How often to policies get replaced?

[PhxSunsFan]

I read that an agent can always replace a LH or SL policy bec of the higher rates they usually charge.
My question:
How often does this happen? Assuming the policyholder initiates contact somehow?

 

[HoosierLife]

Depends on the agent.

 

[PhxSunsFan]

rephrase:
an agent can " sometimes or often " replace a LH or SL policy,, ( of course not, always)

 

[WinoBlues]

Zero times if the agent never pulls the trigger and gets in the fight.

I do not do a lot of replacing. I am sure I could make just about any replacement "justified" though. Replacing LH is no different than replacing any FE plan that was not the appropriate plan with say a GUL or a better performing WL. Or a term plan with a plan that better fits the need / want.

SL and LH are generally more expensive than than other true guaranteed SI Whole Life. BFD. LH sells a crap load of it. The ones I run into tend to be very small policies <$10,000. The clients tend to like the agent. They pay claims very quickly compared to all but one company that I am aware of. If my brother had a 3 yr old LH $10,000 policy I would tell him to keep it. I would top him up with the best additional plan I could find.

Don't worry about who you can replace or who can replace you. Just get the ink on the paper.

 

[Rearden]

Most policies don't get replaced.

 

[shonceman]

Most policies don't get replaced.

Nor should they. There are far too many agents trying to make a living by flipping people, IMO. Oh, sure it can be "justified". Doesn't always make it right.

I'm not saying an agent should never replace. On a rare occasion, I might. If it's a brand new, or fairly recent (months not years) issue policy, I might replace. If it's graded and I can get immediate benefit I will replace. But I will NOT replace a whole life policy outside of contestability, unless circumstances warrant (for example, a policy that's about to lapse due to overloan).

This is on my mind right now because I'm trying to keep a client from making a replacement mistake. She's 78 years old, has been my client for 10 years, and is one of my favorite people in all the world!

Well, the other day Agent "Twit" (who's had his license all of 2 days) came knocking on her door and happened to catch her when she was worrying about how to pay for an expensive home repair. He apparently picked up on that, because somehow they had a conversation about getting her some cash through surrendering old policies. (I don't fault Mr. "Twit" for doing that. He's just following his training.)

Here's the deal, though. I happen to know that her health is worse than she believes it to be. I know this because we tried to write additional coverage for her last year. She was declined because of a prescription for a condition she didn't realize she had, so she had answered "no" to a question that should have been "yes".

But what would have happened if that prescription had not shown up? She'd have a small policy now still in the contestable period, plus a much greater amount of coverage that's far past contestability. If she died right now, the last policy wouldn't pay, but the older policies would.

Now, what if I'd replaced all of those policies (like "Twit" is attempting)? She could have gotten a few hundred dollars out of the surrenders, which would have "justified" the replacement. BUT - If she died right now, her family would only get the refund & interest for the year's worth of premiums, rather than the full benefit of the policies she had paid into over many years!

Mr. "Twit" didn't write it with a "know before you go" carrier, so if they check MIB it will likely be declined, anyway. But what if they don't, and she gets a BRAND NEW, SHINY policy? What happens if she dies in the next few months (which is a very real possibility)? Has Mr. "Twit" really acted in her best interest?

(Sorry for the rant. Feeling kind of strongly about this right now!)

 

[WinoBlues]

<crickets>

 

[PhxSunsFan]

MY purpose for asking the question ,without causing a storm, is I like the simplicity of SL and am considering asking them to join,, Many have said they are easy to replace so that changes my thoughts on SL.. thanks

 

[Baseball7]

What simplicity are you referring to? Also, make sure your not taking a lower comp on SL then some big names can offer. Easy to get offered say a 70/80/90 but 100/105 from others.

 

[shonceman]

MY purpose for asking the question ,without causing a storm, is I like the simplicity of SL and am considering asking them to join,, Many have said they are easy to replace so that changes my thoughts on SL.. thanks

Haha! I guess I'm in a stormy mood!

SL is easy to replace on price, and I don't really have an issue with another agent replacing it if it's been less than a year or so since issue, provided he's genuinely putting them in a better position.

But SL also has pretty good name recognition now, which I think makes them harder to replace. When I was a young agent, the same was true of Mutual of Omaha, MetLife, etc. because of heavy TV advertising. I might be able to do better than any of those as an independent, but when people are making a choice between two agents that they don't know, they'll often stick with the company name they recognize over one they don't, even if the price is a little higher.

Also, regardless of what some people think about the Legacy Assurance membership, it does tend to solidify the life sale, making it less susceptible to replacement.