Okay, folks, you might think this is a very dumb question, but here goes:
How would one buy a life insurance policy if they did not really know what is available. To explain what I mean, let me compare it to buying a car.
When someone starts shopping for a car, they already have a general idea of what they want. They want a pick-up, a sedan, a big family car like a mini-van or station wagon, an SUV. Alright their next step might be to look at prices in the newspaper to see what they can afford. Lastly they may go to a showroom just to pick up brochures. In any event, the point I am making is: a) they have an idea, b) they do a bit of research, and c) they go in to a dealer to buy.
When buying LI, how would one approach this. Some poor agent does not want to spend a ton of time educating someone on all the policies and riders out there.
Yet, one goes to the LI websites, all the policies are described only in general terms. You do not really know the nuts and bolts of how to get a loan or how interest is computed. Their DI rider is only spoken about in the vaguest of terms, "if you are disabbled as defined in the rider. . . "
I did a google search on LI riders. There were just so many. Far more than are discussed on this board.
(1) So how do you start preliminary research so you are conversant with the producer. (2) Once you meet the producer, what do you tell him.
Given the variety of policies out there, do you have to narrow it down for the agent telling him you are mostly interested in the DB, in the CV, in deferring taxes, in tax free loans ? Let's face it, LI is about alot of things, and the DB is almost an incidental feature, at least for some insureds.
You're right. I don't have the time, patience or desire to educate someone on the intricacies of life insurance. Then have them go online, searching for the cheapest policy they can find and cut me out. Just as bad, they decide on a term policy with a $20/month premium since that is all they can afford and I have to wait 4 months to get paid.
Or, I could just say "what do you want" and take their order.
Okay, folks, you might think this is a very dumb question, but here goes:
How would one buy a life insurance policy if they did not really know what is available. To explain what I mean, let me compare it to buying a car.
When someone starts shopping for a car, they already have a general idea of what they want. They want a pick-up, a sedan, a big family car like a mini-van or station wagon, an SUV. Alright their next step might be to look at prices in the newspaper to see what they can afford. Lastly they may go to a showroom just to pick up brochures. In any event, the point I am making is: a) they have an idea, b) they do a bit of research, and c) they go in to a dealer to buy.
When buying LI, how would one approach this. Some poor agent does not want to spend a ton of time educating someone on all the policies and riders out there.
Yet, one goes to the LI websites, all the policies are described only in general terms. You do not really know the nuts and bolts of how to get a loan or how interest is computed. Their DI rider is only spoken about in the vaguest of terms, "if you are disabbled as defined in the rider. . . "
I did a google search on LI riders. There were just so many. Far more than are discussed on this board.
(1) So how do you start preliminary research so you are conversant with the producer. (2) Once you meet the producer, what do you tell him.
Given the variety of policies out there, do you have to narrow it down for the agent telling him you are mostly interested in the DB, in the CV, in deferring taxes, in tax free loans ? Let's face it, LI is about alot of things, and the DB is almost an incidental feature, at least for some insureds.
Thanks
Why not ask the agent the same questions as you would for any other financial product, and that excludes disability and health insurance ?
If I had to ballpark it, slightly more than half of my lead sources are uncertain what type of life insurance their looking for.
That gives me an opportunity to excel, and I give a term vs. WL vs. UL vs. VUL vs. EIUL powerpoint presentation (hardcopy, not projector).
Before I do an in-person presentation, I try to get a good feel for what range of affordability they are comfortable with, and I don't rule out asking them how cost efficient their qualified plans are.
If I meet with someone in person, I usually bring 3 options: Term, Term with ROP, and a permanent policy.
I never recommend WL, and I no longer recommend VUL, because it requires too much management by the consumer and the agent. Their are plenty of lawsuits still in the works by consumers who had amnesia from the last recession and play the blame game if they had an outstanding loan.
The bottome line -
If you are at all considering a permanent policy, you need to look at the same factors as you do for investments. 99% of the agents out there do NOT do this.
Always start with A NO LAPSE GUARANTEE TO AGE 100, and it better not cost you a lot if anything at all to get that guarantee.
Truth is, even though you bought a VUL for your children, you need to treat it the same as your investments because it's your money.
Life insurance is the only financial product that's guaranteed to return to your beneficiaries more than what you put in today, but also gives you the greatest liklehood of a pile of cash down the road when you don't need LI, or both.
