It’s difficult for consumers to know if they’re being ripped off when it comes to life insurance. Price alone doesn’t tell the whole story because many products are cheap, but they have terrible coverage. Without much product knowledge, consumers will rely too much on price to make a buying decision, which quite often leads to a bad decision. At Houston Life Insurance Plans, we try our best to educate consumers with product knowledge so they make the best buying decision possible. Try out our blog page to get the product knowledge you need.
To get the best insurance advice, you should work with an independent agent that has experience. Experience is important because new agents don’t know the market very well. A new agent might think that a particular product is well priced, but an experienced agent may know of a better priced product. New agents may be biased in the products they recommend because they lack the experience working with different products. Finally, some agents are contractually obligated to sell insurance with only one company (called captive agents). Those agents are obviously biased in their recommendations. Not only that, but captive agents quite often sell products that are not competitively priced. It’s important to work with an experienced, non-captive agent to get unbiased advice, which is exactly the type of agent you get at Houston Life Insurance Plans.
Guaranteed issue life insurance is also known as guaranteed acceptance life insurance. This type of plan doesn’t provide full coverage until a two year waiting period expires. Many guaranteed issue plans are sold directly to consumers without an agent. Insurance companies that sell direct to consumers are financially incentivized to sell as many of these policies as possible. Insurance agents, on the other hand, have a disincentive to sell these policies. Agents take a drastic pay cut on guaranteed issue plans. This means that agents fight to get their clients a better policy because the commission is better. Agents should do the right thing because of ethics, but its nice to know that a financial incentive also causes them to do good.
People assume that serious health events such as cancer and heart attacks will disqualify them from everything other than guaranteed issue. An agent may be able to challenge that assumption, but if people buy direct from the insurance company without talking to an agent, that assumption will go unchallenged. In reality, that assumption is often false. Many serious health events become irrelevant for simplified issue whole life once two years has passed.
Learn what criteria is not important when searching for the right insurance agent.
As an insurance agent, I feel a sense of duty to combat misinformation in my field of study. I would say at least 90% of life insurance articles on the internet are oversimplified at best, and misinformation at worst. So I was pleasantly surprised when I found a good article. Most points I agree with, but there are some minor points that I don’t agree with.
The author spends some time letting people know how to check the credentials of an insurance agent. Checking credentials isn’t what I call normal behavior. For instance, I don’t ask real estate agents to show me their license. Likewise, I don’t ask doctors for their medical license. However, the paranoid individual is always welcome to check. I believe every state’s department of insurance has their own website providing agent license information and the companies an agent represents (here is the Texas website for agent credentials). Another reason for not worrying about an agent’s credentials is that every agent goes through background checks for every company they represent. If an agent has anything more than a minor traffic violation, that agent could miss the opportunity to write business for an insurance company. Insurance companies also don’t like agents with bad credit, but that has more to do with an agent’s ability to repay unearned commission.
The author mentions time pressure as a red flag. There are some good reasons why agents put time pressure on potential clients. One reason has to do with the old saying, “Time is money.” Some agents have to make a two hour drive to a potential client’s house (that’s a four hour round trip). Asking an agent to make a second trip isn’t being respectful of the agent’s time. Another reason for the time pressure is that some clients are chronic procrastinators. Many clients that I see have gone 60 or 70 years of their life without buying life insurance. They have successfully found ways to rationalize not getting insurance for all those years. Allowing a client like that to find more ways of delaying an insurance purchase is unethical. The agent has an ethical duty to push a little in order to get clients to do what is in their best interest. Medical doctors put the same pressure on their patients. However, if an agent is routinely using high pressure tactics, that usually means the agent is doing a poor job educating the client. The need for high pressure tactics seems to disappear when a client is properly educated. High pressure tactics also come with buyer’s remorse, which isn’t good for the client or the agent.
New Year’s resolutions are often short lived because they require continuous effort. That fitness goal might last for a couple months until some excuse is made for skipping an exercise. Then the floodgates of excuses opens up and the goal is shattered. Luckily for life insurance, no continuous effort is required. Many life insurance policies don’t require an exam, so you’re done with the application process after the agent leaves your home. There are some items to take care of after a policy is issued, but its not a big ordeal. Who knows? Maybe your success with getting life insurance will act as a springboard for accomplishing more difficult goals. You’ll also be one of the few people who can brag about fulfilling your New Year’s resolution. If you start it after January it no longer counts as a New Year’s resolution. So the time is now to do it. I am always available if you need help figuring out the best Houston life insurance plan. Go to my contact page for ways to reach me.
Finding the most affordable whole life insurance requires some research, some patience, and a little luck. You’re taking care of the research part by reading my blog. Congratulations, you can scratch that part off your list. I’m being sarcastic because every insurance agent thinks they give the best advice (there is no modesty in my profession).
The patience part comes from sitting down with an agent to go over options. There’s a temptation to buy directly from an insurance company without an agent’s help. This is obviously more convenient. However, as a general rule, the more convenient a life insurance transaction becomes, the more likely you are getting a bad deal. What’s more, there is no monetary disadvantage to buying insurance through an agent. The rate you pay buying direct is the same rate you pay through an agent. By ditching the agent you are simply making it more profitable for the insurance company. Let me just say this as strongly as possible: Never buy life insurance directly through an insurance company. If you leave here with one piece of advice, then leave with that.
The luck part comes from finding the right agent. An agent can look reputable, but at the same time sell the most expensive policies on the market. There are two things to look for when shopping for an agent: experience and the number of companies represented. Every insurance agent goes through a state exam in order to be licensed. However, this license exam covers the bare minimum amount of knowledge that an agent needs. Most of what an agent learns comes from on-the-job training. Experienced agents understand insurance contracts better, and more importantly, they understand the market better. Experienced agents are more likely to shy away from expensive companies, whereas new agents don’t know the difference between expensive and not expensive companies. As far as representing multiple companies, I think it’s obvious that agents can’t be objective if they are only offering one company.
I hope you enjoyed my life hacks for buying the most affordable whole life insurance. Feel free to leave a comment. If you have a life insurance question that isn’t covered in one of my blog posts, send me a message and I’ll get back to you.