[Editor's Note: This is the first sponsored post this blog has ever seen. As part of the “package” I offered the five Platinum ($2500+) sponsors of this year's WCI Scholarship, they get a sponsored post in addition to some other “free” advertising. You will see one a month for five months. What's the difference between a sponsored post and a guest post? With a sponsored post the advertiser gets editorial control over the content, which I usually do not allow. In this case, it's not a big deal since Lawrence Keller, CLU, CHFC of Physician Financial Services (516-677-6211 or [email protected]) is well-known to long-term blog readers from the nearly dozen guest posts he has submitted over the years. He has also worked with literally hundreds of WCI readers to get term life and disability insurance coverage in place. I've received tons of favorable feedback and absolutely zero negative feedback about Larry over the years so I'm proud to partner with him to offer over $20,000 in cash and prizes to this year's scholarship recipient. Yes, the entire $2500 is going to the scholarship, not me. This post is an interview with Larry that offers lots of interesting tidbits about how the insurance industry really works. Please be sure to thank Larry for his support of the WCI Scholarship in the comments section and with your business when you have an insurance need. If you have not yet made a contribution to the scholarship yourself, please do so here. Any amount is appreciated and is a great way to “pay it forward.”]
What's your story? How did you end up as an insurance agent in New York?
It was purely by accident. I was introduced to a recruiter (head hunter) and he was able to get me an interview with a company in Manhattan. I was told that there would be no selling involved and my position would be to retain existing clients, as well as, introduce them to new products and services that were available. It turns out that it was a John Hancock agency and the position was to be an insurance agent. Since I was right out of college and my friend's father was an insurance agent, and he seemed to enjoy what he did, I figured that I would give it a chance.
When did you start your business? What was that like?
I started in August, 1990. I was told to “cold call’ parents of young children to help them fund college educations for their children. While I was very good at getting appointments and meeting with people on a favorable basis, I was working extremely long hours and, other than having young children, these potential clients didn't have much in common with each other.
Since I was doing their planning in this area, they typically asked for help in other areas including insurance planning, retirement planning and estate planning. As a result, I asked them to provide me with additional information regarding their existing employee benefits, insurance and investments. Since these potential clients were from different backgrounds, I spent a lot of time learning about their industries and professions in order to understand what might be important to them in order to best help them meet their financial goals. Unfortunately, I was not an expert in their specific industry or profession and had to start from the beginning in almost every case. Literally, one day I was working with a plumber, the next day a doctor or dentist and the next day an executive. This was one of the main reasons that I decided to work exclusively with physicians after doing this for about a year.
You seem to spend more time online than just about any other insurance agent I know of. Why is that?
Very similarly to when a WCI reader tells you they wound up on your blog “by accident”, only you know how much work it took behind the scenes and it was the furthest thing from an accident that got them there.
Once I decided to work with physicians, I spent a lot of time in NYC hospitals. However, as you know, physicians are very busy and, to a great extent, do not have control of their time when they are working. Therefore, I wasted a lot of time trying to find people to work with that had an interest in my products and services. I also spent a lot of time waiting for physicians that were interested in meeting but were subsequently stuck in clinic or in the operating room and ultimately had to reschedule. This was just inefficient and was a difficult way to do business and/or build my practice.
For this reason, after my confidence and product knowledge grew, I decided to educate physicians rather than to try to actively sell them something. Much like the mission of WCI, I began writing articles for medical journals and doing presentations for medical associations. The internet was just a natural extension of this strategy. I knew that this would showcase my expertise and if physicians were interested in learning more, they would contact me directly. I was also insurance licensed in every state and could easily work with any of the doctors that called.
You seem to work almost exclusively with doctors, how come? What's the best part about working with them? What's the worst part?
Clearly, the best part is that they are researchers by nature. As a result, if they are interested and dedicate time to the purchase of a product or service, they know the right questions to ask. They also value expertise and can determine fairly quickly if someone is inexperienced or wasting their time.
The worst part is that it can take a long time for some physicians to make decisions but, once they decide to move forward, they want the process completed as soon as possible – usually yesterday.
Another challenge, specifically when it comes to disability insurance, is when an insurance company makes an offer of coverage with some form of modification, such as a rating (additional premium charge or exclusion based upon medical history) or exclusion rider. Due to their vast medical knowledge, they find it difficult to understand the difference between medical management (what they do on a day-to-day basis) and probability underwriting (what insurance companies do on a day-to-day basis) where the same medical information is viewed differently.
