The Life Insurance Agent's Job

The things I am about to describe really happened last week. I have changed the names and a few of the unimportant details to protect the privacy of everyone involved. So here is what happened...

One of my agents was following up on a request that someone had made on our website for term life insurance rates. As part of the follow up process, we routinely verify the information that was supplied online and also gather a few pieces of information that the online form does not ask (specific health issues, family health history, etc.). We do this so that we can do what is called "field underwriting". This process allows us to shop for the best carrier given an individual's unique situation. As independent agents, we shop the whole market and some carriers are better than others for certain situations. Prudential might be a better choice than ING for someone with a parent who died of cancer at age 62, Transamerica might be best for someone with a DUI 2 years ago, etc. We intentionally ask open-ended questions in an effort to gather as much detail as possible because it helps us to find the right choice for each consumer.

During the conversation, my agent asked the consumer about his family's health history with respect to cancer, heart disease and stroke. She left the question open-ended, not specifying an age, but just asking the consumer to tell her if there was any history and if so, what it was. The consumer became very agitated at her and abruptly ended the phone call, telling her that the questions weren't necessary or appropriate. I instructed my agent to send a short email to the consumer explaining our reason for gathering such information. Shortly after she sent that email, the consumer replied with an email telling her that her "open-ended questions were unreasonable and irrational" and that they "may be unethical because they intentionally place people in a higher rate group leading to higher insurance rates, generating more profits for the company and a disservice to the consumer".

Okay folks, here's the deal: As agents, we don't set rates or determine what rate group an individual is in! That is the job of the insurance company's underwriting team. When we ask questions about your situation, we are working for you, trying to find the best fit for your insurance needs. We are trying to shop for you and give you accurate prices. We aren't out to somehow manipulate you into paying more than you should for something. We couldn't do that if we tried. Because we don't set rates!

My job as an independent agent is to find the products that are best for you. That's why I am an independent agent and that's why I ask those (sometimes uncomfortable) questions. So take a tip from me when you go shopping for insurance: Let you agent do his job. Answer his questions. Make him work for you. You will be better off!

I Am Your Policy

You and I have purposes in this world, which when are analyzed, are quite similar. It is your job to provide food, clothing, shelter, schooling, medicine and many other things for your loved ones. You do this while I lie packed away. I must have faith and trust in you. Out of your earnings will come the cost of my upkeep. At times I may appear to be somewhat worthless to you, but some day (and who knows when) you and I will change places. When you are laid to rest, I will come alive and do your job. I will provide the food, clothing, shelter, schooling, medicine and other things your family will continue to need just as you are doing now. When your work is done, mine will begin; through me your hands will carry on.

Should you live and care for your family without me, I will really do a job for you. When you reach the golden retirement age, I will go into action and help provide some of the necessary dollars that will be needed when you can no longer work (This refers to using the cash values of a permanent life insurance plan as income through one of the settlement options.) Whenever you feel the price you are paying for my upkeep is a burden, remember that I will do more for you and your family than you can ever do for me. If you do your part, I guarantee to do mine.

How many times do you say "if"...

Mariam-Webster defines the word "if" as follows:

1 a : in the event that b : allowing that c : on the assumption that d : on condition that

2 : whether

3 : used as a function word to introduce an exclamation expressing a wish

4 : even though : although perhaps

5 : and perhaps not even —often used with not

When you are talking about life insurance, the only "if" should fall between the letters "l" and "e" in the word "life"! Life insurance is about three simple, yet powerful concepts: promises, protection and guarantees. This is the reason that life insurance is at the heart of all good financial and retirement planning. It forms the foundation upon which all other financial plans can be be built. In addition to providing much-needed protection for a growing family, it can form the basis for efficient retirement planning strategies. Promises, protection, guarantees: this is why "if" has no place in your discussion of life insurance.

I lend money when you need it most, with no questions asked.

A permanent insurance policy like whole life or universal life has two features that make it the perfect collateral for a loan: death benefit and cash surrender value. These elements, like a house and the equity that an owner has in it, can be used to secure loans that can provide cash for emergencies, business purposes, real estate transactions, personal spending, etc.

Unlike the equity in a home however, borrowing against a life insurance policy is a no-questions-asked proposition. To the extent that a policy owner has equity (cash surrender value) in his policy (and subject to the limits of the actual life insurance contract), a loan can be made without having to qualify for it. The policy owner need only ask for the money and funds are delivered in just a few days.

Many a criticism has been leveled against cash value policies and policy loans. Most often, you will hear a supposed "money guru" like Dave Ramsey or Suze Orman say "You are borrowing your own money! How stupid is that?". But the criticism is completely unfounded. You see, you aren't borrowing your own money--you are borrowing the insurance company's money and using your money (cash surrender value and death benefit) as collateral. Just like you do with a home equity loan. Except that with a life insurance policy loan, you get much more favorable terms. Like, for example, never having to make a payment and zero net financing costs (again, subject to the terms of the specific life insurance contract).

Access to cash surrender values in a life insurance policy has many uses. Whether your need for a loan is for a family emergency, a business opportunity, a real estate deal or some other purpose, you can count on your good old fashioned permanent life insurance policy to be there, ready to loan you money--without asking questions!

Next: I pay off mortgages, so that the family can remain together in their own home.