Posts filed under 'bait and switch'
I called a client of mine the other day because not too long after I had done an annual review of his term life insurance coverage I received a notice that he had applied with another company and was considering replacing the policy he had through me.
Now I really don’t like losing clients and frankly don’t lose many just because our office gives service after the sale that is second to no one else in the business. Having said that, if a person can get a better deal through someone else, I certainly wouldn’t have any hard feelings about that. Life insurance is about the client and their family, not me.
But darn it all, I really take exception to agents that don’t know what the heck they’re doing. This client of mine had a heart attack 4 years ago followed by a 2 vessel angioplasty. A follow up stress test showed substantial damage and a left ventricular ejection fraction of 48%. He had just been declined by US Financial, a company known for approving heart cases when no one else would. I shopped it and was able to get him a table 5 approval from Empire General which he put in force. That was 3 years ago.
I have asked him every year whether he has had any new cardiac evaluation that might lead to a shot at better rates. He hasn’t had any additional cardiac workups.
So, along comes an agent that does not have a clue. He quotes his new perspective client, my table 5 client, preferred best rates with Genworth. This guy can’t get preferred best rates with Genworth because he’s taking high blood pressure medicine. Never mind he had a damaging heart attack 4 years ago.
I talked with my client about the obvious, the fact that he wasn’t going to get the rates quoted by the other agent. He said that the other agent didn’t promise he would get those rates, that the underwriter would make the final decision. He said he told the other agent his full medical history and the fact that he felt like he was doing better and was certainly hoping he could get those rates.
So what’s to be gained by my client or the agent? Having talked to the underwriters I trust on cardiac issues, in the absence of a new stress test showing significantly improved heart function (remember this guy hasn’t had any new cardiac testing), he’s going to be declined. If he had completed a new cardiac workup showing great improvement, because of the early onset multiple vessel CAD with a heart attack, the best he could get with Genworth would be a table 4 to 6, which being 4 years older than his last approval would be losing ground, not gaining.
Bottom line. There is a fine line between bait and switch and just plain old ignorant. I don’t know this agent so I really don’t know which side of that line he falls on, but either is wrong to impose on a client.
September 10th, 2009
Bait and Switch! Most commonly run across in advertising or in sales pitches when a price is presented that the agent or agency knows is either inappropriate or unattainable. The truth, the switch, in life insurance is usually only brought to the surface after a long underwriting period.
Another type of bait and switch occurs when the underwriter decides that an original quote should be changed for legitimate reasons, but doesn’t give all of the reasons to the agent. “Relating to use of bait and switch (offering one attractive exchange initially, but not honoring the offer) in business, politics, and elsewhere.”
Let me paint a scenario for you that just happened. I have an existing client who wanted to replace an old policy with a new 15 year term insurance policy. We applied 5 months ago and the company came back with a standard plus approval because he was 3#’s over preferred weight at 5′10, 205# (which they would have waived), and his GGT, a common liver function test used by insurance companies, was just over twice the normal limit.
He decided at that time to not accept the policy, see his doctor and see if he could get to the bottom of the GGT issue and get it under control. After several lab and office visits he called and said the doctor couldn’t find anything abnormal causing the elevated GGT, so we shopped it with the elevated liver function and Prudential came back with a trial offer of preferred as long as his weight was the same and the GGT was still no more than twice normal. So he applied and took another exam.
After a month in underwriting the approval came back at standard plus citing a build of 5′9, 211 as the reason. When I noted to the underwriter that the client was 5′10 on the previous exam and was pretty sure he had never been 211, he suggested we get a new build done at his doctor’s office. We then presented Pru with his doctor’s height and weight showing 5′10 and 204. They said to give them 5 days for a reconsideration of their decision.
Five days later they said, in spite of the height and weight appearing to fall well within preferred limits, he was still approved at standard plus due to his cholesterol being 251, a cholesterol ratio of 7.1, his GGT at 105 (less than twice normal, but still elevated), an ALT of 45 (another liver function elevated) and elevated triglycerides of just over 300. Excuse me? They told me a week prior that his weight was the issue, not his weight and this and that and these other three things.
