As people work to make money on Main Street, insurance plays a key role in making sure that an illness, fire, or accident does not put them out of business and that the financial goals for families and charities are met if the person who set the goals dies before they are achieved.
I've been affiliated with the industry for twenty-nine years. All of the titles behind my name -- Chartered Life Underwriter, Chartered Financial Consultant, Masters in Financial Services, Certified Structured Settlement Consultant -- have some relationship to the insurance industry.
I understand the power of life insurance.
The first life insurance check I ever delivered was for a twenty-eight-year-old family friend who was hit by a truck. The money allowed his family to bury him, hire a lawyer, and eventually win a verdict against the trucking company.
A year later, the second death claim I filed was for my father, a fifty-nine-year-old who died of prostate cancer. I had argued with him for years before he agreed to buy the policy. He hated insurance and didn't really like it being part of my career path.
Near his death, he thanked me for convincing him to get the coverage.
I became a true believer in life insurance after Dad's death.
That makes me dramatically different from Main Street America.
According to the Wall Street Journal:
The number of individual life policies sold annually in the U.S. dropped 45 percent over the past twenty-five years, even as the number of households with children rose more than 25 percent. Meanwhile, the number of $2 million-plus policies, typically sold to affluent households, has been rising.
Wealthy people, who can afford first-rate advisers and attorneys, see the need for life insurance, but the message is not getting to Main Street.
I have theories as to why.
I've met a lot of quality insurance agents -- really bright people who care about their clients and recommend innovative solutions. I've become acquainted with many of them through the Million Dollar Round Table, an association for financial professionals who meet standards of excellence.
No one beyond their individual clients knows much about them.
You don't see many reality shows about insurance agents.
If you asked the average person to describe a typical insurance agent, he would come up with a character such as the one Bill Murray kept punching in the movie Groundhog Day: a pushy, not-so-bright person who is more interested in making a sale than helping his clients.
I've been lucky to know people who have devoted their lives to the insurance industry and really know their stuff. Insurance advisers play an important role in people's lives, and agents should have the same kind of extended credentialing process and rigorous continuing education required of certified public accountants.
Some companies are seriously resisting this push for professionalism, especially Primerica, which has one of the largest sales forces in the country. Primerica was part of Citigroup when taxpayers bailed it out in 2008. It spun off in 2010, with Citigroup holding a stake in the new company.
According to an April 25, 2011, Wall Street Journal article: The people at Primerica think life insurance tests are too hard! Meanwhile, the company depends largely on part-time agents, whom the article said "don't actually become insurance agents, often because they flunk state licensing exams, according to filings and interviews." About 80 percent of the 230,000 Primerica recruits in 2010 didn't become insurance agents, often because they failed the exam.
The perception of agents is one hurdle. Another obstacle is that the industry does not have a natural leader or public figure who stands out in the public's mind the way Steve Jobs at Apple or Bill Gates at Microsoft do. Warren Buffett is a big player in the insurance industry, but the public views him as an investment guru.
The most recognized figures in the insurance industry have one thing in common: None of them are human.
Few Americans can identify the president of any insurance company anywhere (I've been in the business twenty-nine years and can only name a few), but most Americans can identify the GEICO Gecko, the AFLAC Duck, and Snoopy from Peanuts, who advertises Met Life.
When an insurance company is faceless or is represented by comic figures or silly commercials, it is easy for it to be defined by negative stereotypes and bad claims practices.
Having an experienced and educated insurance adviser can make a huge difference. People can find good agents in almost every city in America. If not, the next town down the road will have one.
People need to choose an adviser based on professionalism and credentials not because the agent plays golf or sings in the church choir.
I'm not crazy about the health insurance industry. Premiums are high, and for years I did pitched battle with them over claims and exclusions. Since I am a licensed health insurance agent, for many years I sold myself my own health insurance.
It was like a doctor operating on himself. A bad idea.
I finally asked a longtime friend who specializes in health insurance to help me. He has qualified for the Million Dollar Round Table for more than forty years and has a boatload of education.
Since I started letting his firm handle the benefit planning for our business, the claims battles have gone away and, in the past year, our premiums decreased.
It's time to learn more about insurance. The best place to get that education is from a well-trained insurance professional.
Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist. He is the author of the book, Wealth Without Wall Street: A Main Street Guide to Making Money, which is currently available on the Kindle. The hardback copy will be released on September 20.
McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000.
McNay has Master's Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a Quarter Century member of the Million Dollar Round Table and has four professional designations in the financial services.