I was walking the grizzled life insurance veteran back to his room after he spoke to our group of advisors at an education day. On the way, he says to me, “You know, no one needs to buy life insurance.” I think it was intended to shock a green advisor. It had the desired effect. He went on, “You don’t need life insurance to buy a car, or get a mortgage. If you never buy life insurance, it probably won’t affect your own life.” Pause. “It takes integrity to buy life insurance.” At the time, I was thinking that I will never be able to share that with a client without offending them, but it always stuck with me.
I am a former financial advisor. You may not know this, but financial advisors wear a lot of hats – they may be insurance agents, registered representatives (brokers), investment adviser representatives (financial planners), or all three. Most own their own business, even if they work for a major company, so that also makes them the Chief Marketing Officer, Chief Financial Officer, Chief Technology Officer–you name it, they have to do it, or find someone else to do it for them.
In my previous practice, I liked helping people, and helping them solve the puzzles that were their finances, and their frustrating lack of progress towards their goals. But some skills are much more difficult than others. Selling life insurance can be one of the toughest. I had a number of colleagues who just didn’t bother – they focused strictly on investments. Selling investments is easy–they’re sexy, and people come looking for them. I’ve never read an investment brochure that didn’t convince me that it was a compelling and unique way to get rich with an opportunity no one (except for the people who read the brochure) knows about.
Selling life insurance is HARD. Don’t get me wrong–it’s the backbone of a financial plan. An advisor can build a great plan whose sole design is to accumulate “X” amount of dollars towards every goal a client has. It can be creative, tax-efficient, and even leave the clients with a comfortable lifestyle while they’re saving towards their future goals. But what happens if the unexpected happens? The best plan in the world isn’t worth much if it doesn’t take risk into account. If someone dies, and the survivors have to move in with relatives and give up all their dreams, it’s not a great plan. In fact, it’s a plan that’s likely to get the advisor sued by the heirs. Life insurance helps to keep families together, helps keep survivors in their homes, sends children to college. And despite that, people do not want to buy it. I have a lot of respect for our agents who are so good at helping clients understand the need for life insurance.
“How much life insurance would you own if it were free?”
Flashback to my first few months in the business, attending another school that serves as a crash course to the company’s philosophy, and all the aspects of being in sales, and being an advisor. Our instructor asks us the question–“How much life insurance would you own if it were free?” Well, that’s easy. Millions. I’m sure you would come up with a similar answer. We instinctively see the value of life insurance, of taking care of the people we are responsible for. But, we put off doing something about it. We don’t see the immediate value, and there’s a crowd of other responsibilities clamoring for our money. We don’t want to talk to a life insurance agent–we fear we’re going to be talked into buying something we don’t need, or more than we need. We tell ourselves our employer’s policy is sufficient, or at least better than nothing. So then we find ourselves talking with an agent or advisor (which I can tell you was not an easy appointment for that agent to get), and they have the job of leading you through a difficult conversation of what would happen if you died, and how does that differ from what we would want to have happen.
“It takes a village…”
When I was studying for my life insurance license, the very first example in the study book talked about the genesis of life insurance. Villagers would pass the hat each time one of the farmers, or smiths, or barrel-makers would die, because their families had nothing to survive on. Eventually they got tired of this, and decided to ask everyone to set some money towards a fund before someone died. If you put into the fund, your family could draw from it if something happened to you. I guarantee there were barrel-makers who decided that they would risk it, and keep the extra money.
Life insurance today allows us to share our risk with a much bigger village. That keeps it a lot more affordable. Many policies offer living benefits, flexibility and the option to cover other risks besides death. But at the end of the day, we still need to look at who is relying on us, and have we done what we need to in order to take care of them? I have to agree with that life insurance agent who talked to me years ago – it takes integrity to buy life insurance.
Mark Bates is a Registered Representative and Registered Principal of Equity Services, Inc., Member FINRA/SIPC. Equity Services, Inc. is a Registered Broker/Dealer affiliated of National Life Insurance Company, Vermont
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