This is one of those practices that could hang on the “You just can’t fix stupid” wall of shame. The truth is, for the company there is nothing to be gained by not providing all of the information up front. The more accurate and complete the information is, the better the chances that a customer will see logically why they don’t qualify for a better rate. In fact, what they managed to do was make the customer furious….at me.
Bottom line. These situations happen pretty rarely so the wake up call is really for me. Going forward if a client is approved at a higher rate than expected I will be sure to ask for all factors that play into that situation.
June 22nd, 2009
During this recession many people are turning to term insurance as a way to fill the void left by decimated investment portfolios. Like me, most believe that the hole will eventually fill back up, but in the interim who wants to leave their spouse with a 401k that has been downsized to a 101k.
The other thing people have in common right now is that they want to watch their budget and spend the least amount possible on what they do need to buy, life insurance being no exception. So, not that this age old practice needed an open door, but what an opening for those agents and agencies that make their living shamelessly using bait and switch sales tactics.
Bait and switch has become more prevalent than in days gone by simply because there is so much competition via the internet for your business. It is not uncommon for people to get half a dozen quotes and, if they happen to inquire on the wrong website, a site that resells their inquiry, they may end up fielding calls from 15-20 or more agents. Some sites sell leads to multiple buyers and buyers have found a way to defray their cost by reselling leads. Sick little practice, but that’s not really the point. The point is the amount of competition.
There is a mindset with many agents in the world of life insurance today that getting the application wins the game. If an agent gets you to apply and take an exam you have invested in that agent and, even though it is a perfectly acceptable practice, you are not likely to apply with a second agent concurrently because the first agent has told you what you want to hear. Albeit subconsciously, when you choose that agent, almost always due to him or her giving you the lowest quote, you have placed that agent on a pedestal that they have conned, rather than earned their way on to.
And I always hear, “Well, if he doesn’t come through with that rate I’ll dump him and give you a call”. Hello!!!!! Bait and switch works precisely because statistics show that most people won’t do that. They have been through a 1-3 month application process and when the baiting agent calls and tells them the bad news, that the approved price is higher (switched) than the quoted price, but you probably won’t do any better anywhere else and since you’ve already invested this much time, well, the prudent thing would be to go ahead and put it in force, you do. Most of the time you really do. And you never call the agent back that quoted accurately to start with.
So, while I think agents that knowingly use bait and switch are scumbags, it takes two to tango and if that scumbag you’re dancing with lied to you once (the low quote you really didn’t qualify for), he will lie to you again (you won’t do any better anywhere else) and then he will never service your business because he knows that at some point you will come to the realization that he’s a scumbag.
So, assuming you really want to know the truth, how do you ferret out a bait and switcher right up front? First, always get a second quote. If one quote is higher, ask that agent why their quote is higher than the other quote and be honest with them. Tell them what company the other agent quoted and the price. If they tell you a reason that you won’t qualify for that lower rate, armed with that information go back to the first agent and ask them to provide you a copy of the underwriting guidelines they are using to conclude you qualify for the low rate. If they produce the information and it appears they are quoting accurately, call the higher quote agent back and see what he has to say. This may sound like work, but remember, if you dance with the scumbag it means you have helped him stay in business so he can keep on doing it to other people. If they won’t produce the underwriting criteria for you tell them you won’t do business with them. If they say that it’s true that you don’t qualify based on the written criteria but that they can probably get an exception, they’re probably lying. Don’t do business with them or at least don’t apply just with them.
Don’t be adverse to running dual applications. If you do them at the same time you can get it done with one exam and when both companies are done underwriting you will have the facts in front of you and it simply becomes a business decision. It has been taken out of the sales arena.
Bottom line. Don’t be too quick to bite just because the bait looks good. Remember, they wouldn’t practice bait and switch if it didn’t work and honestly I think most people, deep down, would prefer to do business with someone honest. Do your homework and find out if they’re honest before the hook is set.
