I was recently interviewed by Jason Hartman of Authority Magazine for their series “5 Things You Should Ask Before You Purchase a Life Insurance Policy”. This article was originally published by Authority Magazine on July 31, 2020 (here).
Thank you so much for doing this with us! Before we dig in, our readers would love to get to know you a bit. Can you tell us a story about what brought you to this specific career path?
I started out as a life insurance agent. Over the next few years, I began to work with the clients of financial planners and attorneys. Often, the engagements were about “unwinding” insurance policies as they did not meet the client needs and/or had issues. This led me to become interested in financial literacy and consumer advocacy.
Can you share a story about the funniest mistake you made when you were first starting in the industry? Can you tell us what lesson or takeaway you learned from that?
We were on a business trip having dinner at a restaurant. I asked the waiter for a recommendation for a glass of wine, which he provided. I enjoyed the wine so much, that I ordered a second glass. When we received the bill, it turned out that the wine was $25 a glass, which at the time was quite high. The take-away is that before making any purchase, you should understand the cost. Consider this when you purchase an insurance policy. Make sure that you are quoted a premium that reflects your medical history.
Are you working on any exciting new projects now? How do you think that will help people?
I’m working on the Get Ready Initiative. The mission of the Get Ready Initiative is to help people maintain their financial preparedness. This is a culmination of projects over the last few years. The Get Ready Initiative includes the Get Ready Financial Calendar (providing a monthly action item to maintain financial preparedness), the Get Ready financial organization system, Get Ready Podcast, Get Ready Toolkit, Get Ready Newsletter, Get Ready Financial Literacy Advocates Directory, Get Ready Principles and the GET READY! Financial Standards, a best practices playbook for the financial services industry. along with providing best practices guidelines.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Is there a takeaway or lessons that others can learn from that?
In 1995, I became a Life and Disability Insurance Analyst. This license from the California Department of Insurance allows you to charge either a fee for consulting-based engagements or receive a commission for selling an insurance policy. The license prohibits you from receive both a fee and a commission. Having this license and the ability to receive a fee, changed the nature of my client relationships. It enabled me to review insurance planning scenarios with the knowledge that I would be compensated whether or not a policy was sold. This removed the need to sell a policy to receive compensation. While commission-based sales are acceptable, they do provide an inherent conflict of interest wherein your compensation is based upon what the client purchases, rather than upon finding the best product for their needs. Most commission-based salespeople work in their client’s best interests; however, they are not incentivized to do so.
What advice would you give to other people in the insurance field to thrive and avoid burnout?
Great question. It’s important to enjoy what you do. Understand what parts of your job you like and what you don’t like. Then find a way to concentrate on the parts that you like; whether it’s working with clients, marketing or analysis. You can either do so through making a shift like mine (gaining a consultant license) or by hiring an employee, entering into a partnership or joining a larger firm. The key to thriving is deriving satisfaction from your work.
Ok, thank you for that. Let’s now shift to the main focus of our discussion. As an “insurance insider”, you know much more about insurance than most consumers. If your loved one wanted to buy a policy from another person, which 5 things would you advise them to find out about before committing to a policy? Can you give an example or story for each?
- Be clear on what your goals and objectives are. Clearly state your goals and objectives and seek out a plan that meets these goals and objectives. Insurance salespeople will often try to sell you a specific plan and then try to make it fit for you (putting a square peg in a round hole).
- Review options with multiple companies. Companies have differing underwriting classifications. This means that with a particular medical condition such as high blood pressure; one company might consider you for their best available rates, while another company will consider you for a higher rate class.
- Review company financial strength ratings. Even a short-term life insurance policy will usually be in-force for at least 10 years. It’s important that your insurance is with a company that will be in business when it’s time to for a claim.
- Review the qualifications of the insurance agent that you are purchasing insurance from. Whether you are working with an insurance agent, financial planner or online service, it’s important that you work with someone who has knowledge and experience. With insurance agents, consider working with someone who has the CLU (Chartered Life Underwriter) professional designation. If you are considering purchasing coverage from an app or website, consider whether that firm has been around for a while and what their approach is. In other words, are they geared towards making sure that you are educated about insurance and purchasing the right policy or are they more focused on the the process?
- Understand what you are buying. If you are purchasing a life insurance policy where you don’t understand how it works, you may end up with a policy that doesn’t fit your needs. Many permanent (cash value) life insurance policies are terminated in the first four years, because the policy owner doesn’t understand what they’ve bought. This can result in early termination of a policy which may lead to incurring a significant surrender charge. Long term, it may lead to having to make the choice of paying higher premiums than originally projected or losing the coverage.
& strategy and website research.
Insurance agencies or companies are often known to be very creative and innovative marketers. Do you use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?
Insurance companies usually focus on selling a particular product rather than providing coverage that solves a problem. If someone is looking for life insurance, they want to make sure that there is money available for their family when they pass away. That’s a simple issue. People are not looking for a new way to save money for retirement.
Insurance companies should design term life insurance policies that are available for any period and have flexible death benefits. The death benefit could be changed each year on the policy anniversary. For example: the policyowner could decrease the death benefit as their other assets increase or they no longer have a need (child leaves the nest). Also, it would allow for them to increase the death benefit, if there is a new need, such as the birth of a child. Auto insurance and homeowner’s insurance policies allow for coverage changes without underwriting — for example on a homeowner’s policy, coverage can be increased, often automatically, if reconstruction costs rise.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
There are many people who’ve helped me to continue to grow as an author and financial literacy advocate. A colleague, Neil Granger is also a life and disability insurance analyst and we have a common interest in best practices. The Get Ready Financial Standards are a result of our discussions on cases that we’ve reviewed. It’s been an opportunity to share our lessons learned.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Increasing financial literacy and implementing consistent best practices. This would empower consumers and provide long term benefits to financial advisors and companies. Informed consumers would be able to choose products that fit their needs. In turn, this would lead to higher consumer satisfaction which would lead to increase client retention and reduced product terminations.
I’ve created the Get Ready Financial Standards which is a best practices roadmap for the financial services industry designed to empower consumers. The Get Ready! Financial Standards help financial consumers and members of the financial services industry get on the same page. They provide common sense standards and set reasonable expectations for consumers. Member of the financial services industry that adhere to these Standards are dedicated to acting in the best interests of the consumer in a professional and fair manner.
How can our readers follow you on social media?
Readers can keep in touch by visiting my website (www.tonysteuer.com) and connecting on LinkedIn (www.linkedin.com/in/tonysteuer).
Thank you so much for joining us. This was very inspirational.