Initial Premium: $(763.56) Scheduled Premium: $(763.56 per year
payable annually)
Minimum Initial No-Lapse Guarantee to
Premium: $(41.6) per month age 70 premium: $(63.63) per month
Minimum Initial No-Lapse Guarantee
Premium Period: 5 years to age 100 premium: $(111.49) per month
Coverage will expire when the policy values are insufficient to pay the
Charges assessed on a monthly anniversary. Because the policy values may be
Based on the investment results of the subaccounts, the payment of scheduled
Premiums or unscheduled premiums in any amount or frequency will not guarantee
That the policy will remain in force unless the premiums needed to keep the
No-Lapse Guarantee to age 70 or the No-Lapse Guarantee to age 100 in effect
Have been paid.
WHAT IS THE NO-LAPSE GUARANTEE?
During the no-lapse guarantee period, as shown under Policy Data, this
Policy will not terminate even if the cash surrender value is
insufficient to cover the monthly deduction on a monthly date if (a) -
(b) - (c) equals or exceeds (d) where:
(a) is the total of all premiums paid;
(b) is any partial surrenders;
(c) is any indebtedness;
(d) is the sum of the minimum monthly premiums required to keep the
No-lapse guarantee in effect since the policy date.
The initial minimum monthly premium is shown under Policy Data.
If, during the no-lapse guarantee period the specified amount is
increased or decreased, or, riders are added, changed, or terminated, a
new minimum monthly premium will be established for the remainder of the
No-lapse guarantee period.
For any month in which the monthly deduction is being paid by a Waiver
of Monthly Deduction Rider, if applicable and attached to this policy,
The minimum monthly premium for that month will be zero.
If on a monthly date, sufficient premiums have not been paid to maintain
The no-lapse guarantee, the no-lapse guarantee period will be
Terminated.
The no-lapse guarantee period may be reinstated within 2 years of its
termination if the policy is in force. The amount needed to reinstate
the no- lapse guarantee period is an amount equal to (a) + (b) + (c) -
(d) where:
(a) is the sum of minimum monthly premiums to the date of
reinstatement assuming the no- lapse guarantee was always in
Effect since the policy date;
(b) is any partial surrenders that have been taken to the date of
Reinstatement;
(c) is any indebtedness on the date of reinstatement;
(d) is the total of all premiums paid to the date of reinstatement.
If they are "shopping", I don't go anywhere near them. I agree with Somarco. Why should I be the one to educate them, so that they can go online and get it through someone else?
I don't waste time with "tire kickers".
There is also no need to even discuss all the riders out there, since 99% of them will have absolutely nothing to do with your client/prospect. By drilling down and finding out why they want it, who they want it for, and for how long they wish to hold on to it, you are better able to assist them.
You may also be better served finding out what other "investments" or "financial" obligations they have, to get a clearer picture of liquidity and future growth. Alot goes into it. Don't fall into the trap of being a "quote machine" for your clients or prospects.
If all they want is a number, then send them to the internet and move on.
You don't refer a someone to a physician, and say, "He/She's the cheapest." No. You say, "He/She's the best." We are our own worst enemy, ladies and gents. Buying Life Insurance is NOT like buying a car. Buying a car is a selfish act - you want to be seen in a sleek, cool, fully featured automobile. Buying Life Insurance is an unselfish act - you want to make sure that your family has as little to worry about as possible, in a very traumatic time in their lives.
Ask any widow/widower if they are glad that their spouse got the cheapest policy? Or if they are glad they got a policy that was sufficient for their needs?
But, as an industry, we keep sending out postcards with the words "CHEAPEST RATES IN TOWN" on it, and are surprised that the buying public has become price shoppers.
Look at the Cellular industry. They don't chat about being the cheapest. The concentrate on who can provide you the most minutes, the coolest download ringtones, the best internet graphics. They know if they can list all those "value added" options, then price becomes secondary. In other words, they find out how to be the "best" provider for your needs.
That should be our line of thinking.
Do you think if you go to one cell phone provider, and tell them that their competition is cheaper, they will try to cut their price? NO. They will list all that they offer, and justify that with their cost. You, at that point, will either make the decision based on how much you want to write the check for each month, or on the services you receive.
Also keep this in mind. The client/prospect who does not want to share information with you, and who makes you do all the work, will probably not be a client for long, and/or will not have any respect for you, or what you do. This does not mean you shouldn't service the client. It means that, if you are trying to get basic information from them, and they are not cooperating, chances are they've got something to hide.
