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Life Health > Life Insurance

Basic Black

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It is no secret that fashion in women’s clothing changes with predictable regularity. The “new look,” the sack, mini-skirts and designer jeans, all, at one time or another, made obsolete billions of dollars worth of clothing.

This has occurred with no great distress to the clothing industry, but the same cannot be said of those who ultimately had to pick up the tab for the new duds.

Each shift in the fashion parade evokes the query, “How do the designers get away with it?” Some theorize that it is the economic cycle, with hem lines rising as the economy falls and lowering in better times. I suppose short skirts provide some consolation for hard times if this theory is valid. A few male chauvinist types go so far as to attribute the whole process to the changeable nature of women–not a very popular stance in this day and age of political correctness.

But the fact still remains that it happens. Styles change, and no matter how controversial they are at first, they catch on, and entire wardrobes are abandoned.

I believe there is a fairly simple explanation for the whole process. Each year, there is a new crop of young women who are starting to build their very first wardrobes. They buy the new styles with complete indifference to prior fashion because they have no investment to protect in an existing wardrobe. The new is all that is available to them, so they adopt the new style, with others usually following along. In years to come they, too, will be hit by a wave they helped build.

There are always some who outsmart the system, however. By avoiding high fashion and sticking with classic lines and basic black adorned with varying accessories, they are able to be well groomed without the trauma associated with wardrobe obsolescence.

Well, what they heck has that got to do with selling insurance? More than might at first be suspected. Periodically, new fashions make their way into the insurance business. In the 54 years I have been associated with this great business, I have witnessed a parade of new ideas that have come and gone, some having very little to recall them besides dashed hopes.

Often, such trendy products arise from young, small companies that, like many young women, have nothing to lose by assaulting existing fashion. They have no large book of business to protect, no investment in a field force and, in many cases, no way to compete with the momentum of existing products and companies with established sales organizations. Their only real hope is with something new and attention getting.

The media, particularly so-called financial experts, can always be counted on to cooperate to the fullest. With their usual fixation on the “product de jour,” long-term results and existing products are pass?, just as the latest styles out of Paris erase the memories of last year’s wardrobes. Often, the real irony is that agents are not beaten by new products but rather by the noise and attention such products generate.

The purchase of life insurance is a long-term commitment and a serious matter that’s not entered into either lightly or with enthusiasm by most people. The objective of most flashy products is to somehow take the sting out of the purchase and thereby make it less objectionable. But how can you tell if it will endure or be just another passing fad?

In recent years, many of the new products making their way into the marketplace have one thing in common: In one way or another, they all shift much of the investment risk to the policyholder. To be sure, there are certain guarantees, but the risk to the policyholder still remains. This is an attractive feature as long as the economy behaves and investment values trend upward. But there is an old adage that holds, “The most important thing about money for future delivery is–will it be there? The second most important thing is–how much?” Problems arise when these two are reversed and results are disappointing.

With the current turmoil in the stock and real estate markets, the foregoing rule has become all too clear (and painful) to new retirees with 401k’s that have lost much of their value. Over time, these values may return, but that is of little comfort to the person who needs the income now to fund a retirement. There is nothing like the comfort of knowing it will be there when it is needed.

Like the savvy women who redecorate their basic black classic lines, agents who have watched this parade for many years prefer to enhance the classic lines of time-tested products. Perhaps this is the reason for the re-emergence of whole life and fixed annuities as increasingly the product of choice. They may not be flashy, but they do endure. They are always there when needed.


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