Life Insurance???

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VenomRx's picture
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Joined: 2009-07-20

There are so many different companies: New York Life, Pacific Life, Jackson, etc.... How do you know which one is best? And what company are you covered under?

anonymous's picture
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Joined: 2005-09-29

It depends on the purpose of the coverage and the specifics of the individual.

LockEDJ's picture
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Joined: 2009-07-06

There are surely more similar mutual funds than there are similar insurance companies. How do you know which one is best among them?

BerkshireBull's picture
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Joined: 2009-06-10

LockEDJ wrote:There are surely more similar mutual funds than there are similar insurance companies. How do you know which one is best among them?If you work at Jones they won't give you the training on the insurance side to prepare you to sell permanent coverage and the fact that you only get 40% of FYC (and do you even get renewals?) doesn't make it worth it money-wise for you to even try to place permanent coverage.Learn these two questions, sell the term, have them invest the difference into a Roth or non-qual Am Funds or whatever and move onto your next investment sale.Mr. Prospect, while we were talking about rolling your 401k you mentioned you wanted to get some life insurance in place and now that we addressed the rollover lets address your last concern.  I guess the simplest way to decide how much you need is for you to tell me what do you want your life insurance to do for you?Prospect:  Well I want the mortgage and 1 car paid off, wife would sell the other one if something happened to me, and I'd like to pay for half the kids college.If something happened to you would the family need your income to continue? Prospect:  The debt would be gone and they'd get social security but I suppose they'd probably need another $20,000 as long as the kids are in the house.So work backwards, do the math and come back to him with a $765,000 20-year term policy, write it, and get the hell out of there and bang some more doors.

Spaceman Spiff's picture
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Joined: 2006-08-08

It is true that we don't have a week long intensive course on the ins and outs of permanent life insurance.  It's also true that we don't, and I would suspect other firms don't either, have week long courses on the ins and outs of many different products.  That doesn't mean that we can't get become proficient on our own. 
 
And to say that we should buy term and invest the rest because we only get paid 40% is just simply shortsighted. 
 
Your scenario above works well for the 35-55 year old with a family and kids at home to protect, but without the cash flow a perm policy would require.  For them, term makes perfect sense.  And it can be as simply as you describe.  But it doesn't address estate or more advanced planning issues at all.  For that you have to use some sort of perm insurance.

LockEDJ's picture
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BerkshireBull wrote: LockEDJ wrote:There are surely more similar mutual funds than there are similar insurance companies. How do you know which one is best among them?If you work at Jones they won't give you the training on the insurance side to prepare you to sell permanent coverage and the fact that you only get 40% of FYC (and do you even get renewals?) doesn't make it worth it money-wise for you to even try to place permanent coverage....
In part because of these forums - and in part because by selling permanent insurance, I lock out competition - I make an effort to put it into place. I have three term/perm blends in place that should come through in January and February. I'm not great at it, but I'm learning as I go and insurance is a disproportionate amount of my business, relative to peers at the company.
 
That said, my initial point was only that you need to do the dd to understand the difference between firms, just as you do to sit down and listen to the Pioneer guy, the AF guy, the FT guy.
 
Thanks for your posts Berkshire.

BerkshireBull's picture
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Joined: 2009-06-10

Spaceman Spiff wrote:It is true that we don't have a week long intensive course on the ins and outs of permanent life insurance.  It's also true that we don't, and I would suspect other firms don't either, have week long courses on the ins and outs of many different products.  That doesn't mean that we can't get become proficient on our own. 
 
And to say that we should buy term and invest the rest because we only get paid 40% is just simply shortsighted. 
 
Your scenario above works well for the 35-55 year old with a family and kids at home to protect, but without the cash flow a perm policy would require.  For them, term makes perfect sense.  And it can be as simply as you describe.  But it doesn't address estate or more advanced planning issues at all.  For that you have to use some sort of perm insurance. How many Jones guys are actually doing distribution and transfer planning?  WHY WOULD a Jones Rep want to work with distribution and transfer?

MathewBracken's picture
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Spaceman Spiff's picture
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Joined: 2006-08-08

BerkshireBull wrote: Spaceman Spiff wrote:It is true that we don't have a week long intensive course on the ins and outs of permanent life insurance.  It's also true that we don't, and I would suspect other firms don't either, have week long courses on the ins and outs of many different products.  That doesn't mean that we can't get become proficient on our own. 
 
And to say that we should buy term and invest the rest because we only get paid 40% is just simply shortsighted. 
 
Your scenario above works well for the 35-55 year old with a family and kids at home to protect, but without the cash flow a perm policy would require.  For them, term makes perfect sense.  And it can be as simply as you describe.  But it doesn't address estate or more advanced planning issues at all.  For that you have to use some sort of perm insurance. How many Jones guys are actually doing distribution and transfer planning?  WHY WOULD a Jones Rep want to work with distribution and transfer?
 
That's a fair statement.  The argument can be made that most FAs, not just at Jones, aren't doing a massive amount of distribution and transfer planning. 
 
That doesn't mean that Jones advisors shouldn't worry about it because we get paid less than someone else. 
 
Let me turn that last question around to you - Why wouldn't a Jones Rep want to work with distribution and transfer?  Because our payout is 40%?  We still gross more on LI than anything else.  I think payout is a stupid reason not do do the right kind of planning when necessary.  

anonymous's picture
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Joined: 2005-09-29

"I think payout is a stupid reason not do do the right kind of planning when necessary."
 
