Your Ally In The Insurance Buying And Servicing Process – Part 2 - Insurance

Professional salespeople also have changed. They have found that insurance companies they considered bastions of stability were not immune to financial problems. They have had to deal with client panic as the press launched a media blitz on any com­pany that was downgraded by the rating services. Those were difficult times for you and for the agents. And yet it was just those difficult times that caused a profound change in thought about how to deal with life insurance company products. As you read this book, you will find that my opinions are far more polarized today than they were in the past. More than ever before, I believe quality in an insurance product is related to policy owner control. The greater your control over your insurance product, the happier you will be.

It is important to identify those companies and salespeople who will survive and prosper within the environment just described. Will it be the bigger companies because of their capital base and diversity? If one product is legislated out of existence, larger firms normally switch emphasis to another line or to the latest product legislated into existence. The smaller companies, many of which come into being because they recognize a niche market opened by legislative change, are exposed to a higher degree of risk. Either the successful niche company will leverage its success into a more diverse product line, allowing it to grow, pros­per, and handle the change, or it will face acquisition at best, and bankruptcy at worst. The consumer must face the fact that dealing with a niche company carries with it me potential for company failure.

Many of the new life insurance products are securities, and this has changed the life insurance selection process. We now are looking for the company that, in its capacity as a provider of security products, has the best due diligence (thorough product ex­amination and screening) and the best investment and product management people within its organization. Once found, the consumer then can seek out a professional, registered company representative.

Professional salespeople constantly make demands on insurance companies. They demand quality products, superior due dil­igence, and sponsors that will stand behind the products and serv­ices they offer. Salespeople seek companies that will come to their defense when, as a result of a product failure, they become subject to lawsuits. In turn, the companies require that salespeople not sell products of competing companies and not be "dually licensed," so to speak. Companies demand loyalty. As a result, the consumer may find fewer salespeople willing to search the marketplace and act as brokers for more than one company's products. This frequently limits the consumer to the offering of the chosen company.

How do you deal with this world? The proactive consumer first will select a quality company by asking, "Will the company be there keeping its promises year in and year out for the rest of my life?" "Does the company have the products I need, and will it service them in the way I want them serviced?"

The next choice involves the intermediary—the agent/ broker, or financial planner Never before have you needed an up-to-date, well-educated professional intermediary more than you do today to deal with the life insurance products of today. If that person has not read this book, you will probably know more about the new variable products than he or she does after you complete the book.

Your Ally In The Insurance Buying And Servicing Process – Part 1 - Insurance

People selling insurance products also face their own unique set of problems. Looking to their companies for leadership can be a dis­appointing and frustrating experience as the companies vacillate in their commitment to adapt to a consumer-oriented economy and culture. Tune and time again companies that agreed to throw money into client financial-planning services neglected to also throw in the necessary talent. Instead, the money went to attractive offices and greater overhead, failing to provide a profit center be­cause of the lack of ability and support of those occupying the offices. The typical company then terminated another "pilot" and a vice president someplace said, "See, I told you financial-planning services would be unprofitable." A step backward was taken from the idea of providing the customer base with usable, understandable information on which to base financial decisions. And the company went back to machine-gunning the public with "new and improved" products.*

You have been inundated with information. The Internet is your best friend and your worst enemy. Most of us as consumers are road kill on the information highway because the information is so voluminous, disjointed, and contradictory. We all need a traf­fic cop to direct us to the usable and credible information and to help us adapt that information to our personal situation. The life insurance industry has discovered that what you, the consumer, want and need is a trusted financial advisor to work with toward your financial security. Yes, you're right. The buzzwords of the day are financial planner and financial advisor, but do not let that turn you into a skeptic, in my 36 years as a participant, educator, and observer in this business, more than 90 percent of the people that you perceive as trying to sell you something are trying to do the best job they can for you. After all, your financial success is their financial success. What is wonderful is that in the year 2000, the major companies are helping and encouraging these people to become better qualified to help you. The companies are training them in financial planning, and they are not only telling them, but mandating, that their first loyalty and obligation is to you, the client. That does not mean that you can become complacent. You still must interview your intermediary extensively. But it does mean that the corporate mantra has changed. It used to be "Get out and sell something!" It is now "Was what you sold suitable for this particular client's personal situation?" This is a sea change for the companies. Most of you have been working with caring, pro­fessional salespeople for years. The people with whom you have worked were compensated by commissions but understood that your best interests were in their best interest. The sea change in attitude is not with the people with whom you deal. It is with their employers. In the past, the employers turned a blind eye to the shyster, the rogue salesperson who took advantage of people. Indeed, very often these unscrupulous salespeople were showered with accolades as long as they sold huge quantities of life insurance. Employers today know that this is no longer an acceptable practice. They know that the class-action suits brought against companies as a result of unethical sales practices are far too ex­pensive to fight. Today every effort is made to support only ethical sales practices. Salespeople must prove to the compliance officers of their company that they have done their best for you. Rogue salespeople are eliminated as soon as the company identifies them. Does this mean that you, the consumer, can be less vigilant? No, you still need to continue to deal with your trusted professionals, to keep those long-term relationships, and to work by referrals when new advisors are needed. It does mean that if you are ever mistreated, you have far greater support and assistance in ad­dressing your complaint. It is a better world for you than it was in the past.