I have seen many life insurance proposals over the years, and I think I might be one of maybe a handful of insurance agents who still shows the guaranteed column in the life insurance illustration.
I also usually show what would happen to one of my custom whole life policies if NO dividends were ever paid.
I’ve had some prospective clients balk at my illustrations, and one guy told me I should be more like one of my competitors (which he called out to me over the phone) because “they have a fancier website and they show higher rates of return on their illustration.”
The funny thing about that competitor is… they have absolutely horrid reviews, both from former clients and also from both current and former employees. Yeah yeah, I know. The Internet draws out the trolls and also the haters. And, you get way more negative reviews than positive reviews online. However, when the reviews contain fine-grain details, spread out over many months and years, from both employees and customers, then you can kind of sort of start piecing things together as to what is probably happening. And, of course, when you get even positive “5-star” reviews that still contain negative comments about upper management, then there’s probably something fundamentally wrong with the way the insurance agents and management are running the business.
For example, if they are lying to their employees about bonuses and salaries, they are almost certainly lying to their clients about something.
But… beyond that, let me let you in on a little secret. There are ways to “overclock” those life insurance policy illustrations which will let me beat any other agent’s illustration or at least match it. In othe words, if you want me to show you a life insurance policy that will produce 7% annual returns “on paper,” I can do that. It’s soooooooo easy. In fact, I can show you almost any return you want.
10%, 20%… There is one company that used to show over 30% annual returns… on a life insurance policy.
And if that don’t smoke your ribs, I don’t know what will.
But, I don’t do that sort of thing because my primary concern is to solve financial problems for my clients, not to blow smoke up their ass with numbers on a ledger.
Agents are, generally, reluctant to do the same because the only tool in their toolbox is a product that they want to be an investment so… they try to sell it as an investment instead of life insurance. So after 20 or so odd years, they have 100 clients with a bunch of life insurance policies that aren’t investments. But, more than that… because the agent never did an actual life insurance-based financial plan, the client has a bunch of policies but no actual financial or risk-management plan.
And this is where experience becomes the deciding factor. Over the years, I’ve gotten quite good at solving deceptively complex financial problems for folks and creating plans that are almost bulletproof. …problems that don’t initially seem all that complex, like… should you save money now or buy a new car on credit instead?
The wrong decision costs you thousands of dollars.
But… this is not the game a lot of insurance agents and even financial planners want to play. Those kinds of problems are not very profitable for most planners to solve and, frankly, a lot of them don’t really know how to solve them or what to say to their client. They did learn financial concepts at the American College, like time value of money calculations and present value, but they don’t know how to use that knowledge to teach their clients how to make better financial (and even non-financial) decisions.
Instead, they want to play the rate of return game. Anyone can play that game. It’s very, very easy to do. And, it takes no skill… it’s like forecasting economic events. You just keep talking out your ass and, eventually, you’ll get at least one thing right.
It’s something else entirely to sit down with a person’s existing budget, psychology, and “real life stuff” and make a plan out of it that actually helps them. Understandably, not everyone wants that sort of service, and likewise, not every insurance agent can offer that service… which is why my competition exists.