Life Insurance: Avoid MLMs, purchase from Agents

Life Insurance: Avoid MLMs, purchase from Agents

Life Insurance

It’s not a fun topic to talk about, mostly because the basics of this kind of insurance is not about life, but death. We generally don’t want to talk about our own mortality, much less plan for the eventual inevitable.

Life insurance is a much more difficult topic to think about than it is to actually talk about.

Because of the difficulty of this subject, many companies have started utilizing the multi-level-marketing (MLM) format which emphasizes selling to people you know.

The problem with the MLM format

There are five main downfalls we have found with the multi-level-marketing format of life insurance.

  1. Agent dedication
  2. Marketing efforts
  3. Product direction
  4. Effective servicing
  5. Recruiting model

Before we get into these problems, let’s define a MLM organization and an agent.

Multi-Level-Marketing Organization

Multi-Level-Marketing organizations are companies with a group of offerings that focus on both product sales and recruiting. Rather than being a service and sales oriented company, they focus on selling a business model to prospects. For instance, World Financial Group (WFG), is a multi-level marketing company that offers various life insurance products. Their agents are taught life insurance basics, what anyone needs to learn to get licensed, and then are trained to recruit prospects to join their downline.

The downline is simply people an agent has recruited to work under them. Conversely, the upline is the people who recruited the agent.

Whether MLMs are legitimate businesses is a debate for a different website, as we here at Bow Tie Financial Group are all about insurance, not the nuances of what constitutes an “actual” business.

Most MLMs in the life insurance realm have a partnership with a few companies. WFG, for instance, has special contracts with Transamerica, Pacific Life, and a few others. People Helping People (PHP) has a special contract with AIG and, I’m certain, a few other carriers. Primerica has partnerships with Metlife, Franklin Templeton Investments, Lincoln Financial, and others.

You might be aware of a few other multi-level marketing organizations out there, such as World Ventures, Mary Kay, Amway, Avon, Jamberry, LegalShield, Herbalife, and innumerable others. There’s even a magazine periodical dedicated solely to the development of MLM participants.

All of these promise full-time income potential with part-time effort.

It’s time to dive into why, in our opinion, MLM life insurance companies are best to be avoided as life insurance consultants.

1. Agent Dedication

Agent dedication is critical. What do we mean by agent dedication, though?

We mean an agent whose primary focus in business is insurance. Who is solely focused on learning the policy types, differences between products, how each company operates differently, and wonky insurance nuances most people aren’t even aware of.

What else? Agents should be dedicated to their clients and to their carriers. Obviously their clients need to be properly protected. The carriers all have a demographic they best fit, usually represented by rate. Pairing the two up is really the thrust of the agent’s job.

Dedication also comes into play with longevity. If you have insurance questions about a universal life policy, or what some options are with a whole life policy after a few years of cash accumulation, you’ll need an agent who has been with you since it was the setup.

Speaking of setup, we need to make sure your agent is setting up your cash-value life insurance policy with your best interests, not maximizing their commission. Other than cash value, do you need a child rider, return of premium rider, or maybe a waiver of premium rider on your term policy? Do you even know what they are or what they do? These are all things full time agents know which many MLM agents don’t even have on their radar.

2. Marketing Efforts

This is a complicated part of this writing. Marketing is probably the most critical part of the prospecting and sales process, other than making sure things are written correctly.

MLM companies market to three distinct groups of people, on behalf of two entities. They market to

  • Current representatives on behalf of themselves
  • Current representatives on behalf of their specially contracted carriers
  • Prospective representatives on behalf of themselves
  • Specially contracted carriers on behalf of themselves

Agents have one job: marketing to prospects and clients.

What happens when you have a MLM company bringing agents to their annual convention, where their top one or two carriers talk about how great they are and how, without them, the MLM all these people “work for” would not exist? What happens when agents, who by their licensing, are in a position of authority, are lead to believe they’re superior to people with a job (which is often spoken derogatorily as a ‘j-o-b’) because they’re “owning their own business”?

Agents have, in our opinion, one job: match our clients up with the best program for their needs. The only thing we are superior in is our knowledge of insurance product, not business, life, or how to live.

Multi-level marketing organizations have an insular culture of us-first, largely because of their marketing. This results in an often cultist organization where people first represent the MLM company rather than the interests of their clients. Sure, they touch on the best interests of prospects, it just comes as one of the tools for the organization’s strategy rather than the root of the agent’s process.

