Over my career in life insurance I’ve run across some really sleazy things done by life insurance agents that in no way helped the client but definitely made the agent a great payday. Our industry has some checks and balances in place to try to hold down unscrupulous replacement practices, but the truth is if the agent is crooked enough to consider taking advantage of a customer, they are generally crooked enough to find a way around the checks and balances.

I got a call from an older gentleman over the weekend who had a large whole life policy in force and had been paying into the policy since he was 42. The policy is with a dividend paying company so his policy has grown through premiums and dividends that have gone into paid up additions. At this point the guaranteed cash value is paying his premiums and even though he is no longer paying into the policy at age 68, the $440,000 in cash value he has is guaranteed to grow to $631,000 in the next 10 years. His current death benefit of almost $1.2 million is guaranteed to grow to $1.5 million during that period. By age 88 the guaranteed cash value is $780,000 and the death benefit will be $2,149,000……..guaranteed. Wait a minute. I forgot to add in the guaranteed cash values from paid up additions, so you can more than double both of those cash value guarantees. That would be over a million in 10 years and nearing $2 million in 20 years.

Enter an absolute scum ball of a life insurance agent that offers to review his policy since he hasn’t been in touch with the agent in quite a while. He studies the in force illustration for a few days and then comes back to this gentleman with a better idea from MetLife. Now I’ve beat up on MetLife plenty lately and I just want to start by saying that I doubt that even MetLife would approve of what this agent was recommending. So, even though MetLife has this dog of a product they can’t necessarily reign in dogs like this agent. So follow this with me.

This agent suggested doing a 1035 rollover of the cash value into a Metlife variable universal life policy. So, just to restate what is proposed, this agent wants him to bag the policy described above and dump that $440,000 in to a policy that has absolutely no guarantees. Here is the wording from the illustration he provided. “THE VALUES SHOWN ABOVE ARE NOT GUARANTEED. The values are based on a hypothetical rate of return and a weightedaverage of the advisory fees and operating expenses of each of the investment divisions underlying the policy. The weighting is based on the allocation of assets among the corresponding investment divisions of MetLife Investors USA Variable Life Account A, a separate account of our affiliate MetLife Investors USA Insurance Company, as of December 31, 2011. The weighted average reflects fee waivers and expense reimbursement arrangements that may be voluntary and of limited duration. The weighted average for expenses used in this illustration is 0.69%. The values are also based on either current policy charges, or guaranteed (maximum) policy charges, as indicated above the columns. Actual policy values will be more or less favorable than those shown”.

Well if that doesn’t just give you a warm fuzzy feeling, I don’t know what will. The values that are not guaranteed are projected at an 8% annual growth and using current expense charges. Just so they don’t leave you short, they project that growth for the next 57 years straight in their illustration. At age 125, bless his heart, he’ll have $1,818,000 in cash value and $1,836,000 in death benefit. But heck, the market could do better than 8% a year over the next 57 years. So move to the next column in the MetLife illustration. They still project paying 8% annually but instead of their current charges the project based on the charges they’ll guarantee. That’s a reasonable thing to look at because charges can change. Based on their guaranteed charges the policy will lapse in year 12 with no cash value or death benefit. But wait. There’s another column just in case you don’t feel  down enough already. This column shows what happens if they don’t do 8% a year and have to charge their guaranteed maximum charges. The policy lapses in year 8 with no cash value or death benefit.

This agent wants this client to take a guaranteed absolutely beautiful financial tool and risk it all in something that will never do as well and in all likelihood will complete fall apart leaving him with nothing certainly before year 15. Why would an agent do that? Why would someone screw another person out of perfectly wonderful guaranteed retirement? Either the agent is completely stupid or he has somehow been influenced by the $133,000 commission if he can talk the client into switching. I think the agent is stupid, but not so stupid that he doesn’t understand that the only one benefiting from this will be him.

Bottom line. This agent should be fired, shot, have his licenses taken away, shot again and then deported to the middle of the Atlantic Ocean and shot again. It is so tempting to put this New York agent’s name who sells MetLife in this post. If an agent can’t improve someone’s situation they should just say so and wish the person all the best. If you have any questions or feel like someone is trying to sell or has sold you something that is not in your best interest, call or email me directly. My name is Ed Hinerman. Let’s talk.

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