After being beat up yesterday by a final expense life insurance agent that didn’t like my opinion of final expense insurance companies, I’m feeling the need to vent.
Folks, this is all about life insurance customer service, where the customer comes first and if the agent can’t do the very best thing possible for a client, well, they should be honest about that and refer them to someone who can help them. If they are too poor or greedy to refer the client they should at least look for help from someone who can do the job correctly.
So, my list consists of the ways that clients are misled or poorly served because of an agents philosophies, associations or ignorance.
1. Captive agents. Captive agents by contract can only sell for one company. Even those captive agents that cheat on that and have a few companies on the side they can go to for tough cases, only do it if they are going to lose a sale. In other words, they are OK with you paying more than you need to with their captor company as long as you get approved and can afford it.
2. Final expense agents. It’s almost the same as captive agents except they can represent more than one company. But, they limit themselves to only a few products which are generally grossly overpriced because their advertising is out to make you believe that not taking an exam is good for you. Anytime you don’t have to take an exam the company has to raise the price to compensate for what they don’t know.
3. Agents that want you to believe life insurance cash value is a good thing. Let’s just get real. Cash value doesn’t magically appear. It comes from inflated premiums. Cash value doesn’t add to the death benefit unless you use it to buy additional insurance with inflated premiums. It isn’t added to the death benefit when you die and if you’ve borrowed any of it and haven’t paid it back, it’s subtracted from the death benefit.
4. Agents that tell you that you are not insurable just because you got declined on an application with them. Almost all of my clients have been highly rated for some impaired risk or declined before they come to me and our success rate in getting affordable insurance for them is very high. It’s almost like these agents don’t want anyone to have the business if they can’t figure it out so they tell clients to give up.
5. Agents who steer business to a particular company because they pay a higher commission. I don’t have a problem with that if the customer pays the same amount with both companies, but way too often agents will just not mention that best rate available to you because the company pays 10% less than the company they place your business with.
6. Large agencies who steer business to particular companies for compensation purposes. Most of the online mega agencies have contracts with companies that pay a large year end bonus if they sell a certain amount of life insurance. These “bonuses” can be huge. It is not unusual for an agency to get a 40% bonus if they sell enough of one company. Where’s their incentive to put their customer first?
7 Agents who use bait and switch tactics. It is a fact that most customers will go with the lowest quote they find even if they have health issues and preferred plus rates seem a little too good to be true. It is a fact that when the policy is approved at a higher rate that clients seldom want to tell the agent to shove it and start over. This practice is common and also illegal, but very hard to prove. The agent can always say they really thought they had quoted it correctly.
8. Agents who don’t shop cases to multiple companies. With the high turnover in the underwriting section of our industry over the past five years, no one can know for sure what a company will quote without asking. And it is a fact that an application that comes in with a trial quote is more likely to be approved at the rate quoted than an application that is just submitted with no homework.
9. Agents that believe in “closing the deal”. I passionately dislike someone who pushes to get me to move ahead with a purchase. Agents are constantly bombarded with opportunities to learn to close the deal before someone is truly ready. I work with clients a lot who have left the service of another agent behind because they were being pushed faster than they were comfortable with or were being steered toward a product that they didn’t like.
10. Agents who don’t think your budget is important. If you spend more for life insurance that you can comfortably budget, it’s going to lapse at some point and the only one that will have gained from the whole deal is the agent.
Bottom line. The truth is the customer is not always right, but they are still the client and they deserve to be treated honestly and ethically, even if it means the agent doesn’t make any money.
I enjoy reading your articles, and, as an independent agent in the senior market, I have the same philosophy as you regarding the high cost of a typical final expense policy, since no exam is required.
I would like your recommendations on which companies to work with for seniors in good health who can qualify for a regular smaller whole life policy.
I have found that some companies do not offer policies less than $50,000, and perhaps a client may only want a policy for $20-30,000.
Do you have any companies you could recommend that do business in Florida?