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Life Insurance - Learn from an old agent

 Life Insurance - Learn from an old agent

Life Insurance - Learn from an old agent

Life insurance is an insurance product that pays upon the death of the insured. It should really be called "death insurance," but people don't like that name. But she believes in the death of the individual. In fact, the insured is the economic loss that occurs upon the death of the insured.

Read Also: 6  common life insurance mistakes you should avoid

These economic losses take many different forms, such as:

The flow of income to any "breadwinner" in the family

Loss of services for the mother's family residing at home

Final expenses when the child dies

The final expenses of the individual after illness and medical treatment

"Keyman" coverage, which insures the valuable owner or employee of a company against the economic loss that the company may incur upon his death.

Estate planning insurance, where the person is insured to pay real estate taxes upon death

“Sale and purchase agreements,” under which life insurance is purchased to finance a commercial transaction upon the premature death of the parties to the deal

Accidental death insurance, where a person buys a document that is paid in the event of his death due to an accident

Mortgage insurance, where the borrower buys a document that pays off the mortgage upon death - and many more.

Life insurance has been around for many years, and sometimes, it's become a vastly improved item. Insurance agencies have had the option to create mortality tables, which are investigations of measurable examples of human passings over the long run ... typically over a long period of 100 years.

These mortality tables are surprisingly accurate, and allow insurance companies to closely predict how many people will die each year at any age. From these tables and other information, insurance companies derive the cost of an insurance policy.

The cost is typically communicated in yearly expense per thousand inclusion. For example, if you want to purchase coverage of $ 10,000, what's more, the expense per thousand is $ 10.00, your yearly premium will be $ 100.00.

Current medication and better sustenance have expanded the future of the vast majority. The rising future has prompted a sharp drop in extra security expenses. Much of the time, the expense of protection is just pennies per thousand. There is just one sort of extra security, and that is term protection.

This means that a person is insured for a certain period of time, or for a certain period. All other life insurance products contain term insurance as a major component. There is no other item they can use. Nonetheless, insurance agencies have made many, numerous other life products that tend to hide the reasons for life insurance. It also greatly enriches insurance companies.

Term Insurance

Essential life coverage is an inexhaustible yearly protection strategy. Every year, the premium is marginally higher with age. Insurance agencies planned a level charge strategy, which halted yearly expansions in expenses for policyholders. 

Essentially, insurance agencies gather all protection charges from age 0 to age 100 and afterward partition them by 100. 

This implies that in the early long stretches of the arrangement, the policyholder pays more cash that is needed to back the unadulterated protection cost, at that point in later years, the charge is Less than the expense of unadulterated protection. 

A similar level term item can be intended for states of any length, like 5, 10, 20, 25, or 30 years. The strategy for computing the normal charges is something similar for each situation. 

Be that as it may, this new item messed some up. Insurance agencies realize that by far most of policyholders don't keep a lifetime strategy. Thusly, policyholders at the term level would pay future charges and afterward drop their arrangements. The insurance agencies were glad to have the option to keep the cash. In any case, over the long haul, they built up the idea of financial worth.

Cash Value Insurance

With money esteem protection, a segment of the unused premium you spend is added to a record connected to your approach. The cash isn't yours ... It is completely possessed by an insurance agency. On the off chance that you drop your arrangement Ask for a discount, they'll deduct that money to you. Else, you have different choices:

1. Use the cash value to buy more insurance

2. Use the cash value to pay the current installment

3. You can borrow money to borrow money

4. At the time of death, the insurance company keeps the cash value and pays only the nominal amount of the insurance policy.

So does this monetary value product make sense? My answer is "No!"

Cash-value life insurance comes in many other names, such as:

  • The whole life
  • Cosmic life
  • Life-changing
  • Interest in sensitive life
  • Non-sharing life (no profits)
  • Sharing life (dividends)


Many life insurance agents and companies promote their products as investment products. But securing cash value is not an investment. You should never combine investment dollars and premiums into one product. 

And investment You should not invest in an insurance company. They are intermediaries. They will take your investment and invest it She is the same, and she keeps the difference.


Consider the method that agents use to sell life insurance and compare it to any other type of insurance. As you will see, compared to other insurance products, the ways and methods of selling life insurance are ridiculous.


Would you ever consider buying an auto insurance policy, a homeowner policy, or a business insurance policy in which you paid an extra premium that the insurance company kept, or had you borrow from them? But oddly enough, life insurance agents have had great success convincing smart people that monetary value life insurance is a good product to buy.


Want to know why insurance agents sell cash value insurance and avoid term insurance?


A committee

Cash value insurance for insurance companies is really very rich. Therefore, in order to encourage sales, they paid huge commissions. Regular insurance commissions range from 10% to 50%, sometimes 100%. 

But the cash value insurance commission may be as high as 100% of the first year premium, and there will be good renewal commissions in the next few years.

But the commission is not the most important. There is also a premium rate, term insurance is cheaper than cash value insurance.

Here's an example of a 30-year-old non-smoker who bought $ 100,000 insurance:

The insurance cost for a term is $ 0.50 per thousand premium and the premium is $ 50.00. Add 100% commission and the commission will be $ 50.

The cash value insurance cost is $ 12.50 per thousand, and the premium is $ 1250.00. When the commission is 100%, the commission is $ 1250.00.

Therefore, you will find it easy for the agent to put the financial position in front of the client. He would have to sell 25 insurance policies in order to earn the same commission as only one policy with a cash value.

However, I believe the agent has violated his fiduciary duty to the client, which is to provide the customer with an obligation that goes beyond his or her own needs.

Clients also have to let go of their conscience. My view is that life insurance agency companies do one of the following three types of business:

1. Ignorance

2. Greed

3. Knowledge and responsibility

What is the agent you want to deal with?

How do I know this stuff?

When I started my job in 1973, I was clueless about how life insurance worked.

The insurance company taught me to sell life insurance and to discourage customers from buying term insurance. But after a while of reading and researching, I learned that ensuring monetary value is a bad thing. I started selling term insurance, refusing to let go of my conscience, and also returning some early clients and switching their insurance policies from monetary value to term insurance.