Have you ever bought insurance from an agent?

The Sandbox Finance/Investments
21

In the US, for investment accounts (in the general financial services industry) we have escheat laws where if there is no contact with the owner for some period (3 years? 5 years?) the proceeds are turned over to the government, but then are returned to the owner if he claims them.

I doubt there is a similarly short no-contact period for insurance, but if the insured must be dead based on the terms of the underlying mortality table, escheat probably applies.

Some states require insurers to check death records.

22

Huh. I dont even know if theres a central death record in Canada.

23

As of some point around 2010 or thereabouts insurance companies started being required by California (at first, I think enough other states have now joined in to make it effectively all states* at this point) to do regular Social Security sweeps on life policies to see if any of them are payable.

*One policy is affected by the state of situs of the carrier, the issue state, the state of residence of the deceased, and the state of residence of each beneficiary. The likelihood that none of those is California or any of the other states that passed similar measures is so small that it’s definitely safest to just check all policies.

So any policies for which the carrier has the Social Security of the insured are getting checked pretty regularly these days.

Of course, some policies were issued before it was common to collect that information… indeed some currently-in-force policies were issued prior to the passage of the Social Security Act in 1935, and thus obviously didn’t get that information at issue. Some may have successfully collected it since. Or not! :woman_shrugging:

24

It’s a problem if we don’t have the Social Security number. If you do have reasonably complete information then you can escheat the claim to the state the policy was issued in and then it’s their problem.

Some states require interest to be paid from the date of death, so if you can’t pay the claim it becomes problematic. Some of the statutory interest rates are pretty high.

A former employer had some old policies on the books whereby the employee would buy something like $5 of paid up insurance for $2 each paycheck. We had a few where the insured was “J. Smith - assume born in 1895” and they were insured for $17 (or A. Jones for $12 or whatever).

Well the employer went out of business in 1972 so we can’t get anything from them. J Smith is now estimated to be 128 years old and there’s a valid $17 policy on him or her, but what on earth can we do with this $17??? It’d be worth thousands to get it off our books so we don’t have to keep answering auditor questions about it, but there’s simply nowhere to put it.

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25

MLM type structure with agents pushing UL with questionable sales tactics.

26

I tried to buy term life insurance from New York Life online but they forced me to use an agent. He was a nice guy, came round my house (I’d requested a physical version of the policy so he brought that with him). Besides pleasantries he basically spent the entire time trying to get me to buy more expensive life products. I eventually told him I was quite familiar with the details because I work in insurance as an actuary although he didn’t seem familiar with actuarial.

Now he calls me once a year (the policy term is 10) to try to upsell and I ignore the call.

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27

I got the ball rolling on a T10 application for myself this morning! :skull_and_crossbones: :moneybag:

28

And you didn’t call me? Tssk tssk.

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29

Hey, Daddy can shop around!!! Plus you were busy with your courses and hunting students for sport…

30

Just make sure you bought RBC.
And read the incontestibility clause before you do the medical interview.

31

For the last 10-15 years I was with Esurance (online) until more recently State Farm. But I view insurance as a commodity, and don’t need an agency. I don’t expect appreciable differences, and even if there are I’m not likely to have a claim. I didn’t go with State Farm because of the agency, they were cheapest and it didn’t hurt that the office was a 1/2 mile down the road.

32

Term insurance used to be a commodity. Permanent never was.
And in Canada, now, term insurance has some pretty significant differences in policies - some that aren’t really documented online. And the differences aren’t related to claims directly. AND those policy differences,consumers (and actuaries) have no idea of the significance, if any, of those differences.
I dunno if term is still a commodity in the US, it may be.
But even so, the reason an expert helps is in things like choosing companies around claims payments, underwriting differences, comparing policy types, amounts, setting up beneficiaries, etc. Even life actuaries are often barely better than consumers at knowing any of that.
If you’re on the edge of being rated for weight for example, you could be paying 50% higher at one company, vs. another company that has more liberal weight/height guidelines. That’s certainly a common example where term is not a commodity. And an actuary won’t know anything about how to choose in that situation.
Or what if you smoke marijuana (very common in canada). or plan on quitting smoking in the next year.

Here’s an example.
Your birthday was last month, you’re age nearest 40, you want a term 20. Nothing fancy, just someone who’s had a recent birthday.

Most policies: you purchase a term 20, pay term 20 premiums for 20 years, and conversion is a viable option for 20 years.
One policy: you purchase a term 10 policy and pay term 10 premiums for the next 11 months. Then you swap to a term 20 policy.
The second person, direct comparison over only 20 years, paid half the premiums in about the first year of the policy. that’s a pretty big difference.
At the end of the 20 years - so now they’re 60, the first person’s policy is effectively over. They either convert, or cancel. The second person however, still has another almost full year, still at age 40 premiums, AND they have the option of conversion for also another almost full year (the older we get, the older the policy, the more important conversion becomes, and it’s most important in the last year or so of a policy).

They don’t teach you that at the academy.

33

For life insurance products, I’m inclined to say to my financial advisor, “here’s what I want to do; here’s what my concerns are; here’s what I can buy no-fuss, no-muss through annual enrollment at work”. The products have enough complexity, lack standardization, and have considerations that extend beyond the products and over longer terms that, at a minimum, I’m likely to get hit with analysis paralysis. Since I’m paying an advisor to spare me the stress of analysis paralysis and for their supposed objectivity…and to be a backstop if something should happen to me, and my wife, who is less skilled in such things, doesn’t run into issues… I’ll let them say “go talk to so-and-so about such-and-such a product”.

