Insurance as income replacement? and funding???

It's a Primerica concept of starting with everyone you know and branching out. Although it will get you the errant client it by no means provides a steady flow of weekly clients.
 
H&L said:
I think I would rather cold-call and walk into small businesses in a strip center than try this stuff out.

Maybe it is because I am only 26 but there isn't a way in the world I know more than maybe 100 people so "COI" doesn't seem to be a big help either.

As I stated the COI is only one leg of marketing, yet as you market your B2B they would be included into your COI and it should grow. At least the ones that give you their info.

It's a Primerica concept of starting with everyone you know and branching out. Although it will get you the errant client it by no means provides a steady flow of weekly clients.

Now this is just pathetic. This was around long before Primerica.
 
Although you are actually doing a great service to your friends/family the honest truth is when you become an insurance salesmen they cringe at getting hit up for insurance.

And how's my circle supposed to grow? I'm supposed to call my best friend and ask him for names of his friends? That quite frankly puts your friends in a difficult position. It's also a good way for your friends to stop calling you.

The reason all of us are still friends is because we don't hit each other up for sales. How would I like my buddy to call me and ask me to buy a case of Pepperidge Farm Goldfish?

I had an acquaintence - pretty much as "loose" friend years ago get into cemetery sales. He wanted my parent's phone number to hit them up and asked me and my wife how were were set for burial plots. That was the last time I talked to him and won't contact him again. My wife found it very awkward and rude that he gets a job and is hitting us up. I'm his friend, not a prospect. If I'm interested in what he's doing I'll ask.

My brother and sister are both self-employed and both are my clients. I didn't hit either of them up for health insurance - they instead obviously knew what I did and asked me about it. They get me referrals when they run across anyone. I don't ask them to solicit their friends for me because again, that puts them in an awkward position.

Instead of abusing my friends I'd rather go B to B or telemarket to get clients. I cherish my friends and family - they're not supposed to be my income source because I can't market.

Depending on how carried away you get there's "Amway-ish" concepts out there like the "3 foot rule" which means everyone within three feet of you should get your card. These are those douchebags at parties, social events and gatherings where you're trying to relax and out comes their business card. Form your hand into the shape of a L and put it on your forehead if anyone here is one of those people.
 
John,

As everyone knows I'm new to the insurance business, but I've been around and in other businesses for longer than many here. I agree with your entire post. Thanks for putting it into words.
 
Hey, why doesn't my buddy hit me up for that case of goldfish? After all, as the Pepperidege Farm owner he could sell it to me at wholesale plus a few bucks. I'm buy 'em anyway so why not just get a case of the things. He'd be doing me a favor, right? No. If he brings up those damned fish when we're together I'll pop him in the nose. And he'd rather have me drive a nail through his big toe then have me talk about health insurance.

In fact, after 13 years of sales, when I became an insurance agent my dad joked and said "great, what do I have to buy now." Obviously at age 75 he's safe.

Again, the reason we're all still friends is because we leave our job at the door. Heaven forbid we all because each other's clients. That's a ticking time-bomb to the end of the friendship.
 
Well I see we are back to our old hat and pony show. The Circle of Influence has been around for some time, some do abuse the strategy such as Primerica or Amway or the overzealot salesperson. So some decide to place all the negative aspect that some have used and place it on the Whole, which is nothing more than a bait and switch circular argumentive position.

Even John admits that some of his acquaitence or family brought insurance from him because at the time they knew he sold insurance. Yet how are all your acquaitences going to know what you do specifically if you don't keep in front of them? Now I understand close family and friends but those in most circles are fairly small compared to the entire picture of all of ones acquaintances of one degree or another. I have a lot of old acquaitences via the DME or Photography business that I haven't seen in years, now how am i suppose to let them know? Well unless I sit down and organize my contacts and make contact they will not, and in fact if done properly it won't be a sales job but a simple contact letting them know where you are at and what you are doing. Which in many cases mine and others that do this actually help keep old acquaitences that once were lost back to the fold of friendship.

Basically this is nothing more than natural human behavior. Of course anything can be taken to the degree of severity and ruined but that is up to the person doing it. As I noted originally, if you market to your friends and acquaintances via DM, email or whatever in a proper manner some will step up and give you a hand such as providing their contact list whatever that might include and some won't, I never said to end a friendship over it by placing any demands upon their assistance.

Ps I do understand some will have to load up all the negative aspects to things they have little interest or knowledge in, I suppose that is human nature also.
 
Now some suggest that the average family simply canÂ’t afford a solid Insurance Contract for life or a WL or UL policy. How can they afford a five hundred dollar a month, well that is just it, there is obviously more ways one can do this. What you have to do is perform the Needs Analyzes and understand where they are at and their mentality on how they want to protect what they have and how they are willing to do it. So letÂ’s take an average family in the Middle Income range with two workers, one is a Grocery Assistant Manager making around 35 grand a year the wife is a RN making around 45 grand a year. Both have basic packages offering a health, wife has that so the husband doesnÂ’t pay into his. Life is 1.5 there yearly income, STD is provided for and the wife is invested in her retirement package that will provide 75% of her income at retirement age of 65 along with Health package, she is also putting in 5% in a ROTH via her employer plan. The husband has Life, STD and places 5% in his 401 plus has a 401 floating out there from his former employer with around 30 grand and hasnÂ’t done nothing with it yet but likely looking at a new Bass Boat but wife is dead set against it. The husband is 38 and the wife is 33, have two kids one is 8 the other is 6 both in school. Will go ahead and put them in a 25% tax bracket and have a 200 grand home that they have lived in for 7 years and put down 30% that they receive in the sale of a previous home. A thirty year term with the balance at 140 grand, their payment is $794.90 with 139,069.97 balance of the loan.

