what should have been obvious to anyone. Talking about some sherry glasses and a decanter for sale in his stores, he asked the question, “How can you sell this for such a low price?” and answered it, “Because it’s total crap.” He also described some earrings as, “…cheaper than a prawn sandwich”. The following day, £500 million was wiped off the stock market valuation and his company was forced into bankruptcy. It does not do to speak the truth about the real value of your products. You must always allow your customers to deceive themselves into buying what you offer.

Today, conventional wisdom says you can find cheap insurance online. These words are intended to encourage you to look at what’s on offer. There is, of course, never any obligation to buy. But, if no-one looks, there is no chance for the insurance company to make a sale. The marketers have to say something to provoke you into looking. So, when you see the word “cheap” applied to policies for sale through a website operated by a single insurer, read on with caution. This is an old sales technique and it fools only those who never shop around and find out what the competition quotes.

All of which brings us to the online search engines that obtain quotes from multiple health insurance companies. Here, when you see the word “cheap” it’s more real because you can compare and contrast all the different offers from the different companies. The headline premium rates quoted give you a starting point from which to judge value for money. Read the detail of the coverage offered, being clear on what is included and what is excluded. Identify what the deductible will be, how much the copayments are and whether you have to pay for your drugs or meet out-of-pocket expenses. Only when you have finished can you decide whether you have found the real bargain offer. It’s possible you will find one or more policies that are sufficiently good value-for-money to justify being called “cheap”. If you do, you calmly seal the deal and pay the low premiums. This is the cheap health insurance you were looking for. But if the quotes prove universally poor value, you move on and try somewhere else. It’s the old, “If at first you don’t succeed, try again.” all over again. The newer breeds of online only companies are offering genuinely low rates. This competition is slowing the premium increases from the traditional companies. Keep searching until you find the best deal on offer.

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