So, to answer our first question, what happens when they bring agents to their convention and their agents buy into the idea of independence built upon the back of this organization? People are given options that are limited, at best, and duped into joining an organization that will suck them dry, at worst.

Agents are dedicated to marketing to new prospects to consult with them. That’s the daily marketing effort of the independent agent. We don’t want to recruit or sell a dream of owning your own business — we just want to set you up with an insurance program that benefits you.

3. Product Direction

Product direction is not a term the insurance industry uses. In fact, it’s a term we made up to describe the focus of how agencies position their products. It ties closely in with marketing efforts, though it slightly different.

A life insurance product is intimate. It is often the one barrier between your family’s success and destitution in the event of a death. It can be a cushion that lets you take time off for grieving and therapy after losing a child or loved one. It can save an entire matriarch’s legacy from ruin.

Life insurance is often the one protection between destitution and success


The one direction product for full-time life insurance agents is toward clients. It’s finding the blend of term, cash value, and long term care. It’s figuring out whether juvenile life is best set up as a whole life to help fund college, or if it’s more advantageous to set it as part of the parents’ coverage.

Our one goal is to build a client for life, as it were.

Furthermore, product direction is based in experience. A direct agent will have a team of underwriters backing them to answer any questions they have. Many even long-time representatives with MLM organizations are still in a beginner level of knowledge with how to set people up properly.

Agents’ products are focused on client protection, growth, and development. We are experienced and backed by teams with an immense collective knowledge focused on selling the right product, not selling mass quantities of product.

4. Effective Servicing

Servicing applies to more than a missed payment or adjusting how much you put into your indexed life insurance policy. Servicing is anticipating your needs when you call in with a problem. It is a periodic review of what you currently have and suggestions on how to move forward.

Servicing is critical to insurance, especially life insurance. It comes from a desire to maintain good relationships and empower people to maintain knowledge and control over their assets and life. Servicing is one of the most powerful tools in an agent’s set.

Speaking from experience, servicing through a MLM representative’s perspective and from a direct agent’s perspective is wholly different. A representative with a MLM does not own their book of business. What that means is while they have access to it, it can be taken away at any time. A direct agent owns their book and is able to stay on top of any issues faster.

What that means, for you, is one less layer of red tape to cut through on the day before payday when you realize there’s a little more month left than there is check, and you need to adjust something. It means that direct agent is more likely to be able to pull you out of a sticky situation. It means that question you have about your unique underwriting case has fewer steps to get through for a solid answer.

It’s the difference between a policy being issued in days and one being issued in weeks. It’s often a 10% difference in premium, whether $18/month vs $20/month or $270/month vs $300/month. Oftentimes it even comes down to accuracy against speed.

Direct agents are more flexible and empowered to service their — our — clients. And we’re proud of it.

5. Recruiting Model

Most of this comes down to the recruiting model multi-level marketing organizations employ. In order to make recruiting attractive, there are weaknesses built into the representative’s business plans.

One of the largest problems is commission: a MLM representative’s commission is significantly lower and will still only go up to a fraction of a direct agent’s rate unless they can become among the top 5% of recruiters (recruiters is emphasized because amount and quality of sales don’t contribute to their commission).

We don’t work for free, of course, which is why we need commission. Our consultation to help you find, apply, and be accepted for the right insurance plan is our commission. It’s what keeps our lights on, our fridges stocked, and our tanks full. It feeds our pets, raises our children, and gives back to our community. The commission paid out on a policy is the same, whether it goes to a MLM or direct agent. It’s just your direct agent gets a higher commission because they’re empowered to service and work on your policy. The MLM organization absorbs 30-75% of the commission (usually on the higher end) to maintain their organization.

What this pay cut means is instead of being solely an insurance consultant and agent, MLM representatives have to recruit to survive and grow their business. This makes their friends, family, and insurance prospects potential downlines, to participate in these cut-rate commissions and recruiting models to train their own competition masked as teammates.

Direct agents only sell, service, and manage policies. We do not recruit.

In Conclusion

As distasteful as we find the vast majority of multi-level marketing organizations, we don’t wish to discourage people from joining them should they find a fit. Much like food, we can’t fault people for enjoying what they do. I, Eddie, the author of this post and president of Bow Tie Financial Group, cannot stand eggplant, yet I don’t think people should never eat it if it suits them.

This is more a warning, a tip, something to encourage people to take a second look at the organization they’re purchasing something so, so critical from.

Direct agents are local business owners with full stakes in their business. We are people who dedicate ourselves to knowing what you don’t know, and what you don’t want to know. We ask ourselves each day “What do I know? What do they need to know? Have I told them it yet?”

