The debate about selling life insurance policies has heated up over the past 50 years. Selling term vs. whole life insurance policies is killing agents or enriching clients. Consider the dilemma created and fuelled by low-rate cheap internet term life insurance versus wholelife insurance with high commissions.
Over 600 life insurance companies compete unfairly. Agents compare apples to lemons and make the wrong comparisons. Each possible mix of life and term insurance is combined into a delicious lemonade. Einstein couldn’t finish high school, let alone the more difficult task of creating a formula to compare life insurance rates.
This is because there are more than one formula. Every life insurance company has at most one formula to compare its best-selling term with other insurers. Plus, a formula that shows why the best selling whole life coverage is the best. They then show how their best-selling term coverage is superior to buying whole life insurance from any competitor. They also show why whole-life insurance is better than any other insurance provider’s cheap term.
The policy scramble is a name game. You have first whole life insurance coverage. Then you have life insurance policies called “straightlife”, “life endowment age 100”, “simple life” and “ordinary life”. There are four more options for the same whole-life policy. Agents can sell term life insurance that is “all risk”, with no cash value. There are many options. A term can be straight term, annual, monthly renewable, 5 years renewable, 10 year renewal, straight decreasing, or mortgage decreasing. These 6 terms could be used by the same company and sold at different premium rates.
Every year, new crossbreds are added to the mix. Some provide cash dividends, while others do not. Popular derivatives such as Universal Life were introduced to eliminate all confusion about whole life vs term insurance. With a small amount of pure risk term and cash value whole life, you could create your own pie. The controversy did not end there, because now agents were heavily promoting another selling option.
Commission is no more a factor. At least, not among independent agents. Term insurance agents who work for career companies are usually paid 15% to 20% less than those who sell them policies. They were more motivated to sell whole life policies because they are more profitable for their home offices. Independent life insurance companies offer a variety of whole, universal, and term policies at a high commission.
Individual rates for insurance policies are no longer considered. A policy’s rate is not enough to judge it. A very short time ago, AIG was the largest term insurance company. Its first three letters were AIG. They combined the lowest rates with some of the highest commissions to create an earth-destructing mess. How can you compare apples to apples when 99.5% of the insurers are not so greedy? You can research rates, company age and commissions, financial investments, policy riders and mortality tables, as well as underwriting requirements, to help you decide which apple you should sell or buy.
How to buy or sell life insurance policies There is no way to know if you are covered for all seven major risks. These plans are to provide risk plans for adequate life insurance, car and homeowners, major medical, disabled, retirement, long-term care, and home ownership. It is amazing how many policy buyers and insurance agents can sit down and see the whole picture at once. They don’t. Insurance is bought primarily by price (like cheapness), commissions or what prospect is asked with.
This is what you can do. Come to my home and I’ll show you all my assets and risks. I have $10,000 in my bank account and will tell you that all my insurance needs can be met. Then, I would tell you that I am competing with 2 other people and that I will choose the best plan. Is this fair? This is a huge selling opportunity for you, and I’m testing your integrity. Do I care if your life insurance policy has a higher cash value to give me more retirement benefits? It is also important if I obtain cheaper term insurance to cover a mortgage disability income program.
In over 100 years, insurance agents haven’t gotten their act together. They don’t have 20 more years to wait in this information age. Insurance is not something that people need to be extremely educated in. Agents in insurance need to be extremely knowledgeable about adapting to client needs and implementing a comprehensive insurance strategy.