Annual Renewable Term

[Robert Barney]

Out of that WHOLE video... all you want to do is bash the way term life insurance is presented?

Precisely.

Making the case that a term product is a second class form of life insurance, or worse, making it appear to be defective, is an age old method employed by some life agents to make permanent life appear superior.

In truth, permanent life insurance contains insurance protection and in that regard is no different than a term policy. Term IS the protection component in the product, so that if the insured dies tomorrow, the company can pay the death benefit.

A whole life policy and a term policy provide EXACTLY the same protection benefit. No different.

Further, the consumer is paying for that protection benefit regardless of which kind of life insurance he buys. In fact, because the cost of that protection element is often hidden in permanent life (unless it's a UL product that shows the protection cost), that protection cost is usually more expensive than the protection cost in a competitively priced term product.

Permanent life merely adds a prepayment function to the protection element, that allows the consumer to keep the premiums level, or to prepay even more premiums to get to a point where the company has built up sufficient money to carry the product without charging additional premiums.

But NOTHING eliminates the cost of protection from a life insurance policy, NOTHING. There are no free rides because you bought a permanent policy. You still pay for protection, you simply pay for it differently.

So if you are going to poop on term, just remember that you are also taking a dump on whole life, just not admitting it.

The victim in this debate is the poor consumer who believes, as a result of your misguidance, that term insurance is a terrible product - it isn't.

Now I don't think whole life is a bad product, it just isn't for everyone. In fact the VAST majority of consumers need term and don't need whole life insurance.

To my readers I explain whole life as a Mac truck. It's much more expensive than term, which is like the family auto. You can make a great case for all the benefits of having a Mac truck, but if all the buyer needs is something to go get groceries, or drive to work, then a Mac truck is a stupid idea.

But that doesn't stop some agents from trying to sell Mac trucks to people who simply need a car.

By contrast, for the guy who actually needs a Mac truck, it would be stupid to use a family car.

My point is that both have tires, both have windshields, both have engines, both need fuel, etc. The fact that they share common mechanisms makes them forms of transportation, but their purposes are quite different.

All life insurance contains a term (protection) element. Whole life insurance is just term you pay for differently. And why would you give extra money to a life insurance company if you don't need lifetime insurance protection. And most consumers don't need lifetime life insurance protection.

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Death is 100% certain.

Not tomorrow it isn't.

And while death may be certain, the need for an insurance benefit, as a result of death, is not the same.

It goes down as people get older. It goes down as liabilities are reduced, and as asset go up.

Eventually, after a person retires, they stop being a financial asset, and become a financial liability. You don't insure liabilities, you insure assets.

 

[DHK]

Well, you just keep pounding that "need" agenda... and I'll keep showing consumers the differences between term & permanent and let them choose what they WANT.


BTW, do you know anything about social security? Did you know that if a married couple was taking social security retirement benefits, that when one spouse dies, the surviving spouse only gets the larger of the two checks... and not both?

Did you know that not everyone reduces liabilities as people get older?

Did you know that some people WANT permanent protection... and they'll buy it if you simply show them how and why?

There are people in their right mind that will pay $10,000 per year for a $500,000 death benefit, even though they know they could get away with paying $500... and they're happy to write the check???


BTW, you keep insinuating that I denigrate term life insurance. That is not so. Terminating insurance has a job that it does well - provides a given amount of protection for a given premium for a given period of time.

Terminating insurance is like renting an apartment. Over time, it will only go up... and at the end of the term, you get nothing back.

Permanent insurance is like owning a home. Premiums are guaranteed level and, if you hold it for at least 15+ years, you can "get all your money back" plus a bank-like return... just like owning a home.

Return of Premium term, non-lapse UL, and other variations are hybrids. Premiums could go up, down, or remain level... depending on the strategy. If you hold it long enough, you might get all your money back.


It's so simple. All I do is give my clients a choice and let them choose.

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But the fact that all you care about is how term life is presented... tells me how closed your mind is. It's too bad really.

