Although this may not be the first policy purchase experience for everyone, a shockingly large number of people go about buying life insurance in this way. They trust that the agent will put them on to the right life insurance plan. The insurance agent, on his part, is happy to make the decision. It allows him to control the transaction, and he can easily pick the policy with the highest agent commissions.
Identifying your role
Now think about that first policy buying experience again. Did you have a role to play in the purchase? In other words, did you look through potential policy options, examine your coverage needs, and seek reviews and advice from friends and advisors, before calling the agent? Or did you simply listen to the agent's sales talk and buy a policy based solely (or mostly) on the contents of that meeting?
If you belonged to the first group-those who did their homework before buying-congratulations! You understood the importance of life insurance from the get-go and were an active participant in buying your first insurance policy. However, if you belonged to the second group-those who entrusted the purchase choice to the insurance agent-you played no role in the policy buy. On the contrary, the policy was sold to you.
The dangers of being a passive buyer
Allowing a third party to sell you an insurance plan is always a mistake. For the time being, let us just discount the thousands of unscrupulous agents that just want to make a quick buck-though you must remember the danger of entrusting your financial future to such characters. The vast majority of insurance agents are good, honest people who genuinely want to help you find the ideal insurance policy. However, even if they have your best interests at heart, they may not understand your specific financial situation as well as you.
For instance, most insurance agents will first try to sell you a whole life plan. It is not as if they will deny you a term plan with its cheaper premiums if you so desire, but a term plan will not be their first option. This is because the longer duration of a plan, the greater the commissions for the agent. Moreover, the agent may honestly believe that the investment and the cash value features of a policy with higher premiums are preferable to cheaper term policies that offer no returns on investment.
The whole life policy may indeed be the right fit for you. But what if it isn't? When dealing with insurance agents, you must nurture that doubt. It will encourage you to ask for other options as well as about disadvantages like hidden costs, exclusions, premium hikes, etc. The more you know, the better placed you will be to buy an insurance policy that fits your needs perfectly. You will no longer need an agent to sell you a policy.
Written By: Deepak Yohannan
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
For more articles by Deepak Yohannan, please visit MyInsuranceClub.com
You may contact him directly on Twitter: @dyohannan