Over the past 50 years, the debate about selling life insurance policies has only gained steam. Is Selling Whole Life or Term Life Insurance Coverage Plans Killing Agents and Enriching Customers? Look at the dilemma ignited and fueled by cheap term life insurance on the Internet and whole life insurance with high commissions.
More than 600 companies that sell life insurance compete unfairly, causing their agents to compare apples to oranges and lemons. Every imaginable hodgepodge of term and life insurance is blended into an easily digestible lemonade combo. Einstein couldn’t finish high school, let alone take on the more important task of developing a formula for comparing life insurance rates.
That’s because instead of a true formula, there are 2,400 formulas. Every life insurance company has at least one formula for comparing its top-selling term to other insurers, plus a formula that shows why the top-selling whole life insurance coverage is the best. Then they have an illustration of how their best-selling term coverage outperforms any competitor’s lifetime purchase. Lastly, they have an illustration of why buying your whole life insurance plan is superior to buying from any affordable term insurance provider.
The policy name game. First you have full life insurance coverage and then you have life insurance policies called “pure life”, “endowment of life at 100 years”, simple life and ordinary life. Four more plans to sell the exact same policy for life. There are numerous options for an agent who sells term life insurance “full risk”, without cash value. “The term can be simple term, annual renewable, 5-year renewable, 10-year renewable, simple decreasing, decreasing mortgage and many more 6 Term types mentioned here could be offered by the same company, all for sale at different premium rates.
Every year new crosses are added to the pile. Some pay dividend values in cash, others provide none. Popular derivatives like universal life, when introduced, would end all the confusion between term life and whole life insurance. You could make your own cake, with a certain amount of pure risk term, bundled together in an orderly process with cash value over a lifetime. This did not end the controversy, as there was now another put option that was heavily promoted by agents.
Commission is no longer a factor, at least between independent agents. Career firm agents typically receive 15-20% less commission for selling term insurance policies. The more profitable whole life policies for their home office gave them a greater incentive to sell. Today, you can find independent life insurance companies that provide various forms of whole life, universal life, and term insurance, all at a high commission for the first year.
Individual policy rates are no longer a factor. You cannot judge an insurance policy by looking at its rate. However, very recently, one of the largest term life insurance companies (with AIG), as its first three letters, got into an earth-busting mess by combining the lowest rates with some of the best. higher commissions. Given that 99.5% of insurers aren’t that greedy, how do apples compare to apples? You can investigate rates, company age, commissions, overhead, financial investments, policy riders, mortality tables, and underwriting requirements, and you still don’t know which apple to buy or sell. .
The correct way to buy or sell life insurance policies.Insurance is a total risk issue, and there is only a limited amount of dollars to cover just these seven major risks. These are to provide risk plans for sufficient life insurance, auto, homeowners, senior health care, disability, retirement, and long-term care. How many insurance agent salespeople and policy buyers sit down and understand the big picture at the same time? They do not. Insurance is purchased primarily for price (such as low price), commissions, or what is requested from a potential customer.
Try this. Come to my house and I will show you my risks and assets. I have a bank check for $ 10,000 and I tell him to take care of all my insurance needs. Then I would tell you that you are competing with 2 others, and I will take the most logical plan. Do you think this is fair? I am giving you a great sales opportunity and I am testing your integrity. Should I care if the cash value of my life insurance policy increases to provide more retirement benefits or assets? Likewise, does it matter if I get cheaper term insurance for a mortgage disability income plan to take effect?
Insurance agents haven’t done well in over 100 years. In this information age, you don’t have to wait another 20. People don’t need extreme insurance education. Insurance agents must be extremely educated to adapt to the needs of their clients in a total insurance concept.