How Policy Can Affect Agents

An article about how health insurance laws can affect insurance agents. Also what some of the most popular types of insurance policies are.

There are quite a few products that insurance agents can sell and one of the most popular ones is no medical exam life insurance, which allows a person to purchase life insurance without having to undergo a medical examination as would be required by many other life insurance policies. While life insurance with no mandatory medical exam is a product that has been on the market for several decades and is expected to be available for quite some time into the future, there are some changes to the insurance industry that are on the horizon.

These won’t have too much of an effect on the consumers, but could be problematic for certain insurance agents, particularly those who can only sell proprietary products. A task force that is being lead by Don Trone, who founded 3 Ethos now has the task of putting together guidelines related to the sale of life insurance products. These new guidelines have the objective of setting some new industry standards for financial planners that include life insurance as part of a complete range of financial planning services.

The practice of bundling life insurance with other financial services, like wealth management, is quite common in the industry. This is because life insurance is an important financial product that many people would have an interest in getting, no matter how much assets they have or the level of service they need from a financial planner.

But the new standards that are being proposed say that there should be no conflict between an adviser’s compensation and the recommendations that they make when discussing a life insurance strategy to one of their clients. This does cause a problem for agents who have a proprietary relationship with the company they are working for, as they are obviously supposed to be promoting insurance products that are offered by their employers first. 

However this doesn’t mean that those agents and financial planners will be facing serious problems selling life insurance to their clients. One of the ways to comply with the proposed standards is that the adviser will simply need to disclose the fact that they receive additional compensation when they sell life insurance products belonging to their employer. Clients are quite likely to understand this, as it is only logical that a planner gets commission for a product that they sell. 

Getting life insurance is an important financial decision. Therefore, clients should examine the details of any insurance packages that they are offered by a financial planner to see if they would meet their needs. If not, then there isn’t any obligation to take up the proposed insurance solution that is being proposed by their planner. Taking a couple of minutes to do some independent research could reveal the differences offered by various life insurance policies, such as coverage amounts and premiums. Consumers can then get a better idea of which insurance solution will be the best and they can always ask their adviser on how they can integrate it in their overall financial plan, even if they didn’t buy the insurance from him or her.

Posted by on Aug 13, 2012 in Blog | 0 comments