Also, the way you keep attacking my professionalism... really says something about you too. I may have questioned your knowledge, but I never attacked you personally.

 

[pcbinsurance]

You both have great arguments. Can't you both agree to disagree? There is a place for term and a place for permanent.
Myself, selling term, it would be wrong for me to disparage whole life agents and I would expect they would give me the same courtesy.
If a good fact finder is done, the right policy should reveal itself anyway.

 

[DHK]

It's kinda funny that I've had it from both extremes.

Here, Robert is saying that term is the only way.

On ProducersWeb, I made a statement that if someone said "I want to buy term and invest the difference, I'd say "sign here""... and I got flack for that too saying that "their fiduciary duty wouldn't allow them to do that".

Our job is to SERVE the client... do a complete fact-finder and show the various options and create a solution that the client wants. (There's that word again.)

Strangely enough... I bet that Robert and I are agreeing in a very disagreeable way.

We solve for the "need" first, then we determine the best way to pay for that "need" based on budget allowed and what they would prefer.

 

[Robert Barney]

There is a place for term and a place for permanent.

I said that, did you miss it?

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Well, you just keep pounding that "need" agenda... and I'll keep showing consumers the differences between term & permanent and let them choose what they WANT.

Yes, and you will continue to portray term as a second class product that is defective and you will let them decided between a cheap crappy policy and a fine product that costs more.

I don't even begin to believe I am going to change your mind. I would hope those who are still keeping and open mind, and who realize that putting the needs of the consumer first, will weigh the debate and realize I am correct.

One thing's for sure, we wouldn't be having this debate is commissions for life insurance were based upon face amount and not premiums.

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Here, Robert is saying that term is the only way.

Absolute baloney, but that is what whole life peddlers always resort to in order to feel better about the fact their are trying to get everyone to buy a product, whether they need it or not.

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Also, the way you keep attacking my professionalism... really says something about you too. I may have questioned your knowledge, but I never attacked you personally.

I don't see the ad hominem attack, I disagree strongly with your clearly stated position.

Frankly, you early on said you were going to block me, I don't know why you didn't. Further, you appear to be successfully selling what you want to sell, and I am a little mystified as to why you feel the need to defend your sales track here.

Are you a life insurance manager? Are you recruiting agents? Are some of your sales people reading what you are saying here?

Other than that, I can't imagine what's driving your need to explain yourself. You can't believe I'm the only person who thinks the way I do. There are lots of folks advising consumers that term is a great product, they're just not as good as I am at explaining why. And many of them throw the baby out with the bath water. There is a place for permanent life insurance, and I own some permanent life insurance. But the majority of life insurance I have owned through the years has been term, and my last term policy will end in 4 years. I sure hope it never pays a death benefit. None of my other term policies paid a death benefit, and I'm glad.

 

[pcbinsurance]

"Originally Posted by pcbinsurance View Post
There is a place for term and a place for permanent.
***************
I said that, did you miss it?"
***************
I was just making a statement. I never said you didn't believe that.

 

[Robert Barney]

"Originally Posted by pcbinsurance View Post
There is a place for term and a place for permanent.
***************
I said that, did you miss it?"
***************
I was just making a statement. I never said you didn't believe that.

I appreciate the clarification. We agree.

 

[DHK]

My curiosity often gets the better of me.

Are you a life insurance manager? Are you recruiting agents? Are some of your sales people reading what you are saying here?

Maybe one day I'll recruit agents, but I'm not doing so now.

Other than that, I can't imagine what's driving your need to explain yourself. You can't believe I'm the only person who thinks the way I do. There are lots of folks advising consumers that term is a great product, they're just not as good as I am at explaining why. And many of them throw the baby out with the bath water. There is a place for permanent life insurance, and I own some permanent life insurance. But the majority of life insurance I have owned through the years has been term, and my last term policy will end in 4 years. I sure hope it never pays a death benefit. None of my other term policies paid a death benefit, and I'm glad.

Sometimes I like and enjoy the challenge. I'd rather debate with you than a client.

