Commission Split on Life Insurance with Customer?

Folks,
Please forgive me if this question is not appropriate by any means.

Here is my challenge... I am an individual planning to buy life insurance for my personal family protection. I have been doing lots of research. I do not need much guidance and know pretty much what I need. I am looking for a specific policy from Guardian which is kind of close to my needs.

I am planning to buy a large policy but I hate losing first 2 years on investment in agent commission and other fees. Its sadly the ugly side of whole life insurance as consumer loses in first 5 years.

Is it ok for me to ask the agent to split his commission with me in the first year to soften the burden? This large fee/loss has kept me on the side lines for last couple of years and its just too hard to bite the bullet and take a substantial loss.

Please advice how to proceed. I dont want to offend someone and dont know if it is something that will be acceptable to the agent.

thanks

Priorities.

.....................................................................
 
Folks,
Please forgive me if this question is not appropriate by any means.

Here is my challenge... I am an individual planning to buy life insurance for my personal family protection. I have been doing lots of research. I do not need much guidance and know pretty much what I need. I am looking for a specific policy from Guardian which is kind of close to my needs.

I am planning to buy a large policy but I hate losing first 2 years on investment in agent commission and other fees. Its sadly the ugly side of whole life insurance as consumer loses in first 5 years.

Is it ok for me to ask the agent to split his commission with me in the first year to soften the burden? This large fee/loss has kept me on the side lines for last couple of years and its just too hard to bite the bullet and take a substantial loss.

Please advice how to proceed. I dont want to offend someone and dont know if it is something that will be acceptable to the agent.

thanks


First. What you want is illegal.

Second, you are not "losing" in the first 5 years. It is simply how WL policies are designed. The Commission is not something that is priced out separately. You might not have a cummulative gain over the first 5 years, but you will over a 10 or 15 year period. WL is a long term commitment. It is not something that is designed to be utilized in the first 5 years.

Also, those "large" commissions are not all that large. I am contracted with Guardian and you get 55% of "Base". So if a policy is overfunded (meaning extra premium is being used to purchase Paid Up Additions. That means around 50% of the Premium goes to the Base and 50% goes to PUAs.
Assuming a $20k/year policy, that means that the agent gets 55% of $10k, then they only get 3% of the other $10k. So that is a total of $5,800 for a $20k premium.

And they only get that in the first year. In years 2+ they only get around 5% of the Base $10k in Renewals. So that is $500 per year while you are paying premiums. And depending on their contract with Guardian that might only lasts for just the first 10 years.

So if you compare the commissions of a WL to A-Share mutual funds for $20k deposited over 10 years:
WL:
y1: $5,800
y2-y10: $500 ($4,500 cumulative)
Total: $10,300

A-Shares:
y1-y10: $1000 (5%) ($10k cumulative)
Trails: $4,000k apx cumulative (0.25% of assets)
Total: $14,000

So would you rather have $10k paid in commissions or $14k?
If you went with C shares or a wrap fee at 1% it would likely be even more than $14k depending on the growth.

The WL is front loaded, but would you rather pay on just the $20k per year? Or would you rather pay on the entire amount that has accumulated?

So with WL you pay less commissions on a cumulative basis. Plus you get tax free growth, tax free distributions, & income tax free death benefit to loved ones. Small price to pay for a lack of liquidity over the first 5 years. Or you could just go with an IUL and you can have around 70%-80% of your premium accumulated as CV in the very first year.
 
If I print my own policy can I get it cheaper?

Why not just get licensed, purchase E&O insurance, learn how to design the policy and run the illustration yourself. Then fill out the app yourself, deal with the back and forth during the underwriting process yourself, and then accept the legal liability for the sale yourself too? :1eek:

People will buy a tablet, smart phone, tv, or laptop that has a 600% markup without even a second thought. But when it comes to financial products and the services around them suddenly they feel ripped off.
Which is more valuable... selling you a new cell phone or helping to ensure a safe financial future for you and your loved ones? :skeptical:
 
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He's been un-insured and sitting on the fence for two years because he
begrudged a professional from earning a commission.

He'll be un-insured 2 yrs from now and is family will go on welfare for
his stinginess when some gun totting punk shoots him in a mall.

He knows enough to be dangerous to himself because he does'nt understand
time value of money or human capital.

Bet he asked alot of insurance agents for free info to have learned so much.

I would never want this kind of turkey for a client.
 
Why not just get licensed, purchase E&O insurance, learn how to design the policy and run the illustration yourself. Then fill out the app yourself, deal with the back and forth during the underwriting process yourself, and then accept the legal liability for the sale yourself too? :1eek:

People will buy a tablet, smart phone, tv, or laptop that has a 600% markup without even a second thought. But when it comes to financial products and the services around them suddenly they feel ripped off.
Which is more valuable... selling you a new cell phone or helping to ensure a safe financial future for you and your loved ones? :skeptical:

Duh! A cell phone, dude! :err:
 
Why has no one mentioned designing a policy maybe not whole life with higher cash values?

SCAgent did. But that would mean that he would have to do "research" for another 100 hours.

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He knows enough to be dangerous to himself because he does'nt understand
time value of money or human capital.

You hit the nail on the head. He is smart but not that smart. He reminds me of the journalists in the industry that have been telling us for years that any day now some giant tech company is going to put us all out of business.
 
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