Pitfalls of Selecting the Wrong Life Insurance Advisor

The consequences of choosing the wrong life insurance agent can be extreme and irrevocable. The wrong agent doesn’t have to be crooked or immoral either; they may be skilled in some areas more than others, mean well, or simply do not advise you on the best produces. These are things that could potentially happen if you choose the wrong advisor:

You may purchase an ill-fitting policy that does not meet your needs.

This could happen because a bad agent does not pursue all options or is motivated to sell you a specific line of coverage.

You may not get the best support and education about your contract and the life insurance process.

Life insurance involves many complicated pieces. A good agent should be able to explain the process and scenarios clearly to your level of understanding so that you are able to make the best decisions.

You may be undersold or oversold coverage.

A bad agent may oversell you on coverage that you do not need or is inappropriate for your situation. This can result in dissatisfaction with your policy and leave you struggling to pay unaffordable premiums. Conversely, and even worse in a sense, you may be undersold. That is, your line of coverage is not what it could be, because the agent is trying to find the cheapest policy for you. It is important to remember that price does not always equate to value, especially when you are dealing with products that have long timeframes like life insurance. A good agent will work with you to develop a policy that gives you maximum value.

You may face high surrender charges.

A surrender charge is essentially the penalty for cancelling a policy before it reaches maturity. These charges will vary across contracts and they are established to keep you in the policy. With life insurance products that involve cash value accumulation, you may see a significant reduction in value once the surrender charge is applied, should you absolve your policy before maturity. If you purchased a cash value policy, a fixed universal life contract for example, and you later find that this specific product is not ideal for your situation, not only do you lose value to the surrender charges, you are looking at less money to use to shop for another life insurance plan.

Not only can you lose money, you can lose time.

In the scenario above, an agent has advised an incorrect (for you) product. Now that you are shopping again for life insurance, you are in a disadvantaged position for a few reasons. In addition to the actual cash value reduction, you have reduced the time for your cash value product to grow. This can limit the final benefit payout amount, and shrink the accessible cash value in the new policy. Because of surrender charges, some consumers seek term life insurance policies, which provide only a death benefit, no investment account. But term life may also not be for everybody either, since surviving to the end of the term means that you are now faced with renewing or pursuing another policy. A good agent will be able to work with you on figuring out what type of insurance structure will work best for your needs and goals.

You could limit your financial legacy.

Although some consumers use life insurance as a cash value accumulation vehicle, the basic need a policy satisfies is a financial legacy upon your death. Life insurance is one way to establish income for your surviving family, to help pay for your final expenses, and to fund college. Choosing a bad agent that sells you a inappropriate product not only hurts you during your life, it potentially impacts the financial legacy your beneficiaries receive.

Finding the best life insurance program is a process and the results depend on your unique situation, objectives, and needs. A trusted, highly rated life insurance agent is the best way to position yourself toward your financial objectives.

We have created a database of vetted professionals so that you can compare and find the right advisor for you. To begin, use the search tool on the left or contact us at 1.877.614.0141.