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Why Working with an Independent Advisor is Essential for Life Insurance

posted by TrueNorth Financial Strategies on Monday, May 27, 2024

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In the realm of life insurance, the importance of partnering with a financial strategies advisor who represents the broader market, rather than just a single company, cannot be overstated. This approach ensures that clients receive advice that is not only comprehensive but also tailored to their specific financial needs and situations.

Understanding the Bias of Single-Company Agents
Life insurance agents who represent only one company often face significant conflicts of interest. These agents are typically incentivized to promote their company’s products above others, regardless of whether these are the best fit for the client's needs. Their compensation, employee benefits, and even qualifications for rewards like trips can be tied directly to the sale of their company’s products. This financial entanglement can lead to a bias that may not always serve the best interest of the client.

The Dangers of Limited Options
When agents are restricted to the products of a single insurer, clients are likewise limited in their choices. This restriction can be detrimental because not all insurance products are created equal, and the criteria for underwriting these products can vary significantly from one company to another. For instance, what qualifies as a 'tobacco user' can differ across companies, which can drastically affect premium costs.

A Real-Life Example of Cost Savings
Take the case of a client who was funding a buy-sell agreement with a $10,000,000 term policy from a popular insurer, paying nearly $90,000 per year because the insurer categorized chewing tobacco use under 'tobacco user' rates. By switching to an insurer that did not classify chewing tobacco use in the same way, we were able to reduce the client's premium to about $30,000 annually. This change not only resulted in significant cost savings but also highlighted the value of having a knowledgeable advisor who understands the nuances of the insurance market.

The Advantage of Market-Wide Representation
Financial strategies advisors who represent the entire life insurance market can compare different products, underwriting guidelines, and pricing structures across a variety of companies. This broad market knowledge enables them to find the best possible coverage at the most competitive prices for their clients. More importantly, these advisors are committed to the client’s financial well-being rather than fulfilling a sales quota.

The Bottom Line
​Choosing to work with a financial strategies advisor who has access to the entire insurance market rather than a single-company agent is crucial for anyone serious about obtaining life insurance. Such advisors not only provide unbiased advice but also ensure that clients get the most beneficial policy tailored to their specific needs. When it comes to life insurance, having an advisor on your side who is committed to your financial health can make all the difference in both protection and cost.

For anyone considering life insurance, remember it's not just about buying insurance—it's about acquiring it correctly and strategically. Choose an advisor who will help you navigate this complex landscape, ensuring that your coverage fits your personal and financial circumstances. Start the conversation with TrueNorth today by filling out the form below!

(Securities offered through Lion Street Financial, LLC (LSF), Member FINRA & SIPC Investment Advisory Services offered through Lion Street Advisors, LLC. LSF is not affiliated with TrueNorth Companies, L. C.) Tax and Legal services are not offered by Lion Street Financial, LLC., or Lion Street Advisers, LLC.