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If you're mildly curious... here's the ProducersWeb article where I got into it about just selling a term policy to someone who says that's exactly what they want. You'd have to scroll down to my comments made on December 16th and follow the thread from there.

ProducersWeb - Life - How not to argue with Dave Ramsey

 

[VolAgent]

My curiosity often gets the better of me.



Maybe one day I'll recruit agents, but I'm not doing so now.



Sometimes I like and enjoy the challenge. I'd rather debate with you than a client.

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If you're mildly curious... here's the ProducersWeb article where I got into it about just selling a term policy to someone who says that's exactly what they want. You'd have to scroll down to my comments made on December 16th and follow the thread from there.

ProducersWeb - Life - How not to argue with Dave Ramsey

I read a few of the comments before I gave up. Quite frankly, they are self-pompous idiots. Only Lew seems to get it, but since you have learned a lot from him that is not surprising.

If a working individual needs 1, 2 or even 3 million in coverage, and that is certainly a reasonable amount depending on age and income, it is next to impossible they can afford it all as whole life, or even that they need that much of their coverage as whole life.

I have found arguing with prospects to be a complete and utter waste of time. If you have to convince them they need or want something, you are wasting your time. They won't buy and if they do it will be lucky to stay in force for 6 months. First and foremost, sell the termite the term they want. Make sure it is convertible and you can have conversations for years into the future about the need for whole life. They benefited because they now have coverage and a good agent who can help them as life changes, and you benefited because you got a client and got paid.

The funny thing is, the guy who is buying a term at age 40, he is probably going to be buying another term at age 60. Just try not to say "I told you so" as you write up that second application. He just better hope he is still insurable at age 60.

 

[Robert Barney]

BTW, you keep insinuating that I denigrate term life insurance. That is not so. Terminating insurance has a job that it does well - provides a given amount of protection for a given premium for a given period of time.

Terminating insurance is like renting an apartment. Over time, it will only go up... and at the end of the term, you get nothing back.

Permanent insurance is like owning a home. Premiums are guaranteed level and, if you hold it for at least 15+ years, you can "get all your money back" plus a bank-like return... just like owning a home.

Renting versus owning, another laughable analogy that has nothing to do with the concept of insurance PROTECTION.

Insurance is a risk sharing venture where large numbers of people put their money together with other people in order to compensate those members of the group who experience the loss of an asset.

How that is renting is beyond me. The old rent versus own analogy was another attempt by the whole life peddlers to denigrate term life insurance by arguing that is is a substandard, defective product. If it is, then whole life is a load of crap because it contains term life insurance, and in most cases the cost is hidden and overpriced.

Which is why we have yet to see any of these folks providing us with real world examples of prices that can be compared to competitive alternatives.

Tell me, is whole life a good choice at ANY price?

And as to this peculiar notion of "terminating" life insurance, let's consider the lapse rates of whole life policies.

https://www.soa.org/Files/Edu/edu-2012-c17-1.pdf

which says:

The overall lapse rate for whole life plans, all policy years combined, was 3.4 percent on a policy basis and 4.1 percent on a face amount basis for the current study, down from 3.5 and 4.4 percent, respectively, for the prior study.

The total lapse rate for term insurance, all policy years combined, was 6.6 percent on a policy basis and 5.7 percent on a face amount basis, a decrease from 7.0 on a policy basis and 6.2 percent on a face amount basis from the 2003–2004 experience period. Lapse rates on policies at the end of the
guaranteed level premium period — shock lapse rates — ranged from an average of 22 percent for 5-year level premium term to 37 percent for 10-year level premium term on a policy basis.​

While you would expect term policy lapses to be higher than whole life, the point is that whole life lapses are clearly too high for a product that people are supposed to keep for their "whole life". Why so high, because the product is sold to people who don't need it, and when they find out, they quit. And the cost of quitting is extremely high, considering that the first 3 years of premiums are lost paying the costs of acquiring those policies, including the extremely high commissions paid to the agents who sold them.