Recently, I was working with a lady from California. When she retired, she was given some bad advice about Medicare. It is not my intention to play the blame game. I can leave that up to the presidential candidates. Regardless of whose fault it is, when her COBRA benefits ended, she did not have Medicare B. She is able to enroll again during Medicare’s Open Enrollment during the first quarter of 2013 but her benefits will not start until July of that year.
The result is that she would be forced to go without health insurance for 10 months for her doctor’s bills. The sad part is that even though she has asked other insurance agents for help, they have all thrown their hands up in surrender.
In this post I want to identify the types of insurance agents that exist. I also want to share some ways to identify and use them. If you elect to use the wrong type of insurance agent, prepare for some possible frustration.
Most people in the insurance industry start out as insurance agents. The Rookie is relatively new. The latest stats that I have seen say that 96% of Rookies fail in the insurance industry or get promoted into management within 4 years.
On the positive side of the ledger for a Rookie is his sincerity. He really does want to help you. He has been taught that the products he sells will truly be useful to you.
On the negative side of the ledger is his training. The first promotion that an insurance agent gets in a “captive agent” system is to sales manager. It is the sales manager’s job to recruit and train new insurance agents. That means that often the Rookie is being trained by someone with less than 4 years experience.
The Rookie who is part of the “Independent Agent System” probably has little or no training. The insurance companies provide seminars and advanced underwriting assistance by telephone. They also provide insurance agents with all the product information and sales ideas they can.
Unfortunately, it is up to the individual insurance agent to not only learn how an insurance policy works. He must also learn how to use that particular policy to solve people’s problems. The insurance companies do not offer that type of training. An insurance agent can only learn how to use their portfolio through experience.
Ideally, all Rookie agents would be trained and overseen by someone with more experience. Sales Mangers would be required to have at least 5 years experience or advanced training that they could use with Rookies. Rookie independents would have the wisdom to find a mentor with whom they can discuss anything that is out of the ordinary.
To paraphrase something that was told me in my first year, “The Rookie will not intentionally harm you but can accidentally ruin your finances.” If you are going to use a Rookie insurance agent, check out his overseer. Make certain that there is someone watching over his shoulder to prevent mistakes.
All you need to do to identify the Rookie is check his license. If he has been licensed for less than 4 years, he is still technically a Rookie.
THE SALES PERSON
There are many insurance agents who attempt to be everything to everybody. Their motivation for being an insurance agent is the commission they make by selling insurance. Unfortunately, they tend to place their own income needs before the insurance needs of their clients.
Fortunately, there are not as many of these type of insurance agents as the comedians and politicians would have you believe.
Insurance agents who are in the “captive agency system” are only able to sell the products that are offered by their insurance companies. In other words, their portfolio is limited. If they are not able to sell you what you need, they will try to convince you that, “some insurance is better than no insurance.”
If they are an independent agent, they will only sell you the products that are easiest for them or have the greatest commission. If you are realistic when you tell them what you want to accomplish and what you want to pay, almost all risks are able to be insured against.
It is no wonder that many insurance agents who really want to help people when they are Rookies become slimey sales people first and insurance problem solvers second. The insurance companies are constantly offering sales contests and commission bonuses to insurance agents. They justifiably want insurance agents to sales more or their policies.
A human being can only take so much temptation. A Rookie insurance agent is taught that he can make as much money as he wants. All he has to do is sell enough insurance policies.
There are several indications that the insurance agent you are speaking with is a sales person and not a problem solver. If you go to his office, check out his decorations. If everything is an award for sales activity, you have learned that he is a good sales person but nothing about his ability to solve insurance problems. There should also be something about his community service and education mixed in with the sales awards.
Perhaps the best way to determine what type is insurance agent you are talking to is to listen to them. If they do the majority of the talking, it is probable that they are a sales person first and a problem solver only when they have to be.
THE INCOMPETENT AGENT
The incompetent insurance agent really wants to do a good job for you. Unfortunately, his problem solving skills come up a little short of satisfactory.
He is a good person and would probably make an ideal dinner-guest. His training in insurance has been a little suspect. He has survived in the industry in spite of himself.
In the insurance world, we do not refer to these types of agents as incompetent. We refer to them as unprofessional. It sounds better than incompetent but still means that they should not be trusted to give advice.
Perhaps the best way to identify the Incompetent Agent is to ask how his studies are progressing. The insurance world is ever-changing. An insurance agent must keep informed with state and federal laws. He must also understand what the policies in his portfolio will and will not do.
The Incompetent Agent is only going to do the minimum amount of education that is required for him to maintain his license with the state and contract with his insurance companies.
If you are willing to do your own homework and already know what insurance policy you want to buy, there is no problem using either the Rookie, Sales Person or Incompetent. If nothing else, it gives them some experience. Hopefully, they will learn from the work you do and eventually it will dawn on them how a true insurance professional uses the policies he sells.
THE PROBLEM SOLVER
A true insurance professional is going to be a good problem solver. He will not only know how his products work. He will know how each product works with other products to meet your insurance needs.
For example, much was made by our president about people who had to file bankruptcy even though they had health insurance. What was not mentioned is that their health insurance portfolios were incomplete.
Major Medical insurance helps pay the bills that people get from doctors and hospitals. However, Major Medical insurance will not help pay the mortgage, car payment, utilities or for groceries. In the event of a cancer or other disease that prevents an individual from earning an income, they will need to either rely on personal savings, disability insurance, critical illness insurance or file bankruptcy.
Both Disability and Critical Illness insurance are technically forms of health insurance but they are generally ignored when a customer calls and says, “I need health insurance.” The problem solver is going to make you clarify exactly what you want to accomplish.
If you tell him that you want to be assured that you will never have to file bankruptcy in the event you have a stroke, it is likely that the Problem Solver is going to recommend a mixture of Major Medical,Critical Illness and Long Term Care insurance
One way to identify the Problem Solver is to pay attention to how he communicates. During your first interview, he will spend more time listening than talking. When he does talk, most of his conversation will be in the form of questions.
If you are going to work with a Problem Solver, don’t tell him what kind of insurance policy you want to buy. You can buy an insurance policy from any insurance agent. Tell him what you want to accomplish and how much you feel is a fair price. If it is possible for him to build an insurance portfolio for the amount of money you can budget for insurance, he will. If he cannot meet your needs for the amount you say you can pay, he will tell you how much it will cost and explain “holes” will remain in your portfolio if you can only afford the amount you told him.
The Problem Solver will not pressure you into buying anything. He knows that insurance policies that are sold by insurance agents are not always the answer. Sometimes the solution to a problem is found with a different professional.
However, he may scare you into recognizing the areas that remain uncovered. If he is like me, he may not be the best communicator in the world. The Problem Solver will not intentionally attempt to pressure you into anything but he will tell you the truth.
Just in case you were curious, I was able to give the lady who was given the wrong advice about Medicare B 4 options from which to choose. Three of them required the help of a local insurance agent. One option did not require the assistance of any insurance agent.