In my article “Life Insurance Policy Themes for 2023,” I suggested a tweak in what I called the “discourse” among agents and others in the life insurance business. The tweak was to talk less about why to buy life insurance and more about how to buy it, highlighting the role and value of the agent in that process.
I also posed some questions about the new regulatory and practice guidelines on suitability and best interest. I asked whether the guidance would somehow preclude an agent from casting a prospect’s suitability profile in such a way that the profile turns out to be the agent’s, not the prospect’s. I asked whether a carrier’s financial strength would factor into a product’s suitability. I asked whether a service-intensive product sold by a carrier with a poor reputation for policyholder service would be suitable or in the prospect’s best interest. I wondered whether there would be suitability requirements for a marriage between a complex, service-intensive product and a complex, service-intensive planning application. I noted that I would wait to hear what the experts say about how the guidance addresses the questions I posed, if it does at all. For the record, I don’t think it will.
I’ve received a lot of feedback on that article
(and others) from agents, fellow authors and others involved in the business in various ways. Interestingly, the feedback on that article was less about the discourse or the guidance per se than it was about the bigger picture of how the substance of both topics are impacting the business of being a life insurance agent today. Each group voices its own set of interests, concerns and predictions about the future of their business. Their voices are articulate, their comments insightful and their thoughts about the future of the business often downright disturbing. Here, in a nutshell, is an unvarnished, lightly annotated summary of the themes that I’m picking up on from feedback on my articles:
- “There’s no way that most buyers understand the products they’re buying today.” When I ask how that differs from the past, I typically hear, “Are you serious? There’s no comparison!” I’m not sure I agree.
- “A lot of agents, meaning those other guys, don’t understand the products either.”
- “With notable exceptions, most of the information we get about products is too slick, superficial, one-sided and repetitive to be of any practical value.” Agents tell me that they want the emphasis to shift from why to use a certain product to how to use and illustrate it, especially in the context of a planning application.
- The time it takes an agent to make an effective, comprehensive presentation to a prospect vastly exceeds most prospect’s attention spans. This puts tremendous pressure on the agent to get the information across in the prospect’s undisclosed timeframe. It also dramatically increases the agent’s risk that the prospect will tune out before acknowledging the critical “what if’s” of policy performance. Agents tell me that they would welcome innovative, compliance-approved ways to convey more information to prospects in less time. That information needs to include a clear statement of how the client-agent relationship works, what’s expected of each party and so forth. There’s trouble brewing, some tell me.
- “You’re right to point out the problems with policyholder service, but you’re barely scratching the surface there.” I apparently need to write more about how impactful those problems are for agents’ business models, profitability and, of course, the viability of their long-term relationships with clients.
- Some seasoned agents in the advanced markets are urging me to follow up on two articles, namely, “Deconstructing a Leveraged Life Insurance Plan That’s on Borrowed Time” and “Leveraged Life Insurance Plans and the Muted Call to Arms.” They’re having difficulty orchestrating the engagements described in those articles and would welcome suggestions for how to explain the problem to clients and their advisors, lay out the options and, importantly, illuminate their value proposition to both clients and advisors in the context of those engagements. Maybe then they can get paid for their time.
- “More and more professional advisors know less and less about life insurance or what we really do on a case. This isn’t just bad for networking and referrals. It makes it tougher to get through cases with them.” While I wholeheartedly agree, I don’t think the fault lies exclusively with the advisors. Perhaps the most persistent and pernicious reason for the lack of communication and even collegiality between agents and professional advisors is that each continues to insult the intelligence of the other. The advisors stubbornly refuse to acknowledge the roles that life insurance can play beyond estate liquidity and to expand their planning approach accordingly. The agents just as stubbornly refuse to acknowledge the risks associated with their most vaunted products and planning techniques. So, they talk past each other, largely because it’s in neither side’s commercial interest to change.
- Some took issue with the premise of my articles on the “no-sunset life insurance paradigm shift,” specifically, “The Advanced Life Insurance Market May Soon be in Retreat” and “The No-Sunset Life insurance Paradigm Could be Accelerating.” I understand their point of view, but that’s my story, and I’m sticking with it. The press is becoming involved in this discussion, albeit from a more political perspective. The wealthy will become attuned to the conversation, and many will find no-sunset a plausible, convenient reason to balk at adding life insurance for estate liquidity.
When I consider these recurring themes, I see a two-sided coin. One is the opportunity presented to buyers by products with premium flexibility and real or simulated investment flexibility. The flip side is the crisis for agents who: (1) have to convey increasingly complex information about those products in the context described above; and (2) deal with the practice and risk management aspects of selling and servicing those products. This dilemma is only going to get worse in my view, as the policies become ever more opaque, the applications in which they’re deployed become ever more service intensive and the policyholder service issues themselves persist.
The To-Do List
There’s a common thread running though most of the above themes. Therefore, the following suggestions are designed to be synergistic and multi-purpose.
- Saying more in less time. This one suggested step would enable agents to address several concerns with one fell swoop. In my article “A Conversation About Life Insurance Products for the Merely Well-to-Do,” I noted that the agent had collaborated with members of his study group on a template for presenting products to their prospects. Beyond conveying information in an efficient and understandable manner, the template is designed to establish parameters and mutual expectations for the policyholder-agent relationship, which agents tell me they wished they had made much clearer at the outset of those relationships. I recommend that agents also look at my article “Life insurance Planning for the Merely Well to-Do” for additional suggestions on what to include in the template. Maybe agents can put the template on the agenda of their next study group meeting.
- Generally speaking, speak more specifically. Agents who are trying to network with advisors in the advanced markets and close the gap that I referred to should refresh and retool their presentations to those advisors. They should give special attention to advisor-targeted educational content, advisor-targeted context and knowledge-appropriate cadence of the presentations themselves. For some suggestions on content and context, see “A Sound Approach to Composing a Melodious Life Insurance Presentation,” a central thesis of which is that discussing risk and its mitigation doesn’t cause illness in the presenter.
- Make each networking encounter a teachable moment. See my article “How Life Insurance Professionals Can Screen Estate Planners for Better Networking” for how agents’ well phrased questions can teach advisors about what agents do and how to work with them on cases.
- Choose inspiration over confrontation. Agents working in the advanced markets who encounter prospects who subscribe to the no-sunset paradigm will have a choice. They can argue the politics with the prospects or, referring to my articles, show them how life insurance can enable those prospects to hedge their bets without wedging themselves into a regrettable position. It’s a choice between confronting prospects or inspiring them.
I believe that life insurance has never been a more important component of individuals’ plans and will only become more so. However, I also believe that the concerns that I hear are real and need to be dealt with sooner rather than later. Hopefully, my suggestions offer a reasonably simple and sensible way to get started on that in 2023.