Going a Little Slow

So now I understand how people who have jobs that are 100% commission can become so desperate.

This past month, things have been really slow for this new financial business. I've done almost nothing. I can say 'almost' only because I did answer a couple questions and gave out a few business cards, none of which have led to anything productive yet.

My own availability is the primary reason. I've had a really busy month outside of this endeavor. I had a few additional things going on for a couple weeks with my full-time job, so I just didn't have any extra energy. I've also had to focus more on my martial arts training- I have a 1st degree black belt in Tang Soo Do and needed to pass my re-certification test. I neglected my training more than I should have these last few months, so I had to cram in a few extra karate classes in right before the test.

My potential customers also had some limited availability this past month. I used to schedule a lot of appointments on Sunday afternoons and evenings- then the NFL pretty much shut that down. Around here, only two things happen on Sunday: church and football. Even on a bye week, I couldn't schedule a Sunday appointment if I were giving money away! School and other similar activities also seemed to limit a lot of availability on weeknights for families with children (or even parents who are students themselves). With everything going on, talking about life insurance or saving for retirement/college became low on their priority list. And now that the Christmas shopping season is in full swing, things probably won't get any better until after the new year.

So if this were my primary source of income, I would be really concerned (and probably exhausting any savings I might have).  Jim, my RVP & trainer, has called me a few times trying to get me over this financial hump. I'm sure it's more of a concern for him than for me since my commission directly impacts his.

I am wondering if this opportunity well may have dried up. Things flowed so well in the beginning, it seemed like I had appointment after appointment. I had to do very little soliciting, since so many friends and coworkers knew about my new business and were happy to find out more about it. According to the plan, those initial appointments would lead to more appointments, but so far I haven't had that happen. People were happy to refer me to other people, but those leads didn't seem to go anywhere.

On the bright side, there hasn't been any financial loss for me. Primerica covered the cost for my life insurance license which is good until 2015. Primerica will also reimburse me for the series 6 and 63 exams, which I hope to take in January.  Also, it's neat to be able to have my own business.  I've learned a lot about money, I'm taking some additional tax deductions, and met some interesting people.

The best part has been helping a few people with better management of their financial resources and/or providing protection with a good life insurance policy.  This might sound a little like a cheesy sales line, but it's also true.

Do You Have The Wrong Life Insurance?

After sitting at the kitchen table with a lot of people to talk about financial stuff, I can definitively say there are a lot of different financial products out there, and several of them I would NEVER promote or sell in good conscience.  At the top of the list is cash value insurance.  This includes whole, universal, variable, or whatever creative name an insurance company wants to call it.

Don't get me wrong.  If you own it, it could have been the right thing to do at the time.  Cash value insurance was once thought to be the best thing out there.  But with term insurance being so affordable nowadays, cash value insurance belongs in the past, like the rotary phone and rabbit ear antenna.

For most cash value policies, the cost is about $10/month for every $10,000.  So if you have a $50,000 policy, the monthly cost is be around $50.  It may be more or less, depending on the different riders of the policy and the insured's health at application.  The monthly premium is used to fund the insurance coverage and cover the company's costs, with the rest going into an account that grows a cash value for the insured over time.  That last part sounds fine and dandy, until the policy owner realizes how little that amount actually is and that it will take years to accumulate any decent cash value.

With term insurance, that same $50/month can purchase a total of $310,000 of insurance coverage with a 35 year term.  This quote supposes the clients are husband and wife (ages 31 and 30 respectively) and have no medical history or tobacco use.  The policy includes $150,000 of coverage on him, $150,000 of coverage on her, and $10,000 for every child (under 25) they have listed on the policy.  The actual cost of the monthly premium is only $41.95. 

For $50 a month, what would you rather have: $50,000 or $300,000 in life insurance coverage?

So you might be thinking- what happens after 35 years?  At age 70, the cost of term insurance will be much higher (because the insured is much more likely to die).  At the same time, the mortgage should be paid off and their kids should be financially independent (or so we hope), therefore they won't need such a large amount of insurance.  If they still want to have the $50,000 that would have been provided by a cash value policy, there's a simple answer.  When the policy is issued, take $20 a month, and invest it in a good mutual fund or managed account.  After 35 years, they will have $59,278 to insure themselves.  (This assumes $20/month with a 9% return over 35 years.)  We'll talk about more of the savings/investment side of things once I become securities licensed.

