“We want to let everyone know that life insurance is like that guy on the TV selling his little oven thingy…you just set it and forget it!”
That was the utterance of a Friday morning sales meeting I once labored through when I was a relatively new agent at one of the big mutuals. The attempt was to equip the newest agents with the confidence to convince their family and friends (i.e. their project 200) that this life insurance stuff was pretty cool.
I’m the only one who was in the room who still happens to be in the business, and I’ve never channeled Ron Popeil when it came to explaining life insurance, so I’m not all that sure it was a successful tactic, but I digress.
Sadly, this also wasn’t only time I’ve witnessed this allusion in an attempt to persuade an unwitting prospect to buy life insurance.
It appears that whole life insurance is the product most agents think should be sold under the Ronco® brand. This comes largely from the fact that whole life insurance can be designed in a way that asks simply for a premium commitment and, so long as that premium is paid on time by the policyholder, the policy will not lapse.
And on top of that, the design is so simple that pretty much any agent with any skill level can get this one mostly right. Now, if you ask an agent why this is possible (foundationally speaking) you’ll likely get a lot of stammering and perhaps an explanation that goes something like:
“Well, you place money into the policy, magic happens, and everything is all right.”
And unless you’re less than eight years old—or never came to the understanding that Santa Clause doesn’t exist—this explanation shouldn’t really pass as acceptable. Because, you see, in real life there is no “magic”…just magicians.
Operating under the set it and forget it approach can burn you worse than those Ronco® rotisserie cookers themselves. In fact, any life insurance policy that is designed in a way that could potentially just let you set it and forget it, is likely to cost you big money simply in the cash you lose by its poor performance.
Not only that, but once you plan to actually use your money, assuming that auto-pilot is on and ensuring that you need not worry about what is going on with the policy is a bad idea. We specialize in the business of designing, implementing, and servicing policies that are purchased primarily for cash purposes and I can speak from substantial experience when I say that policy management is very helpful (i.e. if the agent/broker plans to peace out after the policy has been sold, you might be in trouble).
That’s not to say that the product has faults. Any financial product requires management, and most all other financial products (accepts for maybe CD’s) require a degree of maintenance to ensure optimal benefit. In fact, life insurance probably requires less than most.
But if you choose to ignore these things, or you work with an agent/broker who chooses to ignore these things, you may be in for a bad time.
Brandon launched the Insurance Pro Blog in July of 2011 as a project to de-mystify the life insurance industry. Brandon was born in Northern New England, and he currently calls VT home. He attended Syracuse University and graduated with a triple major in Economics, Public Administration, and Political Science.
IPB 107: When Interest Rates Go Up, Bonds Go Down. What Does It Mean for my Life Insurance?
IPB 105: Is Indexed Universal Life Insurance Worth it even if the Interest Rate Assumptions are Wrong?
IPB 104: You Can Just Buy Bonds: One of the Reasons Not to Buy Whole Life Insurance
IPB 103: Why Does the Life Insurance Industry Suck at Marketing?