3 July 2014 0 Comments

The Never, Always, Everyone Fallacy

Screen Shot 2014-07-03 at 9.38.24 AMA claim made by the Auto Club referenced in my last blog triggered the topic for this entry.  It was a statement that a particular policy was recommended for all their members.  That falls in line with declarations occasionally made by agents that they never sell a certain type of policy (Whole Life is a rip off!) or that they always recommend another type of policy (Term is the only policy you should buy!).

Now, I shouldn’t fall into the same trap by saying that such statements are never correct and are always the result of the bias of an agent—but, I’ll say it anyway.  Every type of life insurance policy has positive and negative features.  Every annuity might have a place in a particular individual’s financial picture.  It is true that there are some policies of each type that are more favorably priced and provide more features than others, but blanket statements of what is always right or never wrong just don’t make sense!

Having a bias about a given policy type is not unusual.  I generally favor Universal Life with death benefit guarantees over Participating Whole Life, but I can identify situations—especially for very young people– in which the whole life approach makes more sense.  I generally recommend term insurance instead of permanent insurance for young married couples with children, but if funds are available to provide maximum protection, some portion of permanent insurance is often appropriate.

As a buyer of life insurance or annuities you cannot be expected to understand all of the nuances of the various types of policies available to solve your needs.  But, the agent with whom you are dealing should understand the full array of policies that are available and should not fall into a lazy comfort trap of only recommending that with which he is familiar or what is in his best interest to sell.

If your agent is an always, never or everyone type of agent, it’s time to find a new agent.

Next…should you consider selling life insurance as your career?

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