If $50/month sounds too expensive, there are ways to lower the cost of life insurance.  The younger you are when you purchase life insurance, the more affordable the premiums are.  Obviously, stay healthy and don't smoke.  If you have the ability to, pay your insurance premiums annually instead of monthly- this would save the policy owner 1-2 months of premium with most companies. You could also opt for a shorter term, such as 10 or 20 years.  While your coverage would not be in force as long, the premiums would be much lower.  (Using the example above and all other values being equal, a 10 year term is only $22.72/month.) This might be helpful if you foresee your insurance needs changing in the next few years and are expecting to buy a replacement policy in the near future.

One thing that has been really helpful for a lot of families is an increasing benefit rider.  Let's say the insured can't afford the premium for $300,000 of coverage.  Primerica offers a 10% benefit increase every year for the first 10 years of the policy with no questionnaire or medical exam.  The insured only has to pay the cost of the additional coverage.  So, the insured can purchase a $150,000 term policy, and have the option to increase the benefit of the policy every year by 10% until it reaches $300,000.  If the insured no longer needs the $300,000 later, the rider can be cancelled and the policy goes back to $150,000 at the original premium. 

I guess you could say that I'm biased, since I am a Primerica independent representative who only sells term insurance.  Well you don't have to believe me, but you should probably believe the experts.  Dave Ramsey is pretty opinionated when it comes to cash value insurance.  His website is where I stole the picture from.

You can also read the 3rd Edition of Personal Finance for Dummies by Eric Tyson.  Turn to page 337 where he talks about life insurance.  I'll warn you, he starts off by saying: "I'm going to tell you how you can save hours of time and thousands of dollars...Buy term life insurance."  He also provides a good analysis that shows the problems with cash value insurance.  Of course, you don't need the part where he talks about how to buy term insurance- for that, you should talk to me!

Bad Salespeople Ruin Everything!

Before I complain about bad salespeople, I'm happy to announce that I passed the Pennsylvania Producer's Life Insurance Exam (aka the state life insurance test) yesterday afternoon!  For the past two weeks, I've been listening to the same educational voices on my MP3 player while in the car, then taking practice exam after practice exam on the computer nonstop.  So what's next?  Now I'm focusing on learning the presentation, or  "the spiel" I like to call it, and enjoying a little more commission from my training sales.  Soon, I'll start preparing to take the Series 6 and 63 exams which will enable me to offer mutual funds and other investment products independently of my trainer.

So here's the latest thing I've learned about financial services.  The hardest thing about it isn't the exams, it's bad salespeople.  Until now, I had no idea of the lasting impact that a bad salesperson really has.  It must be the biggest barrier to setting up appointments with potential clients who haven't met me yet.

When I'm trying to setup an appointment, I may be eager, direct, and even excited, but I don't want to be pushy.  If I'm direct and to the point, it's not because of some sales strategy, it's my own personality (friends & colleagues love to attest to this), and I simply don't want to waste your time or my own.  With financial services, most people just want good information, not song and dance.

So when someone has a prior run-in with a bad salesperson, it makes it hard to be direct with them.  They assume that my honesty isn't completely genuine, and that there's some big catch just waiting to come around the corner.  Because of bad salespeople, the client ends up missing out on a future opportunity that might really benefit them, and then honest people like me miss out on the opportunity to provide it.

It's poor salespeople that make sales jobs so hard for honest working people.

For myself, I'm staying far away from bad salesperson tactics.  They don't do anyone any favors.  You'll only get an honest presentation from me.  Of course I'll highlight the positives, but you'll never feel duped, tricked, or that something crucial was left out.  In the future, I may offer incentives to people who agree to meet with me or for referring me to others for further business, but you'll never be the victim of a bate-and-switch maneuver.  I'll let you know if I don't agree with your decision, but it's always your choice to make.

Some of my friends have become clients, and future clients I hope become friends.  That's what builds a good business and generates a decent income, or at least how I intend to do it.

Here's some neat start up statistics.  In August, I met with 4 families for training appointments.  3 of the 4 have become clients with life insurance and investment/savings products.  The remaining family enjoyed the presentation and maybe learned something that they didn't know before.  That's a 75% sales conversion rate, and a 100% success rate.  In my business, that's an achieved goal.

Double Check Your Auto and Home Insurance Rates!

