Linas Sudzius is a lawyer, speaker, former insurance company executive and author of the soon-to-be published book What Most Life Insurance Agents Won’t Tell You.
His law firm works with successful people on their estate planning, and with entrepreneurs on their business legal issues. When he’s not working he enjoys being with his family and listening to audiobooks.
Reach him at email@example.com.
First Experiences with Life Insurance
I was about ten years old—this would have been about 1970--when I first became aware of life insurance. My mother was a single parent to three children, and also owned a business—a beauty shop. She had responsibilities and a mortgage, and was aware of the difficulties her kids would face if something happened to her.
Mom bought life insurance from a career agent. I don’t remember what life insurance company he was affiliated with. A career agent is an employee of the life insurance company, and his job is to sell that company’s life insurance policies to as many people as possible.
Being the youngest in the family, I went with Mom on one of her visits to the agent. I remember him explaining a little about how the policy worked, and how it would help protect the family. I also distinctly remember feeling the kind of unease I always felt in the presence of a high-pressure sales person.
The agent sold Mom some kind of whole life policy. He stressed the importance of the policy’s cash value element, as well as its death benefit.
Years later, when I had graduated college, Mom asked me to contact the company to find out its value in the event of surrender. I went to the agent’s office, and they gave me a quote. After I compared what Mom paid to what the policy was worth, I realized that she wasn’t getting her money back—that, in fact, she was getting far less than she paid. I remember my impression was that it didn’t seem fair.
I believe the kind of policy that Mom bought would have been guaranteed whole life. The premium was a set, level amount that was due every year. The death benefit was guaranteed to be available so long as the premium was paid. And the policy developed cash value according to a guaranteed schedule printed inside the insurance policy.
Did Mom make the right decision in buying that life insurance policy from the pushy agent? Even after all I’ve been through since then, it’s hard for me to say. Certainly her family was protected by the life insurance death benefit while the policy was in force. Could she have made a more efficient purchase? Would she have been better served by a more professional agent? I still wonder.
Do you have similar uneasy memories about buying life insurance?
Motivations to Write the Book
So why did I decide to write the book What Most Agents Won’t Tell You About Life Insurance? Well, it certainly wasn’t to make a bundle of money. Most people don’t want to think about life insurance, much less buy and read a book about it!
There are at least three motivations aside from that.
When I was a young lawyer back in the mid-1980’s, I worked for a law practice that provided prepaid legal services to employees of a big company. I did a wide variety of legal work in that role.
One day an employee about my age came by the office with a universal life insurance prospectus in his hand. He wanted me to take a look at it to give him advice about whether he should buy the policy or not. Well, I had no particular expertise with regard to life insurance at that point in my life. I was a relatively new lawyer, single and poor. I’d never bought a financial product in my life—certainly not any life insurance.
So how did I handle the situation? I did what most lawyers would do when asked to evaluate a financial deal—I read the document.
Notice that I said that the universal life policy came with a prospectus back then. These days most universal life contracts are not required to have a prospectus. But in the early days, when the rules weren’t really settled, some life insurance companies provided them.
Reading the words in the document—I think it was about 50 pages—made me realize that it was almost impossible for a non-expert to understand how that policy worked. I remember trying for about half a day, and realized that I wasn’t going to be much help to my client. I don’t remember exactly what I told him, but I think I asked him whether he trusted his agent. If the answer was yes, he should buy. If the answer was no, he should refuse the policy.
It’s pretty much the same advice I’d give to a client today.
Sometime later, another client brought by a universal life computer illustration to the practice. Since I was the office expert on universal life—due to my experience with the prospectus--the task fell to me.
The client had purchased a policy about four years before, and had the illustration that she been given when the policy was purchased. She wanted to know if she could stop paying the premium for the policy, but still continue to grow the policy’s cash value. I thought I could help her figure it out by looking at the papers she’d brought along.
I didn’t know it at the time, but my understanding of universal life was inadequate for the job. I remember talking to the client, and then discussing the situation with the agent. I also remember the agent being frustrated because he couldn’t make me understand the difference between the policy’s actual performance and the growth predicted on the illustration.
At the end of the day, the client took back her papers and resolved to contact the insurance company directly. That was a relief for me, because I didn’t have a better idea of what to do.
Both those experiences were embarrassing for me, because clients came to me expecting that I would have expertise with regard to how life insurance, and especially universal life, worked. I thought I could understand the products. After almost twenty-five years in the business, I now feel like I’d be able to help someone understand. It’s a main reason why I decided to write “What Most Life Insurance Agents Won’t Tell You.”
Aspire Financial Group has partnered with Advanced Underwriting Consultants (AUC)-and AUC’s founder Linas Sudzius-to provide tax and technical information designed to be helpful to our customers. This post is designed to help educate readers about general matters - and in particular - those who are interested in finding out more about Mr. Sudzius' soon to be published book, "What Most Life Insurance Agents Won’t Tell You." If you need specific advice you can rely on, please consult your professional advisor.
Steven J. Podgorski, LUTCF d.b.a. Aspire Financial Group, 1720 Crofton Drive, Algonquin, IL 60102