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“This I Believe *” * about life insurance
A short note from the Founder of Breadwinners’ Insurance
To briefly introduce myself, listed below are some relevant personal and insurance-related beliefs, facts, and values. Although a little lengthy (I don’t believe in sound bites), the list is hardly complete, nor as fully-explained as might be desired. Nevertheless, it seems a good start.
I believe that the life insurance industry’s (companies, regulators, and agents) failure to provide appropriate disclosure of cash-value policies constitutes a violation of the principles of fair economic competition. (I’m an economics major from Georgetown.)
I believe good disclosure will have a profoundly positive long-term impact upon the life insurance industry, although, in the short-run, insurers and agents could have to make amends for their past conduct. I agree with the poet who said, “Some men see things as they are and say why. I dream things that never were and say why not.”
I believe the industry’s inadequate disclosure practices, not only costs American consumers billions of dollars annually, but also severely harms many of those (at least the eighty percent of the thousands annually recruited as agents who fail) that it has been intended to support/protect.
I believe that agents, like anyone and everyone else, deserve compensation for productive work. However, agents ought not to expect compensation for unproductive hours nor when a policy’s annual price has not been properly disclosed. Given that consumers can now discover the real annual costs of cash-value policies, I believe that agents, who typically have not sold one policy per week, will no longer be able to subsidize their unproductive hours by extracting excessive sales compensation from uninformed consumers. The solution is for agents to become true professionals.
I believe that, by and large, life insurance agents are good guys. Professor Deming would have observed that it is the system in which agents operate that is so terribly defective and dysfunctional. Regrettably, though, agents have fought to preserve the status quo. That is, of course, a typically human reaction, and one that is not without some apparent merit, given the challenges of selling life insurance. Such challenges, though, arise, at least in large part, as consumers’ natural response to the industry’s inadequate disclosure, biased advice, and products’ poor financial quality/value.
With both some levity and sincerity, I believe that several Insurance Commissioners ought to have to “stand in the corner” and then write on the blackboard a thousand times, “I will never again betray my public trust and responsibilities.” Admittedly, many have played a role for having allowed the terribly sick practices of the life insurance industry to have continued into the 21st century in America, and serious punishments may well be warranted for those who have had actual responsibility. In the future, I will write more about my own failures since 1991 when I first presented my disclosure approach to Northwestern’s actuaries and management, and shortly thereafter to A.M. Best and its readers.
I believe that being someone’s life insurance agent can be a wonderful privilege and sacred responsibility. Conversations about life insurance can be truly treasured and profoundly meaningful. For more than 22 years, I have been very grateful to my clients for their trust and confidence in me, their business, and their referrals.
I believe that there are good uses for both term and cash-value policies, and am committed to finding what is best for my clients. I teach clients the need to evaluate the financial performance of their life insurance policies both before buying and on an on-going basis thereafter. Unfortunately, today, hundreds of thousands of individuals, trustees, and advisers, buy and/or recommend uncompetitive new policies every year, and millions of others hold on to uncompetitive policies because of misinformation and misconceptions.
I believe, and my clients tell me, that I provide excellent life insurance advice, service, and products. I know when and from whom to seek assistance on situations that require specialized knowledge outside of my own expertise. I encourage clients and/or anyone else to bring any dissatisfaction with my work to my attention so that I can promptly remedy the situation. I will disclose any and all compensation necessary so that a client or prospective client never has any questions, concerns, or doubts about the objectivity of my advice. Where permitted by law and company contract, and when justified by the size of the transaction and/or nature of the work, I am open to discussing commission rebating and negotiating any other aspects of compensation.
I believe in the children of today and tomorrow, and am committed to working to help them achieve their potentially, both personally and collectively. Our future will rest in their hands, just as their future now rests in ours. I also revere the children of yesterday and yesteryears, am grateful for all their accomplishments, and draw inspiration from their sacrifices and commitments.
I have committed to bringing good disclosure to the life insurance marketplace in 2010; this is the imperative first step in bringing about the long overdue transformation of the life insurance industry. And with your help, we now together can profoundly improve the life insurance industry. Always ready and glad to be of service, I welcome your comments, questions, and requests.
And so, paraphrasing the most memorable Presidential inaugural address of my lifetime, let me close: “With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, and to lead our families and our own lives with wisdom and love, asking His blessing and His help, but knowing that here on earth God’s work must truly be our own.”