LIFE
Life lessons from page 24
Low cost UL ends-up costing big on the back end
When I worked on a sales desk, there was a company that I always lost
sales to for their low-cost death benefits. ALWAYS. I could not win a stinking
case against this insurer; they were highly rated, established, and had great
financials in addition to fantastic marketing/brand recognition. And oh- the
death benefit solves! For years, each time an agent would tell me that they
were in competition against this European-owned company, I would coil.
Eventually, I moved into a product development role, and I no longer had to
experience the feeling of personal loss due to a futile attempt to compete
with this behemoth.
Close to a year ago, a national news article reported that the
aforementioned company settled a class action lawsuit, affecting 70,000 UL
policyholders, for increasing inforce cost of insurance (COI) rates- as much as
38%. To date, the company has been involved in numerous lawsuits regarding
their increases in COI rates.
The takeaways
I don’t have all the answers. How would I have suggested the first
vignette have been avoided? I don’t know- I actually bought many of those
same insurance policies myself. As for the lesser-rated insurer’s MYGA,
I have intentionally purchased products from companies that are rated
less than an “A” with A.M. Best. As for the final “lesson,” I don’t know that
anyone could have anticipated what would have happened with this life
insurance company? Every case is different.
However, two things stand-out to me, after hearing all these experiences:
If it looks too good to be true, it probably is.
Translation: if a product is SO MUCH MORE competitive than
everyone else’s product, the insurance company will have to be
made whole eventually.
We can all benefit from the wisdom and experiences of those who
have served before us.
Translation: share your knowledge, and mentor others, so that
the industry is better-off for it, and uncomfortable conversations
can be avoided.
26
Perspectives
Q4 2019
“If a product is SO MUCH MORE
competitive than others, the
insurance company will have
to be made whole eventually.”