I have often talked about the reality of buying life insurance through your local auto and homeowner’s agent, that reality being a high cost at best and absurdly conservative underwriting which doesn’t favor anyone with any kind of health issue.

Most of the big boys in auto and homeowner’s insurance also offer life insurance, but one look at their rates will tell you that they aren’t competing for that business. To them it’s just there so they can be an all purpose agency. Now don’t get me wrong. If Farmers, Farm Bureau, Allstate and State Farm could offer you competitive rates on all of their products, including life insurance, one stop shopping might make some sense.

Let me use a recent client as an example. A business owner who need to have $1.5 million worth of insurance in force. His only health issue was that he had a heart valve replacement at age 21 due to a congenital valve defect. They waited until he was 21, when his heart reached full size, to do the repair. The repair had been performing perfectly for 20+ years.

He went to his local Farm Bureau agent and was able to secure the $1.5 million of 20 year term insurance for a little over $12,000 annually. I shopped the case and we just placed it with West Coast Life for almost exactly 1/2 as much. To me the difference is a combination of a rate that is too high to start with combined with terrible underwriting.

The problem in the larger picture is that millions of people trust their local agent to have their best interests at heart when they make recommendations. And those agents that are captive with the companies I mentioned above don’t have a choice. They have to write the business through the company they work for, unlike an independent agent. But very few of them will tell their trusting client that there are better, much better deals to be had. And, unless they are completely ignorant of the industry they work in, they know the better deals are out there.

Bottom line. Trust is earned and it is earned so we can continue to serve our customers. When you bilk a trusting client for $6,000 you deserve to lose the business and the trust. Oh, by the way. All of us in the life insurance business have to complete continuing education requirements in ethics. It appears there are plenty who take the credits and throw out the knowledge.