I had an agent questioning me about indexed universal life today. He admitted he was a new agent. He also admitted that one of his primary attractions to the product were the high premium and high commission. Call me old fashioned but I emailed back to him and asked him to give some serious thought to how those two things played into his client’s best interests. This is one of the inherent downsides to life insurance sales.
Life insurance companies don’t attract agents by telling them about less expensive products and lower commission schedules. This is and should be a daily gut check for new and old agents. Especially newer agents should run through their head the concept that if an insurance company wants them to sell a specific product such as an IUL and they pay high compensation on that product, on some level you have to understand the reason. That product is good for the company. Because of that they make it good for the agent. If the policy has any cash value component to it and it’s good for the company (they do really well when one is sold) and it’s good for the agent (they do really well when they sell one), is it really good enough for the client to do really well also.
A client of mine called last week. He is a dentist and had been approached by a Pacific Life agent about purchasing an indexed universal life. He explained that he was kind of interested because he could put $18,000 a year into the policy for 20 years and then borrow $117,000 a year for the next 20 years after that tax free. I asked him what interest rate was being quoted and he said 8.5%. I asked him if the illustration showed what happens if Pac Life doesn’t credit 8.5% annually or, God forbid, has to fall all the way back to their guarantee, because he said that was the other thing he liked was that the cash component couldn’t lose money because it has a guaranteed bottom. He said he didn’t know because all it showed was the 8.5% numbers.
I asked him to send me the illustration because, as I told him, I had never heard of an illustration that didn’t show the worst case scenario along with the pie in the sky scenario. Even if a product has a bottom that doesn’t allow you to lose interest, there are numbers worth considering that go along with that. But sure enough this Pac Life agent, some guy named Carl Locke out of Lakewood, CO has the huevos to try to convince someone to spend $18,000 a year and show them nothing but assumptions. This agent’s lack of candor with a potential client shows where his heart is, right next to the $100 bills in his wallet.
It wouldn’t be hard to go on and on about agents who put themselves ahead of their customers, even to the point of deception. Our industry is littered with examples.
Bottom line. So who am I to get in other agent’s faces about how they do business? I can honestly say I walk exactly the walk I endorse. I never put my interests ahead of a customer’s. I never lead customers to believe that assumptions have anything to do with a product’s performance and never suggest they purchase something if they aren’t completely comfortable with just the guarantees. If you have any questions or are being led down the rosy path of assumptions and want to know what reality can be, call or email me directly. My name is Ed Hinerman. Let’s talk.