We have all heard the same horror stories about Life Insurance agents, or even experienced it personally. The one that sells you exactly what you don’t need. The one that misrepresents. The one that absconds with your premium.
While there are certainly black sheep in this industry, there are also plenty of genuine, honest and hardworking Insurance Agents around that keep families intact and keep you sleeping peacefully at night.
So if you are in the marketing looking to pick up some coverage for yourself, here are the top 5 signs of a great Life Insurance agent:
1. Ensures that your insurance expenditure is in check
Overspending has never been so much in vogue. According to an October 2015 report by Credit Bureau Singapore, more than eighty five thousand Singaporeans missed two or more months of their debt repayment, a 32 % increase compared to 2011.
While overspending on a lavish wedding is far more common than overspending on insurance, the effects could be just as devastating, if not even worse.
A good agent knows that his client should spend within a set limit so that the policies can be serviced to their maturity, and not run the risk of having to suspend or terminate them prematurely. If he keeps insurance expenditure within 20% of your monthly income or below, you know he is acting in your best interests.
2. Stresses that returns are not guaranteed
One huge draw of Insurance is that it also serves as an investment vehicle. For folks that do not actively manage their money, Whole Life Plans and Endowment Plans are popular options to accumulate wealth. This is because the insurer invests part of the premiums and pays out (a portion of) the investment proceeds.
As with such plans, customers are shown the projected returns and even actual past returns (usually when the company outperforms the projected returns) as part of the enticement process. The age old caveat of “Past performance may not be indicative of future returns” should ring out loud and clear.
If the agent does the ringing out himself: You have just found yourself an honest chap who does not make any false claims. And honesty is always one trait you want in a person that deals with your personal finances.
3. Keeps in touch with you regularly even after the sale
Some agents embrace a sales process best described as “hit and run”. While such incidences cannot be reported to our men in blue, it is unfortunately a very real situation for many policy holders.
This is due to a portion of agents merely “trying” their hand in a profession that relies very heavily on sales and sales alone. Their incentives comes from selling as many policies as they can within the shortest time frame possible, hence the proliferation of these Houdinis that disappear off the face of the earth after the policy is incepted.
A good agent is one that keeps in regular contact with you (perhaps once every six months) to ensure he is updated on any upheavals in your financial obligations (say a newborn in the family or marriage).
Through such regular updates, he can then be in a good position to advise what additional cover is necessary given the change in personal circumstances.
4. Discloses all of his incentives – without you asking
We get this – Insurance agents are paid according to the policies they sell. So they have a motivation to sell as much as they can.
It’s only natural because they are mostly on a fully commissioned basis, i.e. they do not receive a fixed salary of any sort. So understanding part of their motivation is important for us when it comes down to signing the dotted line. Yet few of us know that apart from their regular or stipulated commissions for each policy, there could be bonus trips or prizes tagged directly to sales of a particular plan.
One way an agent demonstrates his credibility is to fully disclose what he stands to gain from the particular policy. In is, in fact mandatory for them to do so.
An agent that discloses all his incentives to you upfront is going to be more trustworthy – and we can’t overstate the importance of trust in this industry.
5. Actively discourages you from surrendering your policies
This is the granddaddy of all indicators for an agent with sterling character. Surrendering your policy is the act of terminating it prematurely (before its maturity date).
For Whole Life and Endowment Plans, it usually means a net loss for the policy holder (total premiums paid versus cash value received upon surrender) unless those plans have been around for a very long time.
Unscrupulous agents have no qualms about getting their clients to surrender policies because it frees up cash flow – for yet another sale.
Insurance agents that act in your best interest would never ask you to surrender your existing policies as it usually means: a) a net financial loss on your part, b) loss of coverage while you replace those policies.
So there you have it. A good Life Insurance agent can make the difference between financial security and financial devastation, so choose yours with care.
Do you know what other signs a good Life Insurance agent has? Share with us in the comments below!
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.