5 Mistakes Life Insurance

Now that it's September, many people are focused on getting into the swing of the school year and putting behind them the more-relaxed pace of summer. Not many are focused on thinking about life insurance. But actually, September is Life Insurance Awareness Month (who knew?), so it is a natural time to focus on this topic.

Over the years, I've seen that there is a lot of confusion around this topic - from what type of insurance is best to how much you need and where to get it. With that in mind, below are the five most common mistakes people make when it comes to life insurance. Hopefully, through this list, you'll be able to get a better understanding of how life insurance works and why it's a good tool for you and your family.

Mistake #1 - Having no life insurance at all
Many people simply overlook the importance of life insurance. It doesn't appear to be something they need and it can be viewed as an added expense. But take a second to stop and consider all the important people in your life. If you weren't there, how would they be impacted financially? It's not fun to think about, but by "playing dead" you can begin to understand that life insurance is a critical tool to ensuring your family feels financially supported should anything happen to you. For instance, if you have any outstanding debts or other financial obligations, a life insurance policy will help to ensure that those burdens do not fall entirely on your family members. Remember, it is also important to get life insurance sooner rather than later because the cost can increase exponentially as you age.

Mistake #2 - Relying solely on employer-provided workplace life insurance
Life insurance provided by your workplace is an excellent benefit and can serve as a good starting point for your base coverage. But remember any life insurance provided automatically as a benefit is just that - a starting point. You can purchase additional coverage through your employer or on your own to help fill the gap.

Mistake #3 - Only considering term life insurance
Term life insurance provides a "death" or "survivor" benefit, which is the amount beneficiaries receive if you pass away, for a certain period of time (15, 20 or 30 years are common increments), after which the coverage ends. An alternative solution would be to adopt cash value life insurance, which similarly provides a death benefit, but will grow over the years as long as you continue to fund the policy. Furthermore, cash value life insurance can help with financial obligations in a tax-advantaged way, whether it is paying for college, a business venture or retirement. These policies are generally more expensive, but can make a lot of sense if you are able to commit to regularly funding the policy.

Mistake #4 - Leaving retirement savings vulnerable
If you do not have any/enough life insurance, your family is likely to look to your retirement savings for financial support. This may seem like a safe solution for finding additional resources, but I would advise against using funds saved specifically for retirement for another purpose. If you are the higher earner in the family, your spouse may have been relying on those savings for his or her own retirement. Similarly, if your spouse is forced to liquidate or take large loans from the retirement account, it will hurt the potential long-term investment gains that would have benefitted your family down the road. It is important that the money you are saving is allotted for different goals - from life insurance to retirement - so that you are making the most of each savings opportunity.

Mistake #5 - Guessing on how much life insurance you need
Many people who walk into my office have no idea how much life insurance they need. Is it five times annual salary? Ten times? Some other figure? There are many factors to take into account to figure out how much life insurance is right for you. Often this is where a financial professional can really help with the process. We can help quantify how much and what type of insurance makes the most sense for you and then help get that coverage in place. There are also many online calculators available to use as a starting point. Voya FinancialTM has a helpful calculator to help you figure out your life insurance needs.

At the end of the day, we all just want to know that our loved ones will be taken care of after we're gone. I have seen firsthand the peace of mind a life insurance policy can deliver. So this month, as life speeds up again, take a few minutes to pause and think about the future. Life Insurance Awareness month may only last 30 days, but a good policy will last for years to come!

Succession in Life Insurance Agency

People go into business primarily to make money. Obviously, their intention is to earn more than working for others.

Therefore, they are willing to grind long hours without complaining and they are constantly thinking of ways to expand their businesses by improving quality and efficiency, adding more products, opening branches and marketing aggressively to make more money.

If things go well over many years, the businesses will flourish and grow in value due to additional investment and goodwill. The Chinese have a saying that goes, “Building a business is difficult; maintaining it is even more difficult.” That is because it is not easy for owners of small businesses to find and groom their successor

Many business owners have not actually figured out what to do with their businesses when they call it a day. At the back of their mind, they suppose they will pass it on to their immediate family members.