April 23rd, 2009
Just for minute let’s pretend this wild scenario could happen. You talk to two life insurance agents and tell them both the same health information. One gives you a quote that your life insurance policy will cost $1000 a year and the other says it will cost $2000 a year. Who would you go with?
It’s a no brainer right? Obviously the one that quoted $2000 is just trying to gouge you and make more money than he should by making you pay more money than you should. Probably he quoted $2000 not thinking that you would get another quote. Probably he knew you could get it for $1000 and he just hoped you wouldn’t find out. Right? Mr $2000 is a slimeball crook, right?
Or maybe, just maybe, Mr $1000 is the slimeball and he is playing what’s known in the industry as bait and switch. In the competitive world of life insurance sales there has long been a sick mindset that “he who gets the application first wins”. So Mr $1000 knows that even though his quote isn’t accurate and doesn’t truly reflect your health and what you will ultimately be approved at, if he can tie you up and keep you away from the competition long enough, you will actually go ahead and take the higher priced approval when it hits the fan.
I actually got to see this in action when I worked for a short period at a large on line agency. One agent, known for being able to write a lot of business, bet another agent one day that he could write 50 applications in that shift. I was new there and didn’t catch on to the fact that this guy, no matter what he was told about a person’s health, was quoting everyone preferred plus rates. He finished his 50 applications in just over 8 hours. All of those people, whether they had diabetes, were overweight, had heart disease, or whatever, were delighted to hear that they were going to get the best rate. In the end, only 6 of those 50 qualified for the best rate class after an exam and a review of their medical records. The other 44 were lied to for the sake of the application. He was fired shortly after that.
And if those 50 people had also been talking to Mr $2000, the honest agent, no one would have given him the time of day. Unfortunately clients want low rates and don’t want to hear why they won’t get it.
So, how do you get the best rate available and avoid bait and switch slimeballs? If there are any health issues involved, even as simple as high blood pressure or high cholesterol, it’s very easy to get everyone playing on a level field. Tell the agents you are getting quotes from that you want to see a “trial offer” from the underwriters of the company they are quoting stating what rate class you qualify for. Don’t let them off with a verbal trial offer. Tell them you want to see the email from you to the underwriter explaining your health and the response from the underwriter telling you what to quote.
If an agent isn’t willing to go the extra mile to prove that they are quoting fairly, to prove that their quote is based on facts and not greed, don’t do business with them. The life insurance industry has more than its’ fair share of unscrupulous agents and it’s sad. But if an informed public doesn’t let them run out their dishonest bait and switch tactics, they don’t last long.
Bottom line. We’ve all heard that if it sounds to good to be true then it probably is. If you get two or more life insurance quotes and you’re about ready to throw out the high quote, step back and give that agent a chance to explain why their quote is higher. Tell them that you have a quote that is half as much and ask them why they can’t offer you that. Maybe, just maybe, they aren’t the slimeball in the mix.
February 14th, 2009
I very seldom “go off” on individual life insurance companies. Our experience in the impaired risk market is that company underwriting can go through cyclical changes, so we have learned to stay away from companies who aren’t being consistent until they get their legs back under them.
A problem arises when a new company comes on the impaired risk scene. They know all the right stuff to say to attract the independent agents that can help them break into the market, but until you’ve actually tried them out on a real live client, it’s a crap shoot.
Western Reserve Life western-reserve-life is a company that has fallen into this bait and switch, say whatever it takes to attract agents, mentality.
One of the things we depend on as agents are the trial offers we get from life insurance underwriters. In a nutshell, this is where we present a case informally and the underwriter says, barring any surprises, this is the rate that we should approve your client at. We work hard to do our homework on our end so that there aren’t any surprises once the case hits underwriting. What we don’t want to see is irrational behavior from an underwriting department.
Case in point. A man in his 30’s with multiple dui’s several years ago. He has cleaned up his act, doesn’t drink anymore and is by all accounts a stable family man and a productive member of society. He is, and we admitted this on the trial, on medications for mood stability. When we applied formally the case was declined by Western Reserve because the client is doing so well that his physician was recommending he be taken off of some of this medications. They declined him, in underwriter Kevin Rivera’s words, “because we don’t know how he will do when he isn’t on those medications”. Well crap. I bet his doctor thinks he’ll do just fine or he wouldn’t take him off of them.