Now IÂ’m figuring this in a most general term, husband is bringing home 25 grand and the wife is bringing home 32 grand or 57 grand together. Now their home is $9538.80 a year leaving them 47.4 grand and we have insurance on cars and home that equals about 20 to 30 hundred which brings it down to about 45 grand. Now we are assuming that they donÂ’t get much back in taxes since they are fairly intelligent and only put in what they have to after natural deductions that they have. They are also quite normal, or they donÂ’t save anything to speak of out of the 45 grand, sure they have 5 grand in one savings account but likely will spend that on something or their spending habits would indicate.

Plus we havenÂ’t counted on the agent that came to see them last year that sold them two 30 year term policies of 500 grand each, the agent tried to get the 20x factor but the couple stuck closer to the 10x formula. Obviously no needs analyzes were performed which in my book is not a good thing! Now this was an Assurity Agent that sold these policies and getting them a good preferred rating and his policy is $605 yearly hers is $395 a year totaling $1,000 yearly. Now he sold this using the 5% rule of return, so the 500 grand would generate around 20 to 25 grand a year as an income to replace the spouses income after they are gone minus taxes.

Now there are two things that the Needs Analyzes will show that I’m really interested in. One is just how much income replacement is needed and how do they view insurance overall? I come from the stand point that without good DI coverage all plans are subject to failure including the precious “Retirement Investment” plans. This alone will be about 3% of their income or more depending upon the policy picked. Now I’m wondering how the Assurity Agent missed this since both state that he didn’t bring it up and is it really needed? Now depending upon their choice since we are now in the 20 minute stage of the initial apt. is will they go for the needs analyzes workup or will they not? Now I bill myself as an solid expert on building family budgeting plans, so if they pick the NA (needs analyzes) great if not there is the obvious reduction of the Insurance they have now with Assurity 30 year contract and then including a good DI policy. Just depends on the move they make, either way since I'm there I am sure that the Needs Analyzes will come today or next year at the latest.
 
One of the first things we will discover is the exact need of the so called “Income Replacement” strategy and is it for real. Or is it as I claim, a rather dubious way of selling a quick 30 year term policy. In other words, a quick sale with no Fiduciary or Suitability assessment performed. Or simply a lazy agent that doesn’t take Life Insurance as serious as it should if one is going to endeavor in the practice.

First thing I generally find is this on a typical family, most do not understand or take into account that SS Survivorship is going to be in play. In this case if one spouse were to die this year social security survivorship will kick in and provide about 15 hundred to the survivor in checks on the underage children that will continue till they are at least 18. Plus taken into account if one is involved in a traditional retirement plan (employer provided not 401k type) that often they have survivor benefits for children. Now letÂ’s take taxes on the wifeÂ’s 45 grand and her 20-25% tax bracket will fall to the minimum amount saving at least 10% of her taxes or about 45 hundred a year. Put that with the 15 hundred and all of a sudden I just found the equivalent to the income replacement that was sold! So if I propose cutting the insurance amount in half enough to pay off the house than the couple will see the fallacy of not performing a proper needs analyzes has lead them! Now all this remains the same if the wife dies but something extra kicks in, that is her traditional retirement account will typically kick in survivorship money on her children to be paid to spouse, rather limited maybe but I seen them offer up to SS amounts or between 6-8 hundred a month.

Now all of a sudden they realize what I realize at the start, that the 10x-20x isnÂ’t a Mecca of ethical consideration of Insurance Planning, but as a quick sale usually viewed as a commission whore tactic. While in the end we donÂ’t know how all this will play out but the idea of selling insurance as basically and only as a Income Replacement theory doesnÂ’t measure up to solid Insurance Planning. More often than not they are over insured with the wrong kind of insurance, of course the wrong kind of insurance contract is the next thing that the review will bring out.
 
James,

Let me say I think your needs analysis was brilliant! I am not sure many CPA's out there would perform equally well.

Let me ask though - - and reading your posts on this topic is like reading a book you can't put down.

Now some suggest that the average family simply canÂ’t afford a solid Insurance Contract for life or a WL or UL policy. How can they afford a five hundred dollar a month, well that is just it, there is obviously more ways one can do this.

Now I bill myself as an solid expert on building family budgeting plans,

Regarding these two statements.

1. Is the budget you refer to the budget after the needs analysis meaning how much money is coming in, (thus showing the $500/mo WL policy is more than adequate), or

2. going over their personal spending to find the $500 to pay for the WL/UL policy.

My reason for asking, given the scenario you painted, I still do not see where they will be able to draw the $500/mo to pay for a policy. Though, I plainly see where you have demonstrated to them that the policy a $500/mo payment would buy would adequately provide for their needs should one spouse die.

Do you understand my question or is it clear as mud?

Thanks James. Fascinating reading.
 
James,

Now there are two things that the Needs Analyzes will show that I’m really interested in. One is just how much income replacement is needed and how do they view insurance overall? I come from the stand point that without good DI coverage all plans are subject to failure including the precious “Retirement Investment” plans. This alone will be about 3% of their income or more depending upon the policy picked.[/quote]

James,

1. Is that 3% of gross income or net?

2. Are you are getting them seperate DI contracts? Or are you getting them DI riders on the WL/UL policies you will write?


More often than not they are over insured with the wrong kind of insurance, of course the wrong kind of insurance contract is the next thing that the review will bring out.

3. In this scenario what will be the right contract WL,UL or a combination, why?

4. And was there anything wrong with the term beside the DB?

Thanks
 
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