I've learned a lot in the past month in the financial services industry, and I've only scratched the surface.  I plan on taking the Pennsylvania life insurance exam in mid-September.  Primerica pays for it, so long as I pass the company's "Guaranteed Pass Exam" with a score of 80%.  Until then, Primerica has other ways for me to make commission, even before passing the life insurance and securities exams.

The best way I can do it is by providing quotes for auto and home insurance.  Primerica doesn't actually sell auto or home insurance.  In the past, the company sold it through Travelers, but in recent years has partnered with an insurance company broker.  The broker takes an applicant's insurance needs, driving record, claims history, etc and takes it through 23 top-rated insurance companies to see who can give you the best rate.  If the customer is happy with the result, then I get a small commission.

This week I was approved to start doing this, so of course, I became my own first customer.  When I ran the numbers, I was shocked.  Our 6 month premium for auto insurance went from $673 to $595.  Our annual premium for home owners insurance dropped from $756 to $483.  Add those numbers up, and I'm saving my family $429 a year.

In case you were wondering, the coverage is decent: 100,000/300,000 for bodily injury liability, $250 deductibles for both comprehensive and collision, and full tort.  I'm also cancelling the Subaru Roadside Assistance that I pay $80 a year, because I got roadside assistance included in this policy for $12.

Prior to this change, my wife and I were insured through State Farm.  I want to be clear here, there is nothing wrong with State Farm.  The company has insured me since I was a teenager.  Their customer service is superb and I never had a problem filing a claim.  The only reason we've switched is because I can get the same package and save $429 a year.  If State Farm's rates go down, I'm happy to switch back.  In the meantime, I'm enjoying the savings with a different top-rated company and encouraging others to do the same.

Interestingly enough, I've heard a few objections for changing insurance in favor of better rates, most of them due to loyalty to the agent.  "Our agent is actually a friend of ours," or "State Farm has been really good to us."  Both statements are true, but if your agent is really your friend, then he/she will understand and continue to be your friend after you switch.  State Farm was good to me too, but I now I have another company that's good to me, and it is costing me $429 less this year.

In the interest of full disclosure, I didn't switch all my insurance policies from State Farm.  I rent out a condo that I used to live in, and State Farm's rates for rental owners insurance were still competitive at $220 a year.  I also kept my mortgage disability income insurance with them since it's fairly inexpensive and have yet to find another company offering this type of policy.

So what company did I switch to?  Well, I'm not saying on the blog, because I don't want to lose potential business from customers switching without me.  I can tell you that it's rated very well by A.M. Best.  It's been in business for over 50 years and had well over $300 million in revenues in 2011.  Plus, depending on your driving record, claims history, etc, the company that I switched to may not be the company that offers you the best rate- it may be one of the other 23 top-rated companies that partners with our brokering service.

So if you're interested in getting a quote (whether to purchase or just to compare to what you already have), please contact me via e-mail: plim[dot]2nnaa[at]primerica[dot]com (only written it in this format to trick the spam-bots).  Checking rates over the phone will only take 15-20 minutes, and there is absolutely no obligation to buy.

Of course in a year or so, I'll check the rates again and maybe get a better rate than before!

Sign Me Up, Jim!

I remember thinking: "If even 60% of what you're telling me is true, then it's worth me checking it out."  That's what I thought almost a month ago when he was telling me about Primerica.

I'm referring to Jim, and Jim is now my trainer for Primerica.  He has reached the level of Regional Vice President within the Primerica food chain and actually lives several houses down the street from me.  Prior to this, I had known him to see him around the neighborhood.  My wife would notice him almost every morning walking his youngest son down to the bus stop.  We would see him later in the evening in front of his house or walking his dog on our family walk through the neighborhood.  He was always a nice guy, quick to offer a friendly hello.

One day he asked to meet with us, to talk about what he does and see if it could benefit us.  He never said financial services, but I knew what he was getting at.  I didn't mind- he was a nice guy and everybody has to make money some how.  Plus, we had been procrastinating setting up any type of savings plan for our kids, so I knew this could at least get a step closer.

He gave us the spiel, and almost instantly had my attention.  He came in with the intention of "hooking" me I'm sure, and he did everything right.  With previous companies, I had heard all the money making lines such as, "There's a lot of money changing hands, and we get piece every time it does."  Don't get me wrong, with Primerica there's definitely a little hype with buzz phrases like "financially independent" and "discovering freedom."  However there's also a strong sense of helping families, particularly when people live to short (life insurance) or live to long (retirement funds).  Jim delivered a company spiel, but it's obvious to me that he believes everything he says.