For personal auto, homeowners, and umbrella products…the products are fairly standardized, the contracts only last 6 months to a year…and I’ve worked intimately with those products in the past. I take the easy way out, sticking with an employee/affinity program at a prior employer, which, back in the day, was intentionally priced to be the best deal around for eligible members, subject to the usual regulatory considerations and actuarial justifications. My needs for such coverage are not complex. I’ll occasionally do online quotes with direct writers just to reconfirm that there isn’t much to be gained by moving my business.

However, if my P&C needs became non-simple (e.g. if I felt strongly enough for some of my hobby gear to seek inland marine coverage; if I were looking at a second home or investment property), I’d seek out an agent. If I felt a strong desire to aggressively shop my coverage, I’d go find an independent agent for convenience. (I don’t trust the third-party direct-to-consumer comparison engines available in the US, due to past life experience and not being in the loop anymore about what simplifying assumptions different engines might make.) And sometime in the not-too-distant future, I might seek out an agent to get a second opinion on the Coverage A limit for my homeowners coverage, or to see if I can spare myself some research of various telematics programs for auto coverage.

Health insurance, I sort of view as “in between”. Fortunately, due to employer subsides, I haven’t really needed to shop. It’s always made the most sense for my wife and I to accept what was provided through work, despite certain shortcomings with some offerings. And, when I took over handling such things for my late father, his retirement plan subsidized coverage through one particular set of Medicare Advantage plans that was fairly easy to choose among.

However, my wife, due to her disability, has access to (US) Medicare, so we get the annual enrollment mailings communicating all the different options that would be available to her if, for some reason, we didn’t want her to be covered under my employer’s plan. If I had to wade through that mess to make a decision… while I trust I could puzzle out “the best” choice, I’d likely seek out a third party just to save myself the headache.

34

Life insurance isn’t that hard. Even I can do it. The fact that many advisors can’t isn’t an indication that life insurance is complex or difficult lol.

Determine the coverage amount based on the financial loss.

Determine the appropriate type based on timeframe of need.

Compare premiums of companies for that coverage and type.

Start at the least expensive policy, look at other policy benefits and the incremental costs. Decide given the incremental cost if you want that benefit or not.

Occasionally you have to throw in a wee bit of cultural assumptions and utility theory, but that gets defined explicitly if done right.

For life insurance as insurance, that’s pretty much good enough for most people. It only gets longer than that when you start exaggerating non.life insurance attributes, which isn’t necessary for most people.

A lot of the time I spend with consumers is spent educating them on how they can determine the right coverage and type. Once they’re educated it’s not that hard.

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35

I’m not sure what all you got with State Farm, I’ve been with them for about 15 years, in two states (so two different agents). Their pricing hasn’t always been the lowest but they are definitely competitive. We’ve had… I want to say three claims with them, two auto and one home (hail damage) and they’ve been absolutely zero hassle and paid me at least what I thought was fair if not a bit more. I finally added an umbrella policy this year.

36

How do they know to trust you? One of the worst life insurance stories I dealt with was a couple who bought universal life, paid loads more than they would have with term, and were left with a valueless policy at the end. They would have done better to spend a fifth of the amount on term and 4/5s on an index fund. Saying “go to an advisor” ignores that there are lots of bad advisors out there. I mean, most sales people care more about their income than your interests, even if they care a tiny bit about their customers too.

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37

Well, I don’t tell people to go to an agent generally speaking. I agree with your point, I don’t really have a solution. Though there are a lot of advisors these days that are good. Everyone has the internet and can fact check to a certain extent.

In terms of trust, what I do is educate. 45 minutes on the phone before we really get to seeing any numbers. And I cover stuff in depth that isn’t on the internet. And, I’m far more expert at term insurance than any other advisor I’ve met in the industry. The people that tend to work with me tend to be professional, earning a decent income, and analytical. The people that demand that I just give them a quote, I don’t generally end up working with them.

That process originated because I was software/tech guy when I started in retail. I had no sales training or knowledge and no mentorship. So I read every policy contract and application, and wrote out answers to questions and answers that I figured people would ask. I never had any of the ‘say this to pressure them to buy’ knowledge…and, I have a number of things that I later learned were often considered to be fatal mistakes in sales that I do. Much later I found out that in professional sales those fatal things are actually common because I’m filtering people out, not something most advisors do. I.e. I ask some yes/no questions, which allow a consumer to say no. Common knowledge is never ask a yes no question because people can say no and that ends the conversation. I later learned that in fact qualifying people is part of professional sales, and I was doing it inadvertently. So I guess what I’m saying is that a lot of advisors in the industry think they know sales, but don’t.
I’ve had some high tech/sales training since, stuff that Google, Shopify etc do, and it aligns with what I do.

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38

I check with a few brokers/independent agents (just skip the captives.) Then I run their best offers through a direct rater since some companies have cheaper pricing for direct, and also run some direct quotes for companies the brokers didn’t run.

Finally, I pick the cheapest option of the bunch (after throwing out anything with abysmal customer satisfaction or other red flags), and if an agent offered it at that price I’ll take the agent. Otherwise direct.

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