So my client is really doing better than we presented in the trial in that he has outgrown the need for some of the medications, but the company penalized him, declined him anyway. The underwriter blamed it on the medical director, and actually the underwriter changed his story several times during our appeal process on their decision. They kept moving the target until we got tired of shooting at it.
Western Reserve is no longer on our list of “go to” companies for impaired risk business. Their grandiose claims of being a player in the market didn’t come through. The case above is just one of several where they waffled and declined when nothing changed from the trial to the application.
Bottom line. Fortunately we were able to place these cases elsewhere and get the insurance in force for the clients, except for the case above. Still working on that one.
December 15th, 2008
In my last post I hope I made a clear distinction between a life insurance agent who is qualified to handle cases that involve health issues, and those who really shouldn’t play with sharp objects. At the end I alluded to the definitive way to separate the two groups.
First let me broach the subject of bait and switch. Baiting, telling the client that they qualify for a rate that they don’t, is a way to get the application. Getting the application is a way to get anyone who told you the truth out of the picture. Let’s say I quote you $1200 a year for a term insurance policy. I’ve presented my quote based on the fact that I know you have type 2 diabetes that was diagnosed at age 51 and we reviewed your last set of labs and I know that your hbA1c was 6.4. Another agent quotes you the same policy for $800 a year. Most people will jump on the less expensive band wagon and won’t even talk to me again.
The switch is when the policy is approved. Generally, because a bait and switcher just goes with their favorite company (where they get the highest commission), the approved rate will come back even higher than what I quoted. The B&Ser will come up with some song and dance about why the rate changed and then, having just drug you through a 2-3 month application process, suggest that unless you want to start over and take your chances, this is really as good as it is likely to get.
I know you’re all sitting there saying that you wouldn’t fall for that, but the truth is that bait and switch is alive and well because most of you will accept the higher priced policy rather than start over.
You sound mean, but you’re not.
Which brings me to the magic bullet. How can you weed out the B&Ser right up front? How can you tell if they’re telling the truth or just low balling a quote to capture the application? The bullet is called a trial offer. They way trial offers work is that, for instance, I would send an email out anonymously to the underwriters from all the companies I represent. The email might go something like this:
Proposed insured born 3/14/53, 5′10, 175, non smoker. Diagnosed 4 years ago type 2 diabetes. Most recent a1c 6.4. No other risk factors. All other labs normal. Good family history. Takes 500mg Metformin daily. Looking for $500k term insurance.
Insurance underwriters respond, always with the caveat that any final offer is subject to an exam and a review of medical records. There offers, and these are actual insurance company responses, come back like this. “Tentative ok without a rating if fructosamine is normal”, “Very tentative Standard No Nicotine subject to app,exam,labs,EKG and APS (attending physician statement)”, “Our tentative quote is Standard (due to glucose)”. Once received, we know which company will ultimately provide the best approved offer.
So here is the way to ferret out the bait and switch agent. If you are shopping for insurance and you have health issues, and one quote comes back significantly lower, insist that they provide you with a copy of the trial offer from the company they are quoting. If they don’t have one, they don’t know what they are doing. If they try to tell you that they don’t need one or that companies don’t really honor trial offers, they don’t know what they’re doing. And ultimately, if you think there is some chance that they might come through, apply with them and also apply with an agent who can produce a trial offer, and do it concurrently. Simply let the agents know that it is your intention to accept the best offer after underwriting. That’s fair. Smart too.
Bottom line. The life insurance industry has it’s share of slime balls and their favorite sport is bait and switch. You now have the ultimate weapon for stopping them before they can get you to join their game. Do you want a low quote or an honest quote? Do you want the policy to be approved with no surprises? Do you want to deal with an honest life insurance agent? You decide the game you’re going to play.
May 28th, 2008