He has good reason to believe everything he says- it's worked for him so far.  He's been with Primerica for over 20 years.  His wife is a stay-at-home mom for their 3 kids, one of which is in college.  His house (and his income) compares with most physicians I work with at the hospital.  I've listened attentively to everything he has said, and I found no holes in his story.  He's worked hard for Primerica, and it's clear that Primerica has worked for him.

Of course, success isn't for everybody in this business.  In fact, most people who try this don't finish.  Out of 10 people, around 3 will pass the life insurance exam and join the team.  Many quit during the training process, and Jim describes them as people giving up too easily.  I'm the exact opposite.  I may pick my battles for strategy, but I'm not a quitter.  I might even hate what I'm doing, but I always finish what I start.  Jim may not know what he's gotten into!

When I agreed to sign on, I told him that I wouldn't buy any of his products until I started making some money.  This was my way of making sure he sticks with me, and he agreed on my strategy.  He's been quite complimentary of me so far, some of which I'm sure is learned affirmation from Primerica.  On the other hand, he's done this long enough to know who might succeed and who won't.  He's placed me in the succeeding category- I sure hope he's right.

In the meantime, I'm continuing to setup my training appointments and study for the life insurance exam.  I've already made my first training sale (with Jim doing most of the work).  I also get a nice little bonus if one of the sales also decides to give this business a try.  My schedule is much tighter than I prefer since I'm working full-time and having a busy family life, but I'm hoping this will all pay off in the long run.

In case you were wondering, to sign the independent business agreement, the application fee is $99.  Then after that there is a fee of $25/month.  That's actually small money (my wife can blow a lot more than that in a weekend) since Primerica seems to give so much more, including covering the fees for the life insurance exam and state licence.  I'm also discovering all the tax deductions for having my own business- those are worth it, too!

The Before Picture

I want to do more.  But before I can tell you what that means, it's good know where I'm at right now.

We moved into our new home a little over a year ago.  It's been a good home so far.  Coming from the townhouse we had before, it seemed huge when we moved in.  Now our young kids are starting to grow, I wish the size of the house could grow, too!  Nevertheless, it's a decent house, it meets our needs, and it's our home.

I'd like to think that our family is the typical middle class family.  My wife and I both work.  We have two kids, two cars, and a small dog.  Financially speaking, we're doing okay.  The bills are getting paid.  There's a little debt I wish we didn't have.  We're probably living a little more "paycheck to paycheck" than I prefer.  For the most part, things are okay.  But that's just it, we're doing okay and I want to more than that.

I'm a licensed social worker.  Stereotypically, social workers aren't known for making a lot of money, and that's more true than I care to admit.  For me, my base salary is actually pretty decent for being a hospital social worker, so I really can't complain.  I also have the ability to bring home more money by volunteering to be the hospital's on call social worker.  The on call rotation is a part of our job, but many of my colleagues are happy to give their hours away if there's someone else who needs the extra cash.  It can be rough, especially if paged in at 2am, but it's a good way to get an extra day or two's pay added to the paycheck.

Several times I'd thought about getting into the financial services industry from social work (the two fields can be very similar).  On at least three occasions, I met with people from different companies.  I became very interested each time, but ultimately turned each offer down.  They wanted someone who was willing to drop everything, not bring home a paycheck for two months, and pound the pavement to find leads.  I also felt very poached- they wanted me to turn over the names of my family, friends, and anyone else I knew for more leads.  I didn't like that feeling at all.  I didn't want to look at everybody as if they were a walking dollar sign and a way for me to get more money.  These were sales jobs, dressed in a financial services disguise.

I wanted to bring home more money, but not like that.

I'm a firm believer that the ends do not justify the means.  I believe that how I make money is just as important as having it, and how I spend it.  Maybe I won't make as much money as the other guy with values like this, but I like my faith and my values and intend to keep them.

So this is me, and at the end of last month I signed an independent business agreement with Primerica, in addition to my full-time job.  I intend to find out if I can still be a social worker, still hold my faith and values, while making some additional money in the financial services industry.  There's still a lot of sales, but Primerica's character is completely different.  I find the company's sense of service and desire to get families what they need very attractive.   Plus, it's the only company I know that will let me do this on my own time while working and having a family.

My future entries on this blog entries will track my progress and ultimately tell the story. I hope it's one with a good ending!