Have you ever wondered, how can I buy life insurance without some pushy sales person coming to my home and talking me into what he wants me to buy?
Here are ten thing to keep in mind when considering and insurance program for your family:
1) The insurance sales person has an insurance license issued by your state of residence.
2) The investment products he / she sells requires a securities license.
3) The sales person earns there income from a commission on the amount of premium on the insurance plan you purchase.
4) The sales person is self-employed and responsible for all expense of doing business.
5) Permanent insurance pays the larger commission.
6) Insurance sales persons are focused on what is good for them first, then what is in your best interest second.
7) Creative financing of premium by replacement or transfer of funds is a common practice.
8) Agents are supervised by a broker / dealer or general manager agent.
9) All agents have to comply with continuing education requirement.
10) Registered representatives of a broker / dealer have to do additional training requirements on a annual basis for compliance.
The alternative is to learn enough about your life insurance to buy the policy direct from the life insurance company without an agent. The company has a service department who works with policy holders that have lost their agent. Some companies sell life insurance to you without an agent. The company's sales staff is compensated by a salary and the direct sales process in made easier if you can download from the internet.
Financial planners work for a fee like an account or lawyer and sell products that do not pay commission. This means that these contracts do not have a sales charges if you cancel the policy early and have better performance in the growth of the accumulation value ..
You can also contact the company direct and work with a salaried employee of the insurance company apply for the policy you have selected. The underwriting will be the same, the premium will be lower and the accumulation will grow faster than in a commissioned sale. If the plan is variable universal life, you should review the quarterly statements to keep the investment accounts allocated to the best performing funds.
The direct sales program applies to term, whole life, universal life, universal index life, hybrid variable universal life, and variable annuities. All sold with out sales commissions and surrender charges. The saving on the premium could be another source of funds for funding a savings account.
The purpose of insurance is to leverage money. The event covered by the life insurance will happen. But when? The life insurance will provide money to cover the financial damage or provide capital to replace the economic worth of the deceased.
Life insurance is not an investment because it charges the policy holder a fee to take risk and be able to pay a claim tomorrow or forty years from now. The policy has value and the earnings from the accumulated funds will be used to pay for future insurance costs or become part of the death benefit. In most cases you have either insurance or cash, but not both. More to come in the next Make Money Work newsletter.
To your financial success,