In the rebellion against whole life insurance, count me as part of The Empire

A long time ago, on a website far, far, away, a group of financial planners and rebel insurance agents decided to form a clever-sounding movement called, “The Whole Life Insurance Rebellion”

The Rebel Leader of the movement has stated his mission is to “educate” (AKA expose) whole life insurance as an expensive and mostly crappy financial product.

He even has a nifty quote on his website from the gooroo of finance himself, Dave Ramsey:

“Cash value life insurance is one of the worst financial products available.”

Fast forward to today…

I’m on the founder’s email list.

He sends me periodic emails about his marketing and lead generation course for insurance agents.

Below is a transcript of an email exchange I had with him:

***

Rebel Leader: As I write this email on Thursday night (set to go out Friday morning), one of my agents just hit a $51,394 premium Protective case (the lead came from my site, [website]) that went in force a couple days ago.

Check it out:

Agent commission for universal life insurance

This universal life policy has an annualized target of $51,394.56. Target premiums determine commissions paid to agents. At a 100% comp rate, this agent would make $51,394.56, while simultaneously chastising other agents for selling "high commission" whole life insurance. UL policies of this type generally do not offer increasing death benefits, so policyholders experience declining returns on death benefit payouts over time.

The Rebel Leader who sold this policy goes on to say:

Best part is I never even spoke to the client. I'll split that commission with my agent and make over $20k and I didn't even lift a finger. Imagine that.

Indeed. Imagine that. Now, that's what I call customer service. You take their money and they don't even get to talk to you.

The plot thickens...

Me: Does that card say 1980 as the client’s birth date?

***

Rebel Leader: 1940. We’d have to sell about a 20 million dollar policy to a 38 year old to get that sort of premium. lol

***

Me: That’s too funny.

Nice commission though. I’ve never made anywhere near that much for similar sized whole life policies but… I’ve also never tried selling permanent insurance to a 78 year old.

***

Rebel Leader: It was a slam dunk estate planning case. She’s 78. Has tons of disposable income and money sitting around in CD’s and bonds making next to nothing, and that she doesn’t need. If she lives another 15 years even, she’ll have put in around 765k and her estate receives over 1.1 Million. Not a bad return. If she dies earlier the return is even better!

Her CPA loved it!

***

How amusing.

I can’t say I’m surprised.

At the end of the day, even the Whole Life Insurance Rebels sell permanent life insurance with biiiiiiiiiiiig commissionzzzzzzz.

More:

The policy type in the image above that the Rebel Leader’s agent sold to his client is a type of universal life insurance. This policy type tends to pay out a higher commission than whole life.

Based on information from my UL carriers, some carriers pay less in commissions than whole life but... almost all of the carriers I've seen over the years pay somewhere between 10% to 25% more in total commissions to agents. Policies with no cash value build-up can sometimes pay significantly higher commission.

Not that that’s bad in and of itself but… one of the Rebel Leader’s main arguments against whole life insurance is the high cost and fat commissions paid to agents.

Moving on.

At the risk of openly siding with “The Empire,” the way I sees it is… if you’re going to end up owning a permanent life insurance policy when you’re 78 years old and the cost of insurance is high, then you might as well buy it when you’re 38 years old, healthy, and the cost of insurance is low.

No agent, no matter how skilled, can predict how a 38 year-old’s life is going to shake out and… quite a lot of people do end up buying whole life or universal life insurance at some point.

And... sales of permanent insurance aren't limited to wealthy individuals either. Most people buy permanent insurance late in life to offset the cost of a funeral and burial costs. They can't afford to buy more than what they need for final expenses so... they buy smaller policies.

Wealthier individuals buy permanent insurance for estate planning purposes.

And then you have youngish folks between age 35 and 50 who buy whole life insurance for its cash value buildup as well as for estate planning...

Either way, the sooner you buy it, the cheaper (and better) it is.

More:

It strikes me as a little Darth Vaderish to talk about your client's death as a good rate of return and… to exclaim she’ll get an even higher return if she dies sooner rather than later.

But, that’s my totally biased opinion as someone who designs custom high cash value whole life insurance plans that you don’t have to die to use or benefit from.

Don't get me wrong. The death benefit absolutely is a return on your premium dollars and it absolutely serves an important purpose but... I'd be hard pressed to sell "rate of return" as a primary benefit to the insured policyholder who must die for that return to materialize.

Anywho, if you want more info on how my custom insurance plans can help you protect your income, savings, and your business or family while you’re still alive and kicking... then join my email list.

David Lewis

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.