The Most Common Lie in Life Insurance Sales Case Study #8

One purpose of IIA is to shine light on deceptive sales practices in the industry in order to help insurance consumers spend their premium dollars more efficiently. After my last two cases I can say what is the most frequently spoken mistruth in the sales context. Its plausibility disarms consumers yearning for help and it’s glibly uttered or implied in most interviews: “I will recommend what’s best for you.”

This tendency was observed by Solomon millennia ago. In Proverbs 20:6 he writes, “Many a man proclaims his own loyalty, but who can find a trustworthy man?” Two adjectives contrast the frequency of loyalty to another’s best interest. Many claim it, while few provide it.

In the first case an agent was trying to sell an oral surgeon a large cash value policy for asset protection. (Cash values are exempt from malpractice suits.) I had reviewed the proposed policy and discouraged it (wrong priority; better policies), but my client wanted me to hear the sales pitch firsthand. “When I talk to the agent it sounds so good, I want you to hear it to be sure I’m not missing out.” So the client, agent, and myself had a conference call for well over an hour.

The agent was pleasant and persuasive. I can see how my client, who did not understand the alternatives and was fuzzy on appropriate priorities, could be drawn in. The agent said multiple times, “We need to do what’s best for (client) “. His recommendations were not.

The stakes for the agent were high (a 10K commission) so I expected resistance. When I finally showed an alternative (a last ditch effort for illustration only, not as a recommendation) with a second year cash value of 34K compared to his policy’s cash value of $700, the agent was undaunted, persisting his policy was better. This surprised me, but such denial of the obvious highlighted the disparity between the claim (to “do what is best”) and the recommendation.

The second client shipped me brochures and charts from a financial planner recommending a poor value annuity and cash-value life policy. The “planner” never even evaluated the client’s current policies, one of which was a good value (right type, strong company, lower rates) that met his need much better than the proposed policy. Scattered through the literature was a plethora of claims such as “client’s interests are to be placed first and foremost” and “employees agreed to act in an ethical manner, and with integrity.”

Andrew Carnegie said, “As I grow older, I pay less attention to what men say. I just watch what they do.” These advisors proclaimed their own loyalty with words, but their real loyalty, as per behavior, was marketing policies. Neither client needed more life insurance.

What’s the lesson for insurance consumers? A successful agent routinely claims to put your interest first. Expect it. However this in no way means he keeps your best interest first. It only means he is a good salesman. He survives by persuasion and no line is more effective than claiming to keep your interests first.

The wise consumer will heed Solomon and Carnegie:

1. expect many noble sounding (but empty) claims. Solomon- Pr.20:6
2. pay little attention to them. Carnegie
3. test them with a second (impartial and experienced) opinion. Solomon- Pr. 18:17

Like Solomon and Carnegie, these two clients paid little attention to what men said and reached outside the box to test them with a second and impartial opinion. Like Solomon and Carnegie they both kept more of their wealth. Pr. 14:15 & 24