This is because underwriters are tasked with determining if the symptoms or disease have the potential to prevent the applicant from performing their job duties at any point in the future and once an underwriting decision is made it cannot be changed (assuming the policy is Non-Cancellable and Guaranteed Renewable). This is not the case with medical management where a personal physician can easily change the treatment plan, the medication prescribed, the dosage or all of the above.
What common errors do you see doctors make when purchasing disability insurance?
Other than readers of this blog, which are generally more educated in terms of financial planning and related terminology, many simply don't do enough research. They are given the name of an agent by a friend or colleague and do business with that agent solely for that reason.
All too often only one company's policy is recommended – either due to the agent's contractual relationship with the insurance company or the agent does not possess expertise in disability insurance planning. As a result, not only does the doctor not understand what they are purchasing, they don't understand how it compares to other options available.
The disability insurance marketplace is complex and things are constantly changing. Therefore, even if at one time the company and product that was purchased by the physician making the referral was “the best”, the odds are good things have changed – especially if they made their purchase several years ago.
Another common mistake is purchasing from an agent/broker or financial planner that did a “lunch and learn” at the hospital. While this might be a good time to start doing initial research and asking questions, buying on the spot and not doing any further research can lead to one purchasing the wrong policy at the wrong price for the wrong reasons. Sadly, the hospital is the happy hunting ground for new financial advisors and since they don’t know much, and neither do the residents and fellows, the pairing is destined for disaster.
It is important to note that according to LIMRA (Life Insurance and Market Research Association), the agent retention rate for 2010 was 11% (LIMRA’s Agent Production and Retention Report 2010, published in September 2011). This number represents the percentage of agents who are still under contract through December of their fourth year after hire. What does this mean to you? It simply means that the odds are very good that by the time you complete your medical training, the insurance agent or financial advisor that you decided to work with is no longer working for the same company or is no longer in the profession.
What common errors do you see doctors make when purchasing life insurance?
The mistakes purchasing life insurance are very similar to those mistakes doctors make purchasing disability insurance. The biggest error I see here is a physician going to a website like www.term4sale.com to compare premium rates for the death benefit and guarantee period that they desire. Although this is certainly a step in the right direction, focusing only on the lowest premium rates can present a challenge.
Since certain factors including height/weight, personal medical history and immediate family history can have a significant impact on the underwriting process, simply calling an agent or purchasing a policy online immediately may not result in their expectations being met. For example, if you had a parent die of cancer prior to age 60, some companies will not allow you to qualify for their best underwriting classification while others do not take this family history into consideration at all.
Why is it important to purchase insurance from an experienced agent?
There is certainly no shortage of insurance agents and/or financial advisors that work with or want to work with physicians, the one thing that cannot be replicated is experience. An agent that is familiar with the underwriting of both disability and life insurance policies can all but guarantee a smooth underwriting process in which the desired outcome is likely.
Unlike medicine, which has a standardized path that physicians must take to gain the education, training and experience requirements necessary to obtain board certification, the insurance and financial services industry does not. In fact, for the most part, anyone can call himself or herself a “financial advisor.” While he or she might have passed the tests necessary to earn their licenses, do they have what it takes to become your trusted advisor? Remember, in most cases, you will not be paying any more for an experienced advisor with credentials than you would be paying for an inexperienced advisor or insurance agent with no credentials at all.
What do you wish WCI readers knew about you, your business, and insurance in general?
I think most WCI readers have probably come to the conclusion that I am detail oriented, have strong disability insurance and life insurance product knowledge and enjoy sharing it with others. What they probably don't know is that I have access to significant discounts with most of the “big six” disability insurance carriers. I don't advertise this as I don't want to be known as the agent that simply has the lowest cost products. I want to be known as the agent that takes the time to explain things, reviews the pros and cons of one policy compared to another and helps clients make the best decision possible for themselves and their families. Of course, price is always a strong consideration in the process, but I don't want that to be the main reason someone contacts me. In fact, all too often, I am not a doctor's first phone call but very often I am the last.
Since premium rates and contractual language is regulated by each state’s insurance department, short of one agent having access to a discount plan, if the policy parameters and riders illustrated are the same, the premium rates will not vary from one agent to another. This is something that most consumers seem to not understand.
I interact with a large number of physicians on a daily basis. Unfortunately, some of them will not qualify for coverage at all, or in a way that they would expect, based upon medical history. Since I am very active in the industry, I may know of solutions that are available that I, myself, cannot provide. As a result, I will refer the potential client to the “endorsed agent” that can offer what I feel to be their best option. While I might not be compensated at all for doing this (and some might question why if this is the case), I have found that doing the “right thing” always makes sense and you never get a second chance at making a first impression.
What do you think? What questions do you have for Mr. Keller about his business or the insurance industry in general? Comment below!