In another word, they do not think about how to exit their businesses until they have grown very old or fallen ill.

Succession plan
Every business owner should have a business exit plan so as to secure a good value for the enterprise he has built with hard work, dedication and sacrifice. Otherwise, his family will receive scrap value for his business assets other than real properties.

To exit a business, there are basically two options.

The most common and preferred option is to pass on the business to the next generation. But there may be problems. The owner may not have children or even if he has, they may not be interested in the business or capable of managing it.

The other option is to sell the business. Some businesses, especially professional practices, are not easy to sell. It can be difficult to secure a fair value for the business. For example, if an aging dentist does not make arrangement to sell his practice, including his patient list, or take on a partner with the intention to sell it to him later, who will buy things like his dentist chair and equipment?

Generally, life insurance agencies do not have any value as their agency contracts usually authorise their principals to decide whether or not they will recognise the successors. With such a restriction, potential buyers are reluctant to buy the agency. In most instances, the principals absorb the businesses without paying anything. Generally this statement is true unless the Agency Manager finds a solution to overcome the problem. Today - the solution is available but unfortunately many Agency Managers are either too ignorant or too arrogant to acquire the know-how.

Travel agencies, however, are different in that their principals will accept other buyers provided they don’t have bad records.

Kevin is our family friend. He started a travel agency in the late 1970s and grew it to be among the five largest agencies in Malaysia. After operating the business for 20 years, he sold the business for a few million ringgit and emigrated to Canada to join his children who had gone there to study and settled down.

Whether a business has zero value or is worth millions depends on whether there are legal encumbrances.

Mergers & take-overs
If the business is large and profitable enough, additional options are available.

There are many large companies, especially the public-listed ones, constantly looking for profitable and well-managed businesses to merge with or take over. The retiring business owner can negotiate for a reasonable value for his business to be taken over for cash and/or shares of the company doing the acquiring.

He business owner who is selling his company has the option to take a lesser role and continue to receive remuneration as an adviser or leave all together.

Another viable option is to take the route of making an initial public offer (IPO) of the company’s shares and list the company on a stock exchange. This route usually takes a few years to materialise but it certainly offers exceptionally good value to the business owner.

It is common to have the net worth of a company jump anywhere from 50% to 300% if the IPO is executed properly and marketed aggressively.

Alibaba IPO
A case in point is the recent IPO of Alibaba Group of Hangzhou, China, that saw the wealth of its founder, Jack Ma jump from US$7.1bil (RM23.1bil) last year, to US$25bil last week, making him the richest man in China today, from eighth last year.

After a company has been successfully listed, subject to a moratorium on the shares he holds, the business owner can sell them when the share price is favourable. In the meantime, he can hire professionals to manage the business and then groom a selected candidate to take over his responsibilities.

He may choose to keep his shares and sit on the board of directors to set the directions of the company. When he feels the time is right, he may divest his shares to his family members or bequeath them in his will.

Ideally, a business should reward its owner with maximum value for having slogged for it. This will
only happen if there is a viable business exit plan. Do you have one?

How Much Is Enough

If something were to happen to you, would your family have enough life insurance to continue living the way they do today? Experts say many families need 70 percent to 90 percent of their current gross income if something were to happen to the breadwinner. It’s not a fun topic, but one that is very important and can help your family in a time of need.

Check your life insurance needs as your financial situation changes. Examples include:
• Family grows
• Education funding
• Career advancement
• Salary increases
• Change in mortgage expenses

What to consider
Your financial advisor can help you with a strategy designed to help you anticipate the many options if you were to die. You’ll want to consider immediate expenses, income replacement and available assets.

Think of your life insurance in terms of the income it can provide.

Immediate expenses
As a starting point, the average cost of a funeral in 2012 was over $7,000. There might also be probate fees or other funeral costs.

If your family will keep your home, you will need to figure in the remaining cost of your mortgage, insurance, taxes and maintenance. If your family will sell, think about the cost to rent or what a new mortgage would be. Remember, selling a home may trigger capital gains taxes. Consult your tax adviser regarding your circumstances.

