26 July 2013 0 Comments

The Good And Not-So-Good Of Insurance Agents

negotiatingIt is the job of a good life insurance agent to help you…

  • Identify the best type of policies to solve your needs,
  •  Help you calculate the correct amount of insurance,
  • Find competitive premiums.

Whether or not the agent carries the CLU designation he/she should operate within the province of the CLU creed which is essentially not to provide any advice that, if they were in the same circumstances, they would not follow themselves.

That seems simple enough, but it doesn’t cover the matter of being well informed.  An agent who is ill-informed—operates with blinders on—might believe that they follow this golden rule, but their training has been totally myopic.  They might believe that their solution is always the right solution.

So, the good agent must not only be honest, but be well informed.  Several years ago I testified on behalf of the life insurance industry as an expert witness before a California State Senate Committee hearing on the subject of inappropriate practices used in the sale of annuities to seniors.   Much of the testimony demonstrated malpractice on the part of agents…the sale of policies that truly did not meet the needs of the client and took advantage of their age related vulnerability.  Those situations could be dealt with by imposing fines against the insurance companies and agents, including loss of license and even prison time.  However, much of the bad advice was not of a malicious nature, but due to lack of knowledge.

As a result of these hearings the California Department of Insurance issued new regulations requiring agents to complete continuing education specific to annuities in order to renew their licenses.

The traits of a good agent.

In addition to being honest and well informed, the good agent will have two additional traits.  He will ask many questions before making any recommendation and will be a good listener.   Beware of the agent who quotes a premium before asking many questions that affect what premium will be charged.  Beware of the agent who immediately knocks your current insurance policy or company.  Beware of the agent who wants to push you into any plan before you are totally comfortable with the policy, premiums and company.

It is the nature of the insurance agent to move you forward in your decision process.  The agent has been trained that life insurance is sold, not bought.  Generally that is true.  But you should feel comfortable with your agent.  Ask him/her about their training.  Keep your antennae up and ask for references.

Eliminate buyer’s remorse

Depending on the type of policy, your age and the state in which it was issued there will be a “free-look” provision of 10 to 30 days on any policy you buy.  This means that if you have paid an initial premium you can return the policy within this time frame and get your money back—no questions asked.

Finding a good agent with whom you communicate well is the best way to eliminate any buyer’s remorse and to bring financial security to those for whom you care.

Coming up I’ll be discussing how the Supreme Court’s recent ruling on DOMA affects life insurance planning.  

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