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  • Writer's pictureDavid H. Kinder, RFC®, ChFC®, CLU®

Some ranting on my part

It's unfortunate how little life insurance and annuities are understood, by the general public as well as agents & advisors. First, the general public. If the general public had a better understanding of how life insurance and annuities worked, we wouldn't be needed to sell it. So, in a way, I'm grateful for the challenge. However, if the public understood it... they'd be lining up around the block for the privilege to get it and utilize it.

But they don't understand it.

Agents and advisors... frankly, have been taught by "fiduciary" kinds of organizations that life insurance is for 'needs' and protection only. Yet, there are FAR more uses for life insurance, regardless of whether you have a family or not. It's a phenomenal asset class and tax advantaged contract that is available to EVERYONE (well, everyone who meets the insurance company's health underwriting requirements). There is SO MUCH there... and yet, I hear advisors who say "not every financial plan needs permanent insurance." My belief is that every sub-optimal plan doesn't have cash value life insurance. I can prove it. The idea that you need to LIMIT the amount of Tax Code insurance benefits you need... is ludicrous to me. Yes, the coverage and asset to be built needs to be affordable and designed for the client, but don't limit how much I can get. Some agents & advisors want to do this. They're probably thinking along the lines of "diversification".

The more diversified you are... the more taxified you will be.

Granted, this part is the insurance industry's own fault for focusing primarily on death benefits for so long. The Million Dollar Round Table was established in 1927 as an open discussion group... and the criteria to join was to sell $1 million in death benefits back then. The MDRT has evolved, but not necessarily the understanding for the public and agents & advisors.

Yet, because of overzealous marketing of the tax benefits of life insurance through the mid-80's, it created new laws: TAMRA, TEFRA, and DEFRA. (Don't ask me about what those acronyms mean but I do know what they did.) Insurance companies, by default, to protect themselves from further negative regulation... limits their marketing messages to just how big they are and the size of their annual dividends.

This leaves it up to the individual agent to gain the knowledge and communicate the benefits of these policies to the public. It's just a shame that so many don't understand the full power of what they can do.

But that's okay. That means with less competent agents out there... there's more opportunities for me... but even I have limits. I can't service the entire USA. We need a resurgence of professional agents in the US that promote life insurance in a very professional manner. I don't know what that will look like. It's been tried, but bastardized from what I've seen. The companies themselves don't know how to do it. Maybe that'll be a project I take on in the future?



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