Keep it local, keep it in your community, and keep it in your best interest. Go direct.

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Candle Safety: Chanukah and Kwanzaa

Candle Safety: Chanukah and Kwanzaa

Chanukah and Kwanzaa are two beautiful holidays. Both are about celebrating the roots of one’s heritage and finding the line between assimilation into the majority and cultural independence. Both are celebrated by candles. Both are celebrated with family.

Candles and family can be hazardous, though. Here are some safety tips for these two holidays. Some tips will be for candles, other will be for the traditionally fried foods of Chanukah, finally, one will be some general heat and burn tips.

Candle Safety

Whether you’re lighting a hanukiah (Chanukah menorah) or a kinara (the Kwanzaa candelabrum), you are literally bringing open flames into your house. Open flames, as we all know, can be incredibly dangerous. These are some basic safety guidelines

  • Place your hanukiah or kinara on a flat, fire resistant surface. Stoneware is good, as is a metal tray or even
    aluminum foil over a counter.
  • Be aware of your surroundings: make sure your candles are not under curtains or drapes, are clear of flammable objects, and that they aren’t in an area where they can easily be knocked over.
  • Never leave lit candles unattended — there are religious exceptions to extinguish flames for safety if you need to leave.
  • Keep pets away from lit candles.
  • Only allow children near candles with supervision, such as during lighting and prayers.
  • In some cases, electric candles are a viable alternative. Make sure there are no frayed wires.
  • Do not walk around with lit candles.
  • Only place candles in the non-flammable hanukia or kinara, don’t use improvised materials.
  • Be careful of hot wax.

Food (and Frying) Safety

Chanukah’s candles represent the time oil for one day lasted an entire eight — the time required to press more oil from olives in ancient times. As such, many traditional foods such as latkes and sufganiyot (potato pancakes and jelly filled doughnuts) are specifically made because of their connection to the oil.

Here are some basic tips to keep safe and injury free

  • Be careful when grating or chopping by hand.
  • Keep onions (and garlic) away from pets.
  • Be mindful of long sleeves and hanging clothes when near oil or reaching across it.
  • Use long-handled spatulas and spoons when preparing food
  • In case of an oil fire, turn off the heat and cover with a lid. Do not use water on an oil fire!
  • Use a splatter guard and oven mitts to protect from small oil burns.

General heat and burn safety

This brings us to the final part of our article, and the one its writer, Eddie, knows most about. He’s had his share of burns from his fire dancing days, though nothing too severe. He did work as safety for a couple “incidents” though. Luckily they all turned out fine, in no small part to him, so pay attention!

  • Move an injured person away from any flames or heat sources.
  • Smother any fires that occur on clothing, either with a towel or by rolling on the ground.
  • Do not pull off clothing that has stuck to injured skin. Many synthetic fabrics will melt when burn. If the skin under has been compromised with a severe burn and the clothing is stuck to it, just cut the clothing around the injured area then seek treatment.
  • Rinse any burns in tepid or lukewarm water for a few minutes. Do not use ice, cold water, or any ointments, creams, or lotions.
  • Check the batteries of your smoke detector.
  • Make sure you have an AB or ABC fire extinguisher available. We recommend keeping one outside the kitchen, as flames from cooking can prevent you from reaching it if kept in the kitchen.

Be safe, everyone. This is a wonderful time of the year to celebrate with family, friends, and loved ones. Whether you’re celebrating the cultural backbone of your African roots or the victories over societies that would have you change, do it with the kind of joy that you deserve.

We at the Bow Tie Financial Group wish you the deepest blessings for your holidays.

Christmas Safety

Christmas is a beautiful time of year.  Lights sparkle in most every neighborhood, familiar music plays everywhere, and families come together.

Did you know that Christmas also presents unique risks to your family?

Tree fires are one of those unique risks.  When setting up your Christmas tree, please consider the following tips:

  • Ensure plugs are fully in their sockets and wires are in good condition.
  • Make sure to water your tree: a dry tree can go from a small flame to an inferno within 60 seconds.
  • Keep any heat source away from your tree (this includes candles).
  • Use only UL or ETL/ITSNA listed lights.
  • Use no more than 3 strands of lights per extension cord.  Run those cords along the wall to avoid tripping on them; don’t run extension cords under rugs.
  • Using an artificial tree?  Make sure it’s non-flammable (not “inflammable“) and UL listed.
  • Don’t decorate with tinsel if you have dogs or cats. Tinsel may be beautiful, but its shimmering nature is irresistible to our furry wards; they’re likely to eat the tinsel or pull the tree down in an attempt to get at it.
  • “Angel hair,” made from spun glass, can irritate your eyes and skin; always wear gloves or substitute non-flammable cotton.
  • Spraying artificial snow can irritate your lungs if inhaled; follow directions carefully.
  • Decorate the tree with your kids in mind; move ornaments that are breakable or have metal hooks toward the top.

