What Canadian Life Insurers May Not Want You to Know

What Canadian Life Insurers May Not Want You to Know

To put it blatantly, many Canadians are skeptical of life insurance brokers and
life insurance companies and, in some cases, they have the right to be suspicious.

While the majority of insurance advisors and companies have good intentions, there are certain pieces of information that they’d rather keep to themselves.

Below are the top five most coveted secrets that those in the insurance industry would be skeptical in sharing the information.

1. It is relatively easy to become a Life Insurance Advisor – As per the current survey by Service Canada, there are approximately 16,900 insurance agents working across Canada. However, it is very shocking that there is no pre-requisite for formal education with the influx of brokers within the industry. Fortunately, an aspiring agent would be required to pass the examination and go through a certain amount of screening to get an insurance company to sponsor their license. The newly minted broker must hold errors and omissions insurance to cover their errors and also attend refresher courses and continuing education which would enable them to stay up to date on the latest policies and sales techniques.  For example, in Ontario the agent must complete 30 hours of continuing education every two years. Although it is not considered a huge number, what brokers don’t tell you is that many sales-based meetings can qualify as long as there are technical components to them.

2. Life Insurance Agents are Paid Higher Commissions for Selling Certain
Products –
 Within the independent broker channel, some agencies will pay a higher bonus rate to brokers selling products from one particular company. This does not imply that this would influence every agent’s policy recommendation, but obviously, the temptation will almost always certainly be there.

3. Agent Selling Products from One Particular Company May Qualify for High Dollar Conferences – These conventions are usually at very exotic locations and come with perks like shows, private concerts, five-star restaurants and celebrity motivational speakers. They often come with a price tag of $15,000 or more, are completely free for the broker, thanks to the sponsoring insurance company and the broker gets to live high on the hog for a few days while they are supposedly “working.”

 

 

4. Buying Direct is Not as Good as It Sounds – Many insurance companies in Canada are trying to bypass their insurance advisors, in an attempt to reduce costs, by selling their plans direct to the consumer. This strategy not only impacts Canadian insurance agents and brokers, but the consumer as well. What they don’t tell you is that you’ll be paying a higher price if you buy direct. Many direct plans are up to 20% more expensive than broker sold plans. Truly, with these direct transactions, insurance companies are really en-cashing on the opportunities.

5. Accidental Death Life Insurance Hardly Ever Pays Out – We have all received those direct-mail campaigns offering accidental death life insurance for anywhere from $10-$25 a month. At first, they may come across as simple and lucrative deal. But when you factor in you realise that less than 2% of all life insurance claims are paid out for accidental death. These policies are nothing but giant cash cows for insurance companies that mislead clients with policies they know will only pay out under very rare
circumstances.

 

Created by: Aman Kapur

 

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