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A Situation Where YOU Should Tell the Insurance Agent To Get LostMay 11 '00 Write an essay on this topic.To begin with, I will state that I am a Financial Advisor and, therefore, licensed to sell insurance products. I do not do much insurance business for the simple reason that I seldom think it is needed- contrary to the opinion of many Insurance Agents. Yes, you can probably tell that I do not hold the insurance business in the highest of standings. The simple fact of the matter is that so many Insurance Agents abuse the products. Hence, I do my best to distance myself from the product altogether. However, I do have a good bit of knowledge of the products and will hopefully be able to steer you clear of one way that agents take advantage of their clients. Ok here is the situation: An agent has badgered you into meeting for quite awhile and you finally decide to meet. You do not have anyone who depends on you on for income (you might be single, pull in less than your significant other, etc.). However, you are not real familiar with Life Insurance so you agree to meet with the agent to see what he has to say. One of the first questions will undoubtabley involve this scare tactic: "What would your loved ones do if you passed? How would they get by financially? Would your daughter still be able to go to college if you income was nonexistent? Would your wife have to sell the home? The car?" Yes, these questions do get you thinking about all the variables and what would happen if you passed away. However, you need to keep in mind that no one depends on your income. Hence, the agent will move onto the second tactic (assuming you are younger); "Would it make sense to you to purchase a policy that will allow you to purchase much more coverage at a reduced rate? Yes, you can get a relatively inexpensive rate because you are quite young and healthy. And, when you finally do have someone depending on you for income all you need to do is change the beneficiary". Ok, this one is a little more tricky when it comes to squeezing your way out. Of course it makes sense, but how do you know if someone will depend on your income in the future? Your significant other may get a huge raise and allow you to be a stay at home mom/dad. Maybe you will never have children. Perhaps, you will decide that your company policy is more than enough and that you do not need additional coverage. Finally, the agent will move onto the final bullet in his proverbial chamber: "You seem as if you are quite successful at what you do. I would assume you are paid quite well for your talents and would guess that estate planning will be a concern at some point down the road". Well, yes, if you are successful estate planning will be a concern down the road- hopefully. However, estate planning is not a concern at this point in time and who is to say that it will be? A number of different things could happen that would eliminate estate planning from your needs- you could have sextuplets, the stock market could crash, or you could become unemployed and unable to find a a new job. Hence, the need to examine the benefits of considering estate planning too early. I would also add that those of you who are close to retirement age should be extra cautious when discussing estate planning via life insurance. Keep in mind that the older you are the more the policy will cost and the more the agent will get paid. I believe the best way to work around all of these problem is to purchase a policy shortly after a child is born. My parents did this and I have quite a bit of coverage with a nice cash value and it costs me less than $30 a annually. When I get married all I have to do is change the beneficiary and the policy will remain in force despite the change. Some people do not believe this is the way to go. However, I am a stronger believer that $30 a year for the 25 or so years before you get married is worth it. Who knows what you will be paying as a 25 year old, but I would suggest that over time you will come out ahead if you start early. I wrote this epinion simply to let you know that if no one depends on you for income purposes, you should not purchase a life insurance policy. Obviously, if you are a child you do not follow into this category. But, anyone else should be wary and realize that insurance is an easy product to abuse because so few people understand it. It is also a frequently abused product because of how well it pays. Be wary.  |
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