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Why Anonymous Competition Works for Life Quotes

Written by Aaron Pinkston, Wed, Oct 28 2009

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This is a true story. What you don’t know might hurt you. If you ever wondered why getting quotes from multiple agents is necessary, read on.

Competition is good for you because it is the only way you will ever see multiple agent perspectives. As I’ve written in other articles, it is important to have different view points because not all agents represent the same companies or know the details of their companies to the same extent.

Competition Keeps Agents Honest

But the darker side of competition is that it helps keep agents honest. Unless you have someone else competing for you, your agent may decide to get paid more. Because life insurance can be so confusing, this means you might never know about options that pay less commission to the agent.

Make agents compete against each other to keep them honest. Don’t fall victim to your agent’s desire to make more money at your expense.

True Story of an Insurance Policy

Several years back, I helped support other insurance agents. When they got into a tough spot, they gave me a call. I worked with over 600 agents – fully independent agents, investment types who sold life insurance on the side, semi-captive agents, (and even some captive agents too).

One day, while one of my co-workers was out, an agent she worked with gave me a call while sitting in front of his clients. He and I befriended each other after finding out we were both Eagle Scouts and had other things in common.

His clients wanted to pay a single sum into a life insurance policy and have it last the rest of the husband’s life. They knew how much they had to spend, but they wanted to know if there was any way they could buy more life insurance with the same amount of money. (hint: I love a good challenge.)

I duplicated the work my co-worker did to understand the exact situation. After dismissing a few possibilities, I suggested another approach. It was a little unorthodox and would actually result in less insurance for the first year, but they could increase the husband’s life insurance amount by about $20,000 for every other year and still pay the exact same amount of money.

Fantastic! It was the solution they all seemed to be looking for. But there was one problem.

A Story with a Sad Ending

After my co-worker returned the next day, she looked over my work and asked if I discussed the “target premium” with the agent. That’s the base amount that affects the agents commission. It dropped from about $16,000 to $12,000. While still a good pay day, the agent would not make as much money.

I told her the agent didn’t seem concerned with the target premium, and it certainly wasn’t the concern of the couple buying life insurance. She asked me to call the agent to explain he would get paid less.

To his credit, he didn’t know what to do. Some of the agents I worked with at the time would have easily decided in their own favor. He eventually decided he “deserved to get paid for the work he did,” and convince the couple taking the larger amount of life insurance was not the right thing to do.

Amazingly, it worked. Life insurance agents must make suitable suggestions, but they are not required to put your interests ahead of their own. The agent padded a healthy pay day.

How You can Get Better Life Quotes

Would the agent have decided getting paid less was okay? Would he have let the couple continue to be excited about the other option if he was in competition? I believe so.

There are lots of little life insurance secrets hiding in the shadows. Some agents know about them, but these secrets seem to make it into the light only when agents are in competition.

Make the agent who sells you your life insurance policy work hard for you. Put them in competition to make sure you are getting the best policy possible. You deserve it. After all, it’s your life insurance policy.