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Many of you will be approached regularly by financial advisers. The challenge you face is to decide which of the approaches to entertain. It’s great that you have so many choices and offers, but it’s important to make sure you choose the adviser rather than letting the adviser choose you.

Most people in Indonesia buy their insurance through an agent. There are certainly lots of agents to choose from, with many life insurance companies employing up to 100,000 agents. With such large agency forces, almost every one of you will have friends, contacts, family members or acquaintances who are agents. These contacts will approach you from time to time and offer insurance advice and products.

There are several benefits to choosing an agent who is a close contact. First, you will trust your close contacts, or at the very least know which ones you can trust. Second, you have the convenience of being able to pull them aside at anytime if you have a problem or query on your policy or investment. Third, you may find it more comfortable to disclose medical and financial details to an adviser who is a close contact than to an outsider.

Of course, there is a flip side to having a close contact as an agent. If your close contact ceases to be an agent or moves to another insurer, then he or she will not be able to service your existing policies in the same way as before. Your insurance company will be able to assign a new agent to deal with your policy, but they may do things a little differently. Remember too that an agent can only offer the products of one insurance company, so if you choose an agent you are also choosing the insurer he or she represents.

An increasing number of Indonesians now choose to buy insurance through their banks. You presumably already trust your bank to handle your banking affairs, so it is quite natural to extend that trust and let the bank handle your insurance and investment affairs. Some banks offer the products of several insurers and a full range of insurance products, while other banks represent only one insurer or may have a narrow choice of products. Buying from a bank is convenient as you can deal with insurance matters at the same time as you deal with your banking matters.

Nearly all of you will have had calls from telemarketers offering insurance products. The products offered are normally cheap and simple, such as personal accident, hospital cash or savings policies. Normally the purchase can be concluded in just a few minutes over the phone, and with a simple health declaration rather than a medical examination. The key benefit of the telesales channel is that it is a convenient way to buy simple products.

A broker’s role is to understand your needs and survey several companies in the market to find which particular product best meets your individual needs. The broker channel is still quite small in Indonesia but is likely to grow over the coming years as the market matures and consumers increasingly ask for independent advice.

At the end of the day the choice of channel and adviser is down to you and is very personal. You can of course have more than one adviser, and there are certainly merits in listening to more than one and in comparing advice and products. Always go through a three-point checklist before you buy: Do you trust the adviser; do you trust the company he or she is representing; and do you trust that the product is right for you? If you have any doubts on any of these three points, then hold back. Don’t let anyone pressure you into buying. Remember, it’s your money.

Finally, one thing to be wary of is any advice that involves you cashing in a life insurance policy and putting the proceeds into a new policy. Normally if you cash in a policy there are penalties involved. Moreover, when you buy the new policy you will face a new set of charges for commissions and may also need to have a new medical examination. So you can lose out big time. This scenario is known in the industry as “policy churning” and the only person that gains in this situation is the adviser, who gets a second round of commissions. There can be occasions when cashing in one policy and taking out another is good advice, but this is the exception rather than the rule.

This is a weekly column written by Sense for Money, an initiative created by financial services professionals who are dedicated to increasing financial awareness and understanding among Indonesians of all levels through various media including educational games. Comments and questions to this column are welcome. Please write to poppyb@senseformoney.com.