Do you have clients who work because they need their income?  For what percentage of these clients have you taken the time to get them to supplement their work disability policy?  I'm willing to bet that it is close to zero.
 
I don't blame you for that.  The premium is small and thus the commission is small and then the haircut that take take is large and the policy may not get approved and if it does, it may not get placed.     It's a lot of work for not much money, so it doesn't make economic sense for you to do it.
 
Yet, it's that "payout is a stupid reason not to do the right kind of planning" that stops virtually everybody who has to put insurance through a grid from taking care of disability coverage.

anonymous's picture
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Joined: 2005-09-29

"Why wouldn't a Jones Rep want to work with distribution and transfer?  Because our payout is 40%?  We still gross more on LI than anything else. "
 
There are a few reasons for this. 
1) If you truly want to do what is best for your client, you need to send the business elsewhere.  If I'm not mistaken, you are limited in terms of companies that you can use which means that you don't have the ability to do what is in your clients' best interest.
 
2) 40% isn't enough to make it worthwhile.  Unlike an investment where one just has to sign a check, insurance work means getting the client approved and then agreeing to accept a policy.  Many sales can result in $0 of commission.
 
3)It takes extra effort to gain the necessary knowledge.

Spaceman Spiff's picture
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Joined: 2006-08-08

anon - you've got a good point with the DI comment.  It's the same reason I don't chase 529 plans. 
 

But, relative to everything else, we get paid well on LI.  For example - I have a client that's asked about how to pass more money on to her kids.  I ran an illustration on a UL with a $21,000 annual premium.  I'd gross about $15,000 on the front end alone.  Is there something else I can put her money and guarantee the kind of leverage that gives her AND I make that kind of gross?   Even if my payout on that $15,000 is only 40%, that's still $6000 net.  And you're going to tell me that it's not worth it at 40%? 
 
That whole send the biz elsewhere if you want to do what's best for your client statement is nonsense.  I can't buy her no load funds, but I'm not about to send her to Vanguard so she can buy them herself because that's in her best interest.  If I can get her something that makes her happy I'm absolutely going to do the biz myself. 

anonymous's picture
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Joined: 2005-09-29

$6,000 is nice, but I'm saying in general, people who put insurance through a grid can't go after insurance business because most of it will be much smaller and not only do you have to convince the client to do business with you, you also have to get the company to do business with the client.   There's often too much work to be done without a guaranteed payday.   It's a different story for someone who for that same sale will make $15,000 and get an override on top of that.
 
Do you believe that going direct to Vanguard would be in her best interest?  I think that my typical client would do much worse by doing it on their own at Vanguard.  They are much better off with me and letting me earn commissions and/or charge them fees.
 
For small 529 plans, I believe that, depending on their state, some of my clients are best served by going direct and I have them do that.
 
There's another difference.  Even if you believe that bypassing you and going no-load is what's best, you have no way of knowing this for certain to be the case.
 
The insurance stuff is different.  You can be certain up front that she's not getting the best deal by working with you.
 
You need to be honest.  You are trying to do what's in the best interest of the client, but  only to the extent that it's also in your interest.
 
By the way, I'm not attempting to be critical.  Your firm has tied your hands.  They've put you in a position where you can't do what's in the client's best interest for insurance products.  If I was in your shoes, I am sure that I would ignore disability coverage and small life sales and only do insurance when it seemed like there was a real good opportunity.   However, that is why I would never put myself in that position.   It can't be the best feeling knowing that although you helped the client, they could have done better working with someone else.

anonymous's picture
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Joined: 2005-09-29

That last post isn't really fair of me.   Everyone's hands are tied to some extent.

Spaceman Spiff's picture
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Joined: 2006-08-08

It's a fair commentary on being a captive agent.  I can do insurance biz through Hartford, J. Hanc***, Protective, Lincoln, Pac Life, Genworth, and Metlife.   That's it.  This client of mine might be able to go online or to Northwestern Mutual or to an insurance broker and get a better deal.  I have plenty of clients who get their term insurance somewhere other than me because they can get a better rate.  Even $5 or $10 a month is a big difference on most term policies.  But if I can do it and be competitive, I'm going to go after that business.  
 
My original point wasn't to discuss being a captive agent.  It was to discuss the notion that we shouldn't even be thinking about advanced planning cases at EDJ because our stuff goes through our grid.  I thought that comment was just stupid. 
 
Just FYI, there is a process at Jones that we can ask for permission to use an outside vendor if one of our preferred vendors can't satisfy a need.  For instance if a client has been turned down by all of our preferred vendors, but we know that Prudential will do the underwriting, we can get permission to have Pru do the life business.  There are a lot of hoops to jump through, but it's possible to get done. 

anonymous's picture
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Joined: 2005-09-29

Despite my post, I really don't have a disagreement with you on this subject.  Have a good weekend.

VenomRx's picture
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Joined: 2009-07-20

anonymous wrote:It depends on the purpose of the coverage and the specifics of the individual.
True, the reason I asked is because my brother is covered under company X (IUL), but wants to change to a different provider.

anonymous's picture
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Joined: 2005-09-29

In order for a replacement to make sense, he first has to be healthy.  If he owns an IUL product, he probably doesn't understand, his agent probably doesn't understand, and you probably don't understand it.

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