You could make a case that a number of stockbrokers and investment advisers are money-grubbing crooks; you have only to search the headlines to find, every day it seems, news of a corrupt financial deal that went south and exposed the thieves.
But you almost never think of insurance brokers in that light, and, while most of them are ethical and honest citizens who do their best for the clients, there are a few to beware of.
Why would an insurance broker go bad? The financial world he works in constantly bombards him and his fellow brokers with money-making opportunities; all of them, unfortunately, are at the expense of his clients.
What are the signs of an insurance broker you shouldn’t trust?
- First, he will invariably try to sell you his company’s most expensive policy (usually some kind of “Gold Standard Plan”). He’ll tout the incredible benefits it may offer, the huge coverage that the decedent can expect for his family and the ease of approval for it (there’s a real clue right there, if he tells anyone—you included—that approval for this policy is “a snap”). Translate: he’s working for the company and getting a fat commission and you end up paying him more than you pay for the insurance itself. Is it worth it after all? Not really.
- Second, he may lack the proper credentials. Insurance brokers should be registered under the federal securities laws. If he’s not, either he could not achieve the qualifications to be a certified insurance broker, or he had them at one time and they were rescinded for some reason. Either way, do you let an unlicensed doctor perform surgery on you? Don’t let the fact that you know little about the licensing necessities of a broker and do a little background research beforehand. Since you will be putting some money in his pocket, you might as well be sure you’ll get what you need for the funds you spend.
- Third, run for the hills if the broker puts a time limit on the sale—saying something like, “this amazing whole life policy will only be available for a short time before new Government restrictions force it out of the market.” Maybe there’s a reason it’s being forced out—too many people defrauded by it? Remember, hurrying into a deal will certainly not make a you a smarter buyer – you should have all the time in the world when picking your insurance policy and not have some broker tell you something it’s an amazing deal if bought until tomorrow.
Although it will take a while, you should always investigate your prospective broker. Take the time now, rather than regret not doing it later. The broker, if he is honest, will welcome any questions you have, and advise you not to hurry in a decision anyway.
Of course, if the idea of a broker makes you nervous, just go buy insurance online. Chances are you know your own needs better than a broker, and you’ll probably get a better deal!
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