I happen to like people who do research on the topic. However, I won't work with someone who will "Analyze to Paralyze".
I sat down with a couple last year, and, at our first meeting, the wife had a 52-page spreadsheet with DB's APR's, and COLA's. Needless to say, this didn't work out very well for her. She was too focused on her spreadsheet, than on finding the best product for her needs (which, by the way, she would never articulate to me). To this day, she is still "thinking about it", which is fine with me. I've moved on.
The funny thing is, she wants me to help her with LTC. Anybody want to guess what my response to her was, and how much time I've spent on it?
Okay, folks, you might think this is a very dumb question, but here goes:
How would one buy a life insurance policy if they did not really know what is available. To explain what I mean, let me compare it to buying a car.
When someone starts shopping for a car, they already have a general idea of what they want. They want a pick-up, a sedan, a big family car like a mini-van or station wagon, an SUV. Alright their next step might be to look at prices in the newspaper to see what they can afford. Lastly they may go to a showroom just to pick up brochures. In any event, the point I am making is: a) they have an idea, b) they do a bit of research, and c) they go in to a dealer to buy.
When buying LI, how would one approach this. Some poor agent does not want to spend a ton of time educating someone on all the policies and riders out there.
Yet, one goes to the LI websites, all the policies are described only in general terms. You do not really know the nuts and bolts of how to get a loan or how interest is computed. Their DI rider is only spoken about in the vaguest of terms, "if you are disabbled as defined in the rider. . . "
I did a google search on LI riders. There were just so many. Far more than are discussed on this board.
(1) So how do you start preliminary research so you are conversant with the producer. (2) Once you meet the producer, what do you tell him.
Given the variety of policies out there, do you have to narrow it down for the agent telling him you are mostly interested in the DB, in the CV, in deferring taxes, in tax free loans ? Let's face it, LI is about alot of things, and the DB is almost an incidental feature, at least for some insureds.
Thanks
I thought about this nine ways to sunday today and have come to the conclusion that the old saying is true, "People don't buy Life Insurance".
I thought about this nine ways to sunday today and have come to the conclusion that the old saying is true, "People don't buy Life Insurance".
James -- My brain must be tired today. What does that mean? My old brain is missing the old saying...
Well it means that people in general don't go out and actively buy insurance like say a car. Most buy insurance after we present them with sales presentation, so if the question is "How to sell" I understand but the question is "How to buy" really confused me because people such as myself before I got into insurance don't go out and actively seek to buy insurance.
Or to put it simply, Insurance is not a Commodity, and can not be sold like a Commodity no matter who says so.
OK, maybe the word "shopping" to a group in sales was the wrong choice of word. I meant how does one buy insurance.
BACKGROUND
In the world of personal finance, there is a ton of information on mutual funds, stocks, bonds, IRA's. A long time ago, I emmersed myself in the study of stocks, bonds, mutual funds, asset allocation, IRA's, etc.
I really have become quite competent and well versed and could go toe to toe with any financial advisor on mutual fund selection, asset allocation, and diversification.
INTEREST IN INSURANCE
My interest in insurance came about when I was looking for something I could use as a vehicle to save money for my children. It started out as a 10 pay WL policy. Well now it is paid.
Since I cannot get them an IRA, I came to the conclusion that a VUL would be nice for them.
Since finding this board, I have come to the realization that LI is an integral part of one's financial picture (I guess the word investment can't be used to represent insurance). Nevertheless, I would argue with anyone that LI is integral to their financial well-being. Further, the uses and versatility of the product make it a financial Swiss Army knife
MY HOPES
I desire to become conversant in the attributes, uses, and flexibility of permanent insurance so I can set them up with a nice policy when they are older (many companies will not underwrite UL's for pre-teens). So, I figure by the time they are 16 or 17, I should know enough to know a good policy from a less desirable policy. Additionally, just as I intend to teach them about mutual funds and investing, so do I intend to teach them about insurance.
Don't get the idea I am made of money. I am talking modest amounts. Perhaps just starting them out with $100,000 policies for less than $400 a year. So obviously, the agent is not going to be predisposed to spending a whole lot of time with me answering endless questions.
I do, however, want to start them out because:
1. At such a young age the COI is dirt cheap.
2. At such a young age they will have many years of compunding on the earnings.
MY QUESTION
My intent is to be as efficient as possible with the agent. Perhaps telling him I want the following attributes:
1. Insured to age 120.
2. Minimum guaranteed earnings of X%
3. Full participation with the tracking index
4. Loans for which the interest is paid to myself
5. Minimum surrrender fees.
Now, he might say he can only get me 3 out of 4 above. Then I might want to ask him which is his best WL policy and how that compares to his best UL.
