All Insurance Agents Are Not Created Equal

[This is a guest post from Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF. It is a basic post, but drives home a solid point, which is to discuss how to choose the insurance sales person with which you should work. Given that I’ve had some bad experiences with an insurance salesman myself, I thought this advice was spot on and wish I had received it while I was in training. We have no financial relationship.].

Unlike medicine, which has a standardized path that physicians must take to gain the education, training and experience requirements necessary to obtain board certification, the insurance and financial services industry does not. In fact, for the most part, anyone can call himself or herself a “financial advisor.”

Believe it or not, according to LIMRA (Life Insurance and Market Research Association), the agent retention rate for 2010 was 11%(1) . This number represents the percentage of agents who are still under contract through December of their fourth year after hire. What does this mean to you? It simply means that, if you are a Resident or Fellow and choose to work with a newly licensed insurance agent, the odds are good that by the time you complete your training, that agent or financial advisor is no longer working for the same company or is no longer in the profession.

Therefore, if you are in the market for an insurance agent, I would suggest that you ask the individual(s) you are considering about any professional designation(s) and/or certification(s) they have earned. Not only does this show a commitment to the industry as certain experience requirements must be met, these individuals should also have a good understanding of the
financial planning process. You might also want to ask the following questions:

• What is your educational background and area(s) of expertise?
• How long have you been in the industry?
• Which disability insurance companies do you recommend most often and why?
• Which life insurance companies do you recommend most often and why?
• How much experience do you have working with clients in my medical specialty?
• Do you have any affiliation with any specific insurance company?

Beware agents that are “captive” and can only offer policies from one company or may have a strong financial incentive to do so. Ideally, you want to purchase your policy from an insurance agent that represents several insurance companies, provides you with illustrations of coverage from each and will review the differences between them with you in detail. This way you can make a decision that best meets your individual needs, goals and budget.

The time to ask your questions is before you purchase any insurance products. All too often, I see physicians in situations that could have easily been avoided if they took the time to really understand who they were working with and what they were purchasing before they “signed on the dotted line”.

Finally, remember, since the contractual language and premium rates must be approved by the insurance department of each state before a policy can be approved for sale by a particular insurance company. Since the industry is heavily regulated, you will not be paying anything more by purchasing your policy form an “experienced” insurance agent than you would be by purchasing your policy from a newly licensed or “inexperienced” insurance agent or broker.

1 (LIMRA’s Agent Production and Retention Report 2010, published in September 2011)

What do you think about Mr. Keller’s advice? Have you had a particularly bad interaction with an insurance salesman in the past? What advice would you give to others? Leave a comment.

These are the personal views of the author and may not represent the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries or affiliates thereof.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9th Floor, New York, N Y
10017-6603, 212-541- 8800. Securities products and advisory services are offered through PAS, 1-516- 677-6200. Financial Representative, The Guardian Life Insurance Company of America, New York, NY (Guardian). PAS is an indirect wholly owned subsidiary of Guardian. Physician
Financial Services is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC.

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