What Really Drives Life Insurance Sales?

Manipulation: The manipulation usually involves a product performance “illustration,” which may be 20 to 30 pages long. The illustration shows how the product works, which is different from how it will work. It is a sample, not a proposal. It can show multiple scenarios based on assumptions that may or may not occur.

Reinforcement of the decision:  Agents reinforce the decision with sales speak focused on the product’s greed-related benefits. Popular phrases include “Be your own bank,” “Works like a super Roth IRA” and “Where else can you get the safety of a bond-like product and the potential return of the stock market?”

Are Consumers Getting Mixed Messages?

When I entered the industry, we were called insurance representatives, which is precisely what we were. Then they told us we could call ourselves “financial consultants” by taking some classes.

The confusion started when we got securities licenses. Once you have a securities license, the regulations and disclosures change.

I remember when we had to have customers sign a disclosure that said we were not allowed to sell while we were advising. They told us we needed to switch hats from advisor to sales when we completed a financial plan.

Once we entered sales mode, clients knew the advisor part was over, and the sales process began.

Who Are We?

In addition to being called insurance sales representatives, securities brokers and financial consultants, we were called financial services representatives, financial representatives, financial planners and financial advisors,

Then we acquired specialty titles, such as retirement specialist, wealth manager, money manager and tax strategist.

What do all of these titles have in common? There are a lot of them. And they’re confusing, and they may be misleading.

Unless our titles reflect who we are, what we do, our legal obligations, and how customers should see us, there will be confusion, complaints, and lawsuits.

Possible solutions:

• More disclosures?
• More regulation?
• More reinforcement?
• More buyer beware notices?
• More consumer education and awareness?

I believe tone hat the big roadblock is that insurance companies employ salespeople who are trained in an ongoing conflict of interest. They know their benefits, office, support, and leads depend on production quotas.

Some other considerations:

Independent sales forces: Many career agents try to put the consumer’s interest first, but the career agency system makes that difficult. Independent agents have the best opportunity to upgrade the industry. They don’t have an insurance company home team pressure to sell their company-manufactured products.

Regulators: Titles can be deceptive and lead consumers to think that they have the consumer’s best interest first. Only registered investment advisors (RIAs) are legally required to be fiduciaries. Regulators can do more to distinguish RIAs from salespeople.

Technology advances: Insurtechs can provide online education, disclosures in large print, transparency, and quote engines so consumers can shop and see who is competitive.

Consumerism: Consumerism is about making it easy to read, understand, and qualify those looking after their interests, not their employers’ best interest or other parties’ best interests.

Brochures, advertisements, and marketing techniques can be deceptive: In my experience, disclosures in small print usually benefit the company, and disclosures in large print benefit the consumer.

Educating consumers about what questions to ask and how to interpret the answers is key.

The Ultimate Question…

Should consumers seek out, rely on, and depend on “advice” from non-fiduciary, commission-driven, conflicted, professional salespeople?

We are professional salespeople, and regardless of our titles, designations, branding, and marketing, consumers need to know how to distinguish real advice from a sales pitch.

The best solution is an educated consumer. It’s time for consumers to take responsibility for their decisions.

Howard Wolkowitz is the founder and creator of LifeInsureAssure.com, a life insurance advisory platform.

..

..

..

..

Credit: Nuthawut/Adobe Stock