All the insurance I wish my agent would have sold me

Insurance has been like an umbrella, covering us and keeping us dry even during the rain. We are in the minority of policyholders as we have experienced more insurance claims events than most, including two homeowner property claims, a hail storm, a water softener leak, and five vehicle claims, three accidents, and three vehicle theft or vandalism claims. Perhaps we simply experienced our allocated percentage of claims events in this past 25-year period and will go another 35 or so years without another claim? Let’s hope so, but the odds are against it.

One of the things I learned as a 20-year insurance industry veteran and insurance geek was that I found the vast majority of situations I had to bring to my agent’s attention as opposed to my agent educating me on how to best manage these risks.

My agent never talked to me about restructuring our auto insurance. We’ve carried 100/300 automobile coverage for a long time, with a $500 deductible. As I got smarter about insurance and our financial health changed, I decided we should update this program as well. We changed to a 200/500 policy with a $1,000 deductible and saved enough that we also bought a $1 million umbrella liability policy. We now have much more coverage for the same amount of money.

My agent never talked to me about flood insurance. When we bought our house, I knew that the subdivision next door had flooded about 10 years prior, and there was significant construction defect litigation that went on for years with the developer. I asked my agent to send me the flood map.  Amazingly, the flood map showed the flood plain that came right up to our backyard fence line. That’s too close for comfort, so I was happy to buy the flood policy and figure that I’ll continue to do so for several years while we experience multiple rainfall events and see if potential flooding ever becomes a concern.

My agent never talked to me at all about the value of term life insurance. Life insurance is a controversial topic, primarily for the reason of whether you should buy whole life or term. My parents bought a whole life policy on my 18th birthday with a coverage limit of $75,000 and paid for it all through college. I later took over the monthly payment of $46.20. When I went through the Dave Ramsey Financial Peace University course, we did some research. I could buy a $1 million term policy for $45/month. If I die, would my wife rather have a $75,000 or $1 million check?  We decided to adopt more of the Dave Ramsey approach, so we bought a $1 million policy and cashed out the whole life policy.

There may be some very specific reasons or situations to buy a whole life policy, so I’ll leave it to the experts to navigate those waters. If a person says they will never have a savings account and instead would typically borrow from home equity lines of credit, 401k loans, and the like, then selling them a whole life product that has a cash savings component might provide them with another pot of money they can pull from while continuing to act irresponsibly.

My agent never talked to me about retirement planning either. It’s another controversial insurance topic on whether you should simply invest in 401k or if you should buy an annuity product. When I first started my 401k at age 23, I didn’t know how to pick investment funds or have a MorningStar subscription. I went to my insurance agent since I thought he might be more knowledgeable. Instead of helping me pick investment funds, he immediately tried to sell me more whole life insurance. I told him I was 23 years old, single, only had student loan debt, and already had a policy for $75,000 on my head, so what did I need more life insurance for? He was adamant that I needed more coverage and never gave me any help related to the investment funds.

Thankfully, when I sold my whole life policy, my relationship with that agent terminated as well. I’ll never go back to him for any financial-related advice, and whenever anyone tells me that he is talking to them, I tell that story and simply say, be careful.

I wish I had an agent who would have first listened to my situation, understood my goals, and then provided guidance and recommendations on specific products or coverage limits that made sense at that time. I wish I had an agent who would keep up with the changes in our lives and provided recommendations on products as our needs evolved. I wish my agent had painted a picture of the next 10 years of our lives and provided insight into what could occur. Together, we could have determined the right mix of products and services. That’s why I buy insurance, to protect my family from future events that I don’t know are coming.

If agents could be trained to be more “consultative” in nature, they could dramatically improve not only the lives of their customers but their personal wallets as well. While we are all “insurance geeks,” we are also consumers of insurance. Being exposed to different scenarios and life circumstances can give agents the confidence to build a comprehensive insurance umbrella over each of their policyholders and help ensure that we stay dry, even when it rains.

Tim Christ is a vice president at Claimatic, a SaaS intelligent decisioning software that serves several P&C insurers. He is the author of two books on insurance, business, and technology, a speaker at industry events. Contact him at tchrist@claimatic.com.

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