Christmas tree fires are fairly rare, but when they do happen, they’re absolutely devastating.  Click this link from FEMA for more information on Winter fire safety.

Click this link from the Christmas Tree Association for a number of tips on how to protect your pets and many other things.

Click this link (opens in a new window) for a bunch of great safety information from the National Safety Council on how to prevent some of the over 15,000 injuries that happen during decorating every year.

Click this link for pet safety tips from the ASPCA.

Finally, in case something terrible and tragic does happen, make sure your family is covered.  Call us today: (520) 867-4705 or get a quote here.

Up next: how to safely host a holiday dinner!

Happy holidays from all of us here at the Bow Tie Financial Group.  Celebrate to the fullest and be safe!

Shopping for Quotes: to Redact or Not to Redact

We’ve received many declarations pages over the years with the premiums blanked out. Clients are afraid, for one reason or another, to show us how much they’re paying for what they’re receiving. Oddly, this has only happened with auto insurance quotes.

Generally, people who blank this out are trying to get us, the agent, to show them the lowest price we can offer. They’re afraid that if we see they’re paying three times our lowest price, we’ll split the difference and pocket the commission. When this happens, we’re being seen as a salesperson, not as a consultant.

There are a few things to consider.

First, the agent has no say over pricing. Pricing is based on an algorithm unique to each insurer based on things including, but not exclusive to, client’s loss and violations history, model of car, size of car, price of car (for comprehensive and collision), and a number of other factors. Even more, premiums have to be approved by each state’s insurance board.

Secondly, as an agent, we are going to have a range of companies to offer, all with different claims satisfaction ratings and insurance package features. If company B is a better fit, but $50 more each year than company A, it will complicate our process in explaining our recommendation to you. As soon as you show that you don’t want us to know your current premiums, you have told us that price is the most important consideration for you.

Our job is to find not necessarily the best price, but the best policy for your budget. If we have all the information in front of us, we are much more empowered to give you the best options available.

Apples to apples only works when you’re getting the right apples in the first place. If you’re paying for honeycrisp but only getting Granny Smiths, let us know. Remember, while we try to save you money, we’re really in the business of saving your money.

As always, if you have any questions, comment, call, or email us.

Thanksgiving Safety Tips

Thanksgiving is almost here, and we at the Eddie Arriola Insurance Agency would like to give you a few quick tips for a safe Thanksgiving!

1. Make sure your turkey is completely thawed, especially if you’re frying it.

A thawed turkey will cook more evenly, decreasing the chances of undercooked parts. Also, when it comes to frying, a turkey with frozen portions will actually create a massive grease fire.

2. Cut that turkey with a sharp, sharp knife!

A sharp knife is a safe knife; it’s less likely to jump out of what you’re cutting or glance off it and cut you. Also, if a sharp knife does cut you, it’s a lot easier of a wound to treat than one made by a dull knife.

2. Make sure that turkey is cooked!

Turkey should be considered done when a meat thermometer inserted into the deepest part of the breast reads a temperature of 165ºF.

We hope you have a wonderful, fulfilling, and safe Thanksgiving!

Halloween Safety Tips

Halloween will be here in less than a week and, despite it’s fun nature, there are many unique hazards associated with this unique holiday.

The Centers for Disease Control (CDC) have a list of excellent health safety tips here. Also, the American Academy of Pediatrics (AAP) has an exhaustive list of safety and health tips here.

Beyond that, here are a few reminders on the property and casualty side of safety.

  • Make sure any driving done is completely sober and your lights are on.
  • Keep jack-o-lanterns at least 5 feet away from any flammable materials.
  • Make sure decorations don’t impede walkways.
  • Make sure decorations are not near open flames.
  • Check all wiring on lights and electronics, immediately discard any which have exposed wires.
  • Remember that “inflammable” and “flammable” mean the same thing: it will burn quickly. Treat those materials accordingly.

We here at the Eddie Arriola Insurance Agency hope you have a healthy, safe, and awesome Halloween!

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