Insurance Agents Don't Want to Scare Off Seniors with Too Much Information

by L.A.S.
I am going to assume that older readers out there will take offense at this. But financial advisors assume that seniors' decision-making skills will decline with age even if one does not have Alzheimer's or any other form of dementia.

Our brains temporarily store incoming streams of data -- numbers, words, phrases, pictures, and so forth -- while at the same trying to decide which of these data is important to us, to our own situation and values. We quickly go through processes of comparison and ranking of these bits of data. We also compare what is coming in to our own 'data banks', in other words what we have learned to be true about the world in general and about managing money in particular.

Brilliant people can juggle more bits of data than the rest of us. But all of us experience a bit of a slowdown in this process as we age. We can easily miss important facts because we are still trying to hold onto as many information bits as we can handle. We also tend, as ALL of us do, to look for the easy solution, which may not be in our best interests. As we get older, we also are more easily distracted or interrupted, so that we have to start over.

Seniors tend to compensate by taking more time to make a decision. This is perfectly all right. However, most sales people know that the decision delayed, is the decision NOT MADE. So give yourself a deadline to make a final decision. Write out what you feel you need to know to make an informed decision, then when you have gathered that information, sit down with your significant other and discuss what looks best for you.

My personal experience is that I can never find the absolute perfect choice, even when selecting so mundane an item as my apartment. I have to decide based on the best overall package of location, cost, space, and other amenities. I have made errors even after all that, but it is the best I know how to do.

Which features of a policy, annuity, or other financial package are MOST important to you? Weed out those options that do not offer them, but perhaps you might call the company rep to make sure that this is the case. The company might have another group of options that they did not even think you would be interested in.

I might mention that some features are not commonly advertised and you might not even know they are out there. For example, many insurance companies have policies with a return-of-premium rider. (This may be true of some term life insurance and of some 'dread disease' policies; the premiums are somewhat higher but the fact that it is virtually free after the return of your money, makes them very attractive.) A company may be allowed to offer certain riders in one state but not in another, but that is out of our control.

An example of a weeding-out process with annuities would first ask if you need it for an immediate payout, for the near future, or for 20-30 years from now. If tax considerations (for the beneficiaries) are paramount, then you might consider buying insurance instead. BTW if you cannot qualify for a long-term care policy, then maybe you could look into raising the value of your current life insurance if it has an accelerated benefit option.

To help you with the information-gathering phase, you might avail yourself of free lectures given by local banks or savings & loan offices. I went to one such lecture several years ago about the Roth IRA when that was a new option. I took notes and kept them for reference. Keep a notebook of notes taken at such lectures or seminars, so you can draw upon them when sorting through company offers.
Good luck!

Are Agents Employees or Independent Contractors?

by L.A.S.
Three former agents for Northwestern Mutual Life Insurance Company sued NML in a class-action lawsuit. They claimed that they were wrongfully designated independent contractors, and denied minimum wage, overtime, and other benefits.
The lawsuit is for $200 million.
It has been traditional that agents for almost all insurance companies are independent contractors who receive only commission for whatever they sell. I can tell you now that these agents would have to prove that NML closely supervised and controlled their hours and other details of their work.

You May Have Noticed A Lotta Insurance Agents Have Gray Hair

The biz magazines for the insurance field have been bemoaning the fact that there are so few younger people entering the insurance agent or broker field. One magazine alone had stories about this in both the September 2007 and the July 2008 issues. One cover says “young brokers have just vanished”. Can it really be that the insurance agent will go the way of the buggy-whip maker?

The average age of insurance agents continues to climb -- currently it is 57. Sometimes it seems like the only younger people getting into it are the sons and daughters of current agents. It doesn’t help that most companies take a sink-or-swim approach to developing new agents -- here, kid, you passed your company’s 5-day training session, now get out there and find your own customers and sell, sell, sell. Young people with college debts to repay just cannot go weeks without a sale and commission.

My Suggestions: Possibly it would be better if the industry adopted an internship or mentorship model of bringing up new associates. And teaching agents how to develop a business plan is an absolute must. But you have to admit, there are few businesses where a kid right out of college COULD get in with a Fortune 500 company with little start-up cost or investment. Insurance is just about the only one there is nowadays.

Insurance is in my view an intensely personal transaction. The best agents really LIKE people and want them to do well, and want them to avoid losing everything they’ve worked so hard for. There is no way to accurately assess the real needs of a visitor/caller to one’s office (or website) or get down to the bare facts in a cold call. Many Americans are under the impression that all insurance is alike, really, that you can compare prices on the internet and that’s all there is to it.
NOT!

In an era when tons of information and data are at your fingertips on the web, I feel that today’s customers are LESS informed about insurance in general and about the advantages of different kinds of insurance in particular.

I could write a book about general misinformation about Life or Health Insurance -- and who knows, maybe one day I will. I have met people informally online or whatever who think that because they are perfectly healthy now, they do not need health insurance and should not be forced to buy it. They do not seem to understand that once they get a serious health condition that they will have a hard time qualifying for ANY health insurance, at ANY price! And the worst part is that they do not know that insurance products vary from state to state according to what that state’s insurance commissioner will allow to be sold there! It can be very frustrating for me as an agent when my company does not offer a desired rider (such as return-of-premium) in that state.

Also I have had frustrating sessions trying to explain how insurance works to people who don’t want to listen after more than 30 seconds because they think that you are just trying to sell something they don’t need. They have a mental block when I try to tell them that a responsible agent will spend plenty of time trying to find out what you DO need so that you do not waste your insurance dollars. A responsible agent will take all the time necessary to explain what your options are, what any provisions mean, the advantages and disadvantages of a type of policy, and to answer any questions you have.

And you need to do your part, too, by doing a bit of homework (my site is a good place to start, as are the Komen Foundation, Health Symphony, and the industry NAIC site). Find out the different kinds of policies and ask the agent what kinds of riders are available in your state.

Then call up a few local offices, (or visit websites) and ask for assistance on whatever concerns you have. You can tell an agent to stop bothering you if he or she is pressing you to buy before even explaining the policy. YOU have to speak up for YOUR needs. Now get at it.