In normal times I'm not a big fan of term insurance for people in mid-life or older. It's fine for young couples just starting out or for specific business protection purposes, but that's about it.
The problem is that these are not normal times and term is cheap and cheap is what pepole want... or can afford. Besides, there are term plans where you can get all your money back (called ROP - return of premium) at the end of the term.
Anyway, did I say "cheap?" Sorry. My mistake. Every day agents are getting letters from their carriers saying how term is going up in price early next year... and will keep going up in price until the insurance companies can get a better return on the investments they make with the money you send them.
The "term train" is leaving the station. I'm seeing rates go up 10% to 20%. Paying a higher rate over ten or twenty years, is huge. They may come down, but it won't be for five or six years... and by then you will have "aged-in" to a higher rate if you wait.
So, if you are in need of greater protection you really need to get to the station and get on board, because once this train leaves, it's not coming back and you will be left on the platform having to pay a higher fare for the next train that comes along.
That said, a lot of folks have gotten the word... because life insurance sales have been huge. I thought I'd give you some good reasons to look at your own portfoio and decide if we need to talk.
In addition I thought I'd talk a bit about getting into this biz... since I'm getting more frequent calls about it from people who get this fish-wrap and who had jobs with companies... that are not coming back. If the fit was "right" I'd love to bring some hard-working men and women into my agency (100% commission only) mentor them, train them, and help prospect for them... make a few points on their production (that's how the deal works)... and when they are ready, let them fly on their own and leave the nest. If that is you, talk to me.
-Al
Did you know that life insurance sales have increased 8% through September over 2008, the best nine-month start to a year on record. For the most part, this growth is being driven by increased sales of both permanent insurance and term products.
I'm seeing this in our Sacramento area. Americans have watched the value of their assets go down, but life insurance sales rise, proving to me that the consumer's thirst for safety is real and the inherent strength of this financial vehicle is not going unnoticed. In fact, recent special reports from Moody's Investors Service and A.M. Best (well-known ratings services) found that mutual insurers, which are owned by their policyholders, had stronger capitalization, a less risky business focus and other advantages over publicly traded insurers -- findings that support the life insurance results and trends we are seeing.
Many companies are having a bang-up year which is strong evidence that consumers want the comfort of guarantees from financially strong insurers and they've been very receptive to hearing from their life agents.
Call us "pushy" but most of the agents I know strongly believe that it is the moral obligation of the industry -- especially in this environment -- to sit down with clients and take an active role in ensuring that their financial plans are on track.
Last year, when the stock market declined 37%, real estate plunged over 11%, the cash value of whole life insurance from most mutual life companies increased in value, as it has in the past 100+ years. I have no doubt that people in this area increasingly value and appreciate this safety, security and stability. Even further, against the backdrop of the volatility in today's equity markets, consumers are turning specifically to boring old life insurance to help them overcome their economic hardship, recognizing that financial strength and stability of most companies in this economic storm offers the security, stable returns and peace of mind they seek."
I know. You hear "life insurance" and you think "death insurance!" Not true. These days clients are utilizing whole life insurance for the death benefit it provides, as well as the living benefits afforded by the product's cash value, which help consumers meet retirement, education or other cash needs. And not only are sales of life insurance increasing; policyholders are also placing more money into existing policies to build additional guaranteed cash value for future needs.
So having read the above and knowing the market is there, do you want a new career?
While the downturn in the economy has left many Americans jobless and the national unemployment rate hovers near 10%, a ton of people are seeking entry into this field. Some of the career houses (like New York Life) are hiring in communities across the country.
There are two kinds of agents. One is called "captive" in which they work for one company (like Met or NYL or Northwestern) and that's all they sell. They get a small salary to start out, or perhaps just an advance against later commissions. The training is good, but the pressure to produce can be huge. You can't keep coming back to the store and telling your manager you didn't close the sale... or they are going to pitch you out on your butt (and often want their advance money back too!)
The other paradigm is the independent agent, which is the vast majority of agents out there... mainly because there are fewer and fewer career houses anymore... it's just too expensive to bring people in and train and pay them when the wash-out rate is often 90%.
Indie agents write for as many carriers as they like... but the start-up is brutal... you starve for the first three years... and most don't survive. While there is plenty of free training provided by the carriers, it takes time and study... without the "mentor" you would have at the "captive" house.
I'm not a "captive" agent as I like to sell for many different companies... and I like being my own boss. But others like the kind of security (albeit lower returns) that one can get with a big house, especially when starting out.
I get one call a week from someone wanting to get into this industry. I do my best to disuade them... unless they have a year of living expenses in the bank... even if they join a "captive" house.
So, if you are a mid-level executive-type or ex-sales rep out of work, don't be surprised if you get a call from an insurance recruiter. It's a good move... if you have the financial resources and the self-discipline to get past the first 36 months.
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