Are You Worried That Your Insurance Agent Sold You Too Much Life Insurance?
It is a little known fact that when an insurance agent sells someone a life insurance policy, a very large portion of the first, or second, or third year premium is paid directly to the sales agent as a commission. So, let us say that your insurance agent, whom you consider to be a good friend, tells you that in order to provide sufficient funds to pay for estate taxes, you should take out a life policy. For purposes of discussion let us say that the policy is for $500,000, which in your case, might be enough to pay for any estate taxes which your estate might generate upon your death. Let us also assume that you are elderly and that due to normal health problems, the first ten years annual premiums are rather high, say in the vicinity of $40,000. In that instance, the insurance agent would be likely to receive a sales commission, depending upon the company, of as much as $60,000 or $70,000 over time, in other words, a vast amount of money, earned merely by obtaining your trust and confidence and recommending to you that you buy the insurance. Unfortunately, unless structured properly, the existence of life insurance actually can increase the amount of estate taxes and the use of life insurance to fund estate taxes must be handled properly in order to avoid a financial disaster.
When an insurance agent steps past being merely a salesperson, and becomes a financial adviser, the law holds that the agents assumes a fiduciary duty to his or her client. This means, among other things, that the agent must deal fairly and in good faith, and in total honesty, and must disclose all facts that are material to the transaction. One fact that courts agree is material is the amount of money that the agent will receive if the client buys the policy and also, whether or not the client really needs the policy for valid reasons.
Insurance agents, and insurance companies, rarely, if ever, reveal sales commission information to people who buy their products, because, if truth be told, people would be shocked at the amount of their money that goes to the sales person.
If you purchased a life insurance policy and have questions about whether your rights were violated, please call us at 1-800-306-6010 or contact us online.
When an insurance agent steps past being merely a salesperson, and becomes a financial adviser, the law holds that the agents assumes a fiduciary duty to his or her client. This means, among other things, that the agent must deal fairly and in good faith, and in total honesty, and must disclose all facts that are material to the transaction. One fact that courts agree is material is the amount of money that the agent will receive if the client buys the policy and also, whether or not the client really needs the policy for valid reasons.
Insurance agents, and insurance companies, rarely, if ever, reveal sales commission information to people who buy their products, because, if truth be told, people would be shocked at the amount of their money that goes to the sales person.
If you purchased a life insurance policy and have questions about whether your rights were violated, please call us at 1-800-306-6010 or contact us online.
