In the past month I had two prospects come to me asking me to take a look an insurance product they had purchased. The first one was actually a couple who wanted an annuity that would get them a good return for 10 years. Instead, they were sold two annuities that had 16-year surrender charges, putting this couple in their 80s before being able to access all their money.
The second was a lady now in her mid-60s who had bought a 20-year term life insurance policy in her late 50s. She had told the person who sold it to her that she wanted it for the rest of her life so that she could leave something for her kids. She was under the impression that is what he had sold her, but she was talking to one of her children and they looked at it and told her to talk to someone to make sure.
The problem with both these situations is you really can’t help them without them losing something. The first couple had huge surrender charges because they had the policies only for a year. The lady with the life insurance policy was on a fixed income at this point in her life and had 10 years left to the end of the term. Any permanent plan would have cost more and given her less death benefit.
The point to all of this is insurance in the last 10 years, even 20 years has changed. Look at the fixed indexed annuity, long-term health insurance products, among others. Insurance has given us assurance that no matter what stage of life we are in we have guarantees that achieve short- and long-term goals. The problem is insurance still has this stigma of a used-car salesman. The two stories that I told are the reason people have this feeling about insurance and the people who sell it.
As an advisor and someone who deals with insurance it is hard to see people who want to use insurance to achieve financial security for them and their family. Rather, they end up being “sold” by someone who has a cookie-cutter policy that’s easy for the salesperson. We should be changing from salesman to problem-solver. I’m not looking to sell them, I want to understand what they want to achieve and then I want to help solve the problem even if it’s not easy or not at all beneficial to me. It needs to be the right fit for them no matter the cost to me.
This is the only way as an industry that we can move away from the bad taste that the salesmen have put in people’s mouths. As an industry, insurance is not only one of the best, it’s one of the few industries that can truly guarantee value. As someone in the insurance field we need to know how these policies can work. As in the case of the lady with the term life insurance, maybe the salesperson didn’t know that it wasn’t permanent. The problem is that no matter whether he knew or not he’s not only hurting his name, but putting another black mark on the insurance industry as being more interested in selling than solving. Insurance has changed, but the salesman mentality still follows us.