The life insurance sales industry has a poor stigma. It used to be because a common sales practice was 'to put the prospect six feet under'....meaning the catch phrase was, "....what if you died yesterday?..." No one likes to think of themselves as dead, therefore the public would try to avoid life insurance salesmen. The industry has come a long way. Training methods are more ethical, yet the stigma remains. The average insurance professional is much more knowledgeable today about options for clients, however it's what they're NOT telling you, that causes the 'poor perception cloud' to hover. Here are the top 10 things that your life insurance agent probably isn't telling you:
10. I scramble every year to acquire my C.E. (Continuing Education) credits.
All of the state insurance commissioners require agents to obtain C.E. There are many opportunities for an agent to acquire the necessary C.E., but many end up rushing at the end of their alloted time (usually 2 years) to obtain the necessary hours. This likely demonstrates the behavior of a person who is not be trained appropriately, not growing, and not being a professional.
All of the state insurance commissioners require agents to obtain C.E. There are many opportunities for an agent to acquire the necessary C.E., but many end up rushing at the end of their alloted time (usually 2 years) to obtain the necessary hours. This likely demonstrates the behavior of a person who is not be trained appropriately, not growing, and not being a professional.
9. I changed my companies (i.e. broker/dealer, firm) because of compensation issues, not because of service issues.
The primary driver why most agents change companies is compensation. They're likely receiving a higher payout from where they are now which usually means less, in some form or fashion, for the client. Beware of agents who change companies.
The primary driver why most agents change companies is compensation. They're likely receiving a higher payout from where they are now which usually means less, in some form or fashion, for the client. Beware of agents who change companies.
8. You should consider the likelihood of events as a method of prioritizing discretionary income.
If you have $1 extra at the end of the month, how should you spend it? Life Insurance, Disability Insurance, Long Term Care Insurance, retirement savings, college savings, or some other savings goal?
If you have $1 extra at the end of the month, how should you spend it? Life Insurance, Disability Insurance, Long Term Care Insurance, retirement savings, college savings, or some other savings goal?
Consider the likelihood of each event occurring, which should be a guide as to how to allocate that dollar. For example, is it more likely that you'll need Long Term Care or reach retirement age? Once the most likely events are 'on track' and/or fully funded, then go down the list.
7. You should maximize your 401(k) contributions before considering other non-deductible forms of long-term savings.
Don't fall into the sales pitch that due to the expectation of rising taxes in the future that you should pay more taxes now, so that retirement distributions are taxed less. Take the deductions while they exist. Who knows what the tax system will look like in 5, 10, or 20 years. A bird in the hand...
Don't fall into the sales pitch that due to the expectation of rising taxes in the future that you should pay more taxes now, so that retirement distributions are taxed less. Take the deductions while they exist. Who knows what the tax system will look like in 5, 10, or 20 years. A bird in the hand...
6. You probably won't hear from me ever again, unless I'm trying to sell you more insurance.
Unless you're considered an 'A' client (due to mainly how much commissions you're generating for the agent), you're likely to not be serviced very well.
Unless you're considered an 'A' client (due to mainly how much commissions you're generating for the agent), you're likely to not be serviced very well.
5. You shouldn't take all that cash value out.
Tax deferred cash value build up is powerful, however if you take most of it out, the contract will expire and all of the gain that was distributed will be taxable. Permanent, cash value building life insurance needs to have a significant 'cushion' of cash value in order to pay for very high insurance charges in later years of the policy. Ask for a projection before you decide to pull money out of a policy.
Tax deferred cash value build up is powerful, however if you take most of it out, the contract will expire and all of the gain that was distributed will be taxable. Permanent, cash value building life insurance needs to have a significant 'cushion' of cash value in order to pay for very high insurance charges in later years of the policy. Ask for a projection before you decide to pull money out of a policy.
4. I'm not a financial planner.
As much as they profess to have a plan, for some reason, all the solutions tend to end up as insurance???
As much as they profess to have a plan, for some reason, all the solutions tend to end up as insurance???
3. Term life insurance is appropriate in many instances.
Term life is not so bad. Just be absolutely sure that once the level period expires, there won't be a need for it.
Term life is not so bad. Just be absolutely sure that once the level period expires, there won't be a need for it.
2. My primary company doesn't want me to be objective.
They want the agents to sell their products, and they're typically is significant non-cash incentives like trips to do so.
They want the agents to sell their products, and they're typically is significant non-cash incentives like trips to do so.
1. The large majority of my compensation is paid in the first year of the policy.
Lorin Greber, CFP, ChFC is a financial advisor with Financial Balance Group, LLC in Rockville, MD working with small business owners, professionals & affluent retirees across the country. In today's economic environment, his focus on utilizing whole life insurance as a planning tool makes sense for clients looking to build real wealth.
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