life insurance agent

Experience gets done what lack of understanding can’t

This is, as promised, another in a series of posts that address the difference that the quality of a life insurance agent can make when you decide it’s time to move forward with fulfilling your family or business life insurance need. I know this borders on over-redundancy but the information that follows is an important consideration when looking for an agent.

An Experienced Life Insurance Agent Wins for You

There are about 400,000 life insurance agents in the country at any given time. 90% of new agents entering the business don’t make it to their first anniversary. 95% don’t make it to their fifth anniversary. New agents are lured into the business by the idea that there is big money to be made. There is very little in the way of training agents on how to do the best for their clients, but plenty of training available on how to close a sale. So, at any given point in time you have an overabundance of agents who focus on selling and not enough agents who focus on self education and serving. OK, off the soapbox and on to another case.

An Example of an Inexperienced Life Insurance Agent’s Results

I was recently contacted by a business owner who needed $2.5 million of term insurance for his half of a partnership buy/sell agreement. He applied through a local agent, a friend of the family. He, like so many, assumed that with the legalization of marijuana, his use wouldn’t be an issue with life insurance, especially so because he honestly only used it a few times a week as a sleep aid.

He was preferred plus in all aspects, so was quoted the best rate class. Protective Life had the best preferred plus rates, so that’s where the life insurance agent had him apply. The client mentioned the minimal cannabis use for sleep to his agent and was told it shouldn’t be a problem.

At his age, 51, the rate with Protective was $2,329/yr for a 10 year term. He completed the application and, being an honest guy, mentioned the cannabis use. After the exam and underwriting Protective offered their standard smoker rate at $18,339/yr. That’s nearly 8x the amount he was expecting to pay.

He wasn’t a smoker and never had been. In fact, he didn’t even smoke the pot, but used edibles. But, right out of Protective’s underwriting guidelines regarding cannabis use, if the agent had thought to look, it says: “Standard Tobacco is a best-case scenario; Outcome will vary based on age and frequency of usage”.

The client refused to accept the offer and the agent, likely well on his way to being one of the 95% mentioned above, suggested they use the same exam and go to Cincinnati Life. The client was busy running a business and assumed the agent had done his homework and there wouldn’t be repeat of the Protective bashing, so he signed the new application. They did gain ground, but only because Cincinnati Life’s standard smoker was lower than Protective. This time it was approved for $15,125.00 a year. Once again, underwriting guidelines tripped up the agent by stating: “Routinely test for marijuana on labs; NOTE – Even if the marijuana test is negative, will offer based on the answers provided on the exam regarding use”.

The agent pushed for the client to take the offer stating, “This, unfortunately, appears to be the industry stance”.

The client did an online search and found me. After telling me the story above, I shopped it the way I do all cases and got a tentative preferred non-smoking quote from a highly rated company. I looked at their underwriting guidelines just to make sure we wouldn’t accidentally fall down the same rabbit hole and their stance in underwriting regarding marijuana use is: ” Up to 1 x times per month – possible Preferred Plus Non Tobacco; Up to 2 x times per week or less – possible Preferred Non Tobacco; More than 2 x per week – possible Standard Non Tobacco; Daily – declined (in some cases, highly rated)”.

The Bottom Line

An experienced life insurance agent knows not to assume anything. I shop every case that has even the slightest wrinkle or twist, and always check guidelines to make sure I’m on solid ground. My client was approved at preferred non tobacco at a cost of $2872.00 a year.

I’m not saying to avoid local agents or agents who are friends of the family, but all agents should be should be quizzed about whether they checked with the company on a rate quoted. It’s their job.

If you have questions or have run into a problem with a life insurance agent who doesn’t seem to have a firm grasp on how to serve your best interests, call or email me directly. My name is Ed Hinerman. Let’s talk.