Question: I need advice to assess my life assurance needs. How should I go about finding a good agent?
- E. D.C., Kingston 7.
ANSWER: SEARCHING for a 'good' life insurance agent is like trying to find a 'good' spouse. One needs to look beyond the obvious and the trivial. One needs to do lots of homework and ask hard questions. If not, you could end up like a Lake Worth, Florida resident. He was sold a multi-million dollar variable life policy. The annual premium was US$50,000. After paying it, only about 17 per cent of his net after-tax annual take home pay or $10,000, remained to cover other family expenses. A 'bad' life agent, [like a 'bad' spouse], can cost you lots of money and also make you shed tears.
WHY LIFE AGENTS EXIST
Life insurance, unlike most other financial products, is more often sold, not bought. This is because the subject-matter is unpleasant. As a result we tend either not to discuss it or to put off talking about it. Salesmanship is therefore needed to get persons like you or me to think about it. Selling is but one of the functions of the agent. Others include:
To persuade you to recognise and discuss the financial problems that will be associated with your death.
To assist you to evaluate your life insurance needs.
To provide recommendations in light of your financial needs and objectives.
To persuade you to buy the life insurance that you need.
To monitor your programme and keep it up-to-date.
To help you and your family to use life insurance effectively.
THE SELECTION PROCESS
Now that you understand the role of the salesperson, let us move to how you go about the process of selecting an agent. There are at least three approaches to selecting an agent. The first is to evaluate the agents that have approached you. The second is to seek advice from your relatives and friends. Option three is a combination of one and two. Let us examine them individually:
Option 1: Here is a series of questions you may wish to pose to your prospective agents:
1) How long have you been a full-time agent?
2) What company or companies do you represent?
3) If you represent more than one company what factors dictate your choice?
4) Do you possess the CLU designation?
5) What activities do you pursue to continue your professional development as a
professional?
6) Are you registered under the Insurance Act, 2001? What kind of licence do you have?
7) What arrangements have you made for servicing your clients in the event that you die, leave the industry or move to another company?
8) Do you have testimonial letters from clients that recommend you?
9) If you made a sale to me would you be prepared to rebate a portion of your commission?
Answers to these questions will provide you with criteria for making a selection. Beware of any agent who is prepared to rebate commission to you. This would be contrary to the terms of his licence.
Option 2: This approach would be more informal. Ask your relatives, friends and co-workers about their agent. Find out about the level of professionalism and service he gave them. Has the agent displayed real interest, or was merely interested in making a sale? Short list three of them and meet them individually to assess them.
Option 3: In this case you extend the net to include recommendations from your friends and family plus those who approached you directly and administer the nine-point questionnaire previously referred to. Life insurance policies are very complex financial instruments. A knowledgeable agent can therefore help you to use these products effectively. In the final analysis your selection of an agent will be based upon your evaluation of his honesty, competence and integrity.
Another key consideration is that you should take charge. The agent is just an adviser assisting you in making a major investment decision about your financial future. Your agent should thus be someone you can disagree with, and feel comfortable doing so.
Best of luck in the exercise.
Cedric E. Stephens provides impartial advice on risks and insurance. If you need free information or advice to solve a problem, write to The Financial Editor or, contact Mr. Stephens directly at aegis@cwjamaica.com