MY PURPOSE
- Do as much research so I can ask intelligent pointed questions.
- Not waste his time.
No, I do not want to analyze this to death (someone mentioned paralysis by analysis).
Lastly, if I go to this independent, might there not be companies out there that only sell through captives (Thrivent?) which might be better but which I would never know about.
CONCLUSION
I am very cognizant of an agent's time. (And believe me, talking to multiple agents would not be my idea of fun. I would feel bad having to tell someone no thanks).
I want to go in, have him know that I know what I am talking about so he can save time on the preliminary explanations and get to the heart of the matter. If I only get two hours with him, I want it spent talking about substance, not introductory basic material.
Lastly, personal finance, reading about it and discussing it is really a hobby with me. I enjoy it find and find it quite pleasant.
Wow! I wish I could have been there, when you proposed to your wife. How romantic THAT must have been.
All kidding aside. It sounds like you know what you want, financially. However, Life Insurance is an emotional product, as well.
If I were your agent, and you had done that much homework, I would welcome that. That being said, once I presented my top two contenders to you, if you gave me the old, "Let me talk it over with my wife", or "I'll have to think about it," then I'd know that you gathered just enough informtion to SOUND well informed, and that you are going to analyze this to death.
As your life changes, so does the life insurance product you need. It's okay for someone to own more than one life insurance policy throughout their life. I can appreciate what you are doing, and your reason for doing it.
Good luck to you. I have to admit, I am just as confused with your last post, as I was with your first post.
I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.
My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.
Wow! I wish I could have been there, when you proposed to your wife. How romantic THAT must have been.
Out of respect to Melmunch3, and to maintain the decorum of the board, I will not respond to you except via private e-mail.
Pease feel free to e-mail me at marcircus . com (no spaces - do not wish to create a link) if you wish to make further personal comments. I am going to delete this address in about 24 hours so as to avoid my e-mail becomming clogged with spam.
I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.
My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.
Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!
James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.
In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)
I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.
My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.
Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!
James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.
In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)
LOL, you ought to see me with a fruit stand! Can't wait, told my son that he could do that this summer, it should be fun! I really dislike this house I am currently residing in but it has a great street for such things.
I would imagine if you want to teach your children you look towards teaching them capital investments and real investing. May that be a Lemonade Stand or Cutting Grass for the neighbors. Of course you can elevate this as they age, say selling some form of product for profit. This would of course involve the initial investment and then planning out a strategy to get the end results.
My kid is nine and has a good time doing things such as a Lemonade Stand. Night before I made him and his friend sit down and calculate what the cost would be, figure a good stand presentation and then scheldule their day. Turns out they made about 70 bucks the first day, they were simply walking on a cloud at the end of the day! Of course I match a portion of their profits so they could spend some of the bootie! This was the first leg on there plan trip to the Grand Canyon, I'm forcing them to save their own spending money.
Dang James, I would hire you if you could teach me how to make $70.00 on a lemonade stand!
James, what I mean about teaching: I do not think anyone would disagree that a parent should educate their children about saving, investing, IRA's, 401(k)'s. The popular press is full of stock and mutual fund information. I contend that LI is just as vital an element to one's financial well being as stocks, bonds, mutual funds, and IRA's. Accordingly, they should know about it. Further, they should be aware that when buying LI, youth is on their side.
In fact, if a child grew up to only make say $10.00 an hour. I feel so strongly about permanent LI that I think it might even be bettr than an IRA because of the flexibility and DB. This ofcourse implies the person could only contribute say around $400 or $500 a year (which at $10.00/hr I think he might even be over-extending themselves.)
What is really good about WL or a good UL within ones portfolio is that it frees up your risk ability within your portfolio. In other words it is the ultimate hedge fund (such as equity management) that an individual can employ on their own. Most people in the market should understand the Hedge Fund and understand what is behind that, yet on the other hand they want to talk about the risk of the "Equity Management" usage of a WL or UL Life Contract? Amazing!
Yet though, all of this is mute for the most part if we don't teach our children how to create Capital via Entrepreneurship. Hell guy, I meet people that can't balance a check book but can make money, so as long as they have the ability that most don't, everything else is a piece of cake.
How To Buy A Life Policy
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