- 2,038
Actuaries have it all figured out. Carriers make money on it, just like any other product we sell. And just like any other product, it depends on whether the client wants it. No math required for valuation purposes.
Do You Add ADB
- Thread starter billyb
- Start date
- 913
Sorry bro the question at hand is not whether or not a client want's it. The question is whether or not idiots who push adr honestly inform their clients about the chance that it will pay out. Huge difference. Again, if the clients know the futility of collecting on ADR coverage and still moves forward, that's perfectly fine because it's on them (and they know the facts).
Think of it this way
We could EASILY show all FE clients term policies that offer much larger face amounts for much less premium compared to real FE policies. Tons of clients would jump all over this and think it's the best thing since sliced bread.
And it would still satisfy your three requirements:
- The actuaries have figured it out
- The insurance company makes money on it
- The client wants it
However
FE clients would only want the term coverage if they didn't know it was term. We would have to intentionally withhold pertinent information about what we were offering them (term coverage) in order for them to accept it. The moment we tell them it expires at 80, the game changes completely and so does their decision.
This would be an egregious violation of the ethics practices that we are sworn to uphold.
The right thing to do is tell clients how unlikely accidental death is. Not doing so, is damn low because you are just doing it for the commission.
- 15,041
Always ask yourself.
Knowing what I know, what would I do if I were in this person's situation?
Knowing what I know, what would I do if I were in this person's situation?
- 2,038
Why would you assume that? That's like saying other forms of insurance are worthless due to the probability of payoff. The premium reflects the risk.
- 913
First, your comment doesn't even make sense.
To be clear, I'm not assuming anything. This whole discussion centers around information disclosure. The guy in this thread says he offers ADR as an additional "value". However, he does not tell these clients how truly unlikely it is they will collect on this value. If he began doing this, almost nobody would buy the ADR once they learn the truth.
Whether you are selling UL, WL, term, ADR or whatever, it's our job to inform our clients what we know about the insurance we are proposing to sell them. There are pros and cons to all types of life insurance. The client needs to know this risks & rewards, so they have all the facts to assess whether or not what we are recommending is consistent with their objectives.
This is especially true when we know that a potential contract is like buying a lotto ticket hoping to win $25,000 (ADR).
You can't claim "the premium reflects the risk" and use that as logic to justify why we don't need to inform our clients the improbability of ADR.
Ok so now upselling a customer is unethical? Seriously man, you're waking zig ziglar up from his grave.
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Make sure om every one of your sales you let the customer know that the other solution is they can save the premium for x amount of years and then they can have x amount of money and no longer have a need for this plan and never have to pay a life insurance premium ever again. Ohhh ya and also let them know that even though we dont prefer it, we can send them out paper bills too, just in case they prefer that.
We need to make sure the customer knows everything right? Also, in 2008 1.1 million whole life insurance policies lapsed due to the struggling economy...dont forget to remind your customer that gas prices could increase and it can make it much harder for them to afford the policy and they can end up like the 1.1 million ppl in 08.
- 913
Zig is awesome, and upselling is great if the product you are selling has actual value.
When you decide to push something onto a client you know has virtually no value at all and you choose not to disclose pertinent information, that's extremely low. It's just like Lincoln Heritage agents who preach the FCGS value as a reason why their clients should spend 30%-100% more on their final expense insurance.
You are selling bottled air. Would zig sell bottled air? I very much doubt it. From his books and CDs, he strikes me as a man of honor.
I'm done with this conversation. If you or anyone else wants to push a product that you know has nearly 0 chance of ever paying off that's your choice. I prefer to be honest with everyone especially my clients.
I have never seen or heard of an agent reveling the odds of a base policy paying off, so way would it be different with AD? In fact, accidents are the fourth leading cause of death in the US... And, the younger the client, the more likely if they die within the next couple of years it will be accidental.
https://www.cdc.gov/nchs/fastats/leading-causes-of-death.htm
The product is rated based on the probability of the occurrence.. As to whether it was a good buy or not depends on what happens in the future.. Same with term and whole life.. Term is cheaper because of the probably of dieing during the term is less.. But if you are the beneficiary and the person dies early, you are going to be glad if the bought term or sad they brought WL for the premium they paid. ( remember the motivating factor for AL Williams?)
- 3,989
If I were to take your approach and explained it all so negatively then nobody would buy anyhing.
The odds that your going to keep this policy 25 yrs are so low Mr Prospect are you sure you want it?
The odds that your going to keep this policy 25 yrs are so low Mr Prospect are you sure you want it?
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