The 10 Most Common Life Insurance Mistakes and How to Avoid Them

Attendees at the NAIFA Career Conference and Annual Meeting in Seattle learned about the 10 most common life insurance mistakes and how to avoid them from industry veteran Monte Scott, LUTCF, regional sales director for Midland National. The mistakes are:

1. The insured’s estate is named as the beneficiary.
2. Failure to name at least two back-up beneficiaries for a policy.
3. Failure to check policies at least every three years.
4. The policy they sold does not match the problem the buyer has.
5. The amount of personal coverage is not enough for family security or estate-planning goals.
6. The policy proceeds are payable outright to minor kids, grandchildren, handicapped or emotionally immature or financially irresponsible individuals.
7. All the insurance is owned by the insured.
8. There is no investigation to see if the insured’s business or practice can offer insurance on a more cost- or tax-efficient basis.
9. The purchaser forgot that at some point, the term insurance (including group term) will self-terminate and/or become too expensive for the policy owner to carry.
10. The insurance is bought as though it were a commodity.

The solution to all these problems, Scott told the audience, is to know your clients thoroughly, learn about their families, their health issues and their businesses, meet with them regularly, perform reviews and fact-finders and help them to make the right decisions. “No 1-800  number will do this for them,” he said. “We need to make good recommendations and make sure that our clients do the right thing.”