The Radical Guide to Life Insurance: Beware the life insurance agent
Buy permanent life insurance. Like any sales agent, life insurance agents have an agenda. And their goal is to encourage you to buy permanent life insurance. Why? Because they earn higher commissions for selling permanent life insurance than term life insurance. Make sure that you are buying the insurance policy that is right for you.
Permanent life is "permanent and guaranteed". One common sales tactic is to stress that permanent life or cash value policies are designed to be permanent and that a payoff is guaranteed. However, if you continue to renew your term life policies they can also be as permanent as you make them. And a guaranteed payout? Not true. Cash value policy returns are tied to investments. With investing, nothing is guaranteed. Furthermore, if you cancel your cash value policy in the first couple of years of its life you might walk away without anything at all.
Experience. There is a high turnover rate amongst life insurance agents. Therefore it is possible that you will be assigned someone with little experience. Make sure to work with someone who has years of experience and the skill and knowledge to give you good, honest and straightforward advice. Life insurance can be complicated. So choose someone who knows his or her stuff!
Commissions. There is a high likelihood you will get overcharged by your insurance agent. In order to avoid this situation, ask him or her for a breakdown of the costs of the policy. Make sure you understand how the agent is getting paid.
June 1, 2005 | Permalink
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Comments
I have sold life insurance 25 years - once again an article that "generalizes" that one size fits all is dangerous. First, many wealthy people DO BUY LIFE INSURANCE - not for traditional purposes but as a very efficient way to pay estate taxes. Secondly, I suggest to my clients the type of life insurance that fits their needs - sometimes term, sometimes permanent, sometimes both without regard to commission. Making a blanket statement to beware the life insurance agents is irresponsible. Through my careful planning and helping families and businesses, I have paid many death claims that financially saved families and businesses, put children through college, and kept widows living the life they had before the death of their loved one.
Posted by: tlk | Jul 1, 2005 5:42:31 PM