Next, take a look at your credit card debt, car loans, education loans and other outstanding liabilities. Think about unexpected emergency costs like income lost due to work absence, medical expenses or home repair.

If your children are going to college, this is the last item to set aside for immediate expenses. You will also want to figure in the cost of future college education for younger children.

The estimated average yearly cost of tuition and room and board for 2014 is expected to be:
• Four-year public school: $19,598 a year
• Four-year private school: $42,170 a year

Income replacement
You will want to replace the income you would have been earning for your family. You will need to take a look at how many years your family will need support and the average rate of return on investments.

Retirement savings
If your retirement savings can be liquidated, it might provide cash flow for your family. These can include an IRA, 401(k), annuities and other retirement accounts. If your retirement plan allows, your survivor may receive a single payment of the entire balance (fully taxable to the survivor) or roll over the entire balance into a traditional IRA to continue to the potential of tax-deferred growth.
Contact your financial advisor and tax advisor for more information.

Social Security
For most families, Social Security provides only temporary benefits. Become familiar with how long your family would be eligible for benefits. The time and the amount of benefit might be so small it is not worth including in your calculations.

Available assets
Take a close look at what your family could choose to liquidate, including any stocks, bonds, savings accounts, etc.

What other assets do you have, including inheritance, commodities, rental property, etc.?
If you own rental property or a vacation home, your family might keep it or sell it. If kept, all related expenses will need to be calculated just as with a primary residence, including mortgage payments, insurance, taxes, and maintenance. If sold, there will be selling expenses and taxes due upon sale.

Other considerations
Your financial advisor can help you take a look at your current standing and develop a strategy for planning for your family. This is just a starting point for discussion and planning of life insurance needs.

You will want to analyze the costs and assets for each spouse to plan for a variety of possibilities.

Buy Life Early

The Millennial generation (people born between 1977 and 1995) is putting off traditional milestone events to a later point in their lives than preceding generations—buying a first home, getting married or starting families. It’s due in part to Millennials growing up during the Great Recession of 2009.

According to a Pew Research Center study, only one in three Millennials even head up their own household, down from 35 percent at the time of the Great Recession. Their generation faces higher unemployment and often lower incomes.

That has led many Millennials to also delay buying life insurance. “I see it in many of my younger clients—they struggle with the concept of illness or mortality in their near future,” said Al Schor, field director with Northwestern Mutual. And it makes sense, since the primary reason people buy life insurance is for the death benefit. If they don’t have anyone depending on them, why do they need that protection now?

But, Schor points out, there are other factors to consider when deciding when to buy life insurance. “What they need to realize is that it’s not just about a death benefit or protecting loved ones. It’s an integral part of a successful and balanced strategic financial plan.” He works with a number of young single clients who have seen the value of buying life insurance now. “They understand the value of being able to lock in premiums and death benefit now. And with whole life insurance they’re building guaranteed cash value.”

Most permanent life insurance builds cash value and can become an important, stable part of your financial plan—which is exactly what Millennials say they want, according to the Northwestern Mutual study “Millennials’ Approach to Money Management.” Thirty percent of participants say they prefer a “slow and steady” approach to investing. The sooner someone buys permanent life insurance, the sooner they start building that cash value, which can be accessed for opportunities or emergencies.1 Eventually, if the death benefit is no longer needed, the cash value can be used to supplement retirement.

In addition, something most Millennials likely don’t think about is the concept of insurability. The cost of life insurance depends on many factors, including the type of policy, the death benefit amount, age and health at the time someone takes out a policy. By buying life insurance at a young age, it ensures that if something happens to someone’s health in the future, that person’s rates will always be based on his or her health at the time the policy was purchased. In addition, some policies can be designed to allow the purchase of additional insurance in the future at rates based on someone’s health at the time he or she originally bought the policy. That can be a big advantage if that person was to develop a health issue like diabetes.

It’s easy to see why a young person might think life insurance doesn’t make sense. But Schor reminds his clients, “Think of how much [their] lives have changed in the last five years. They’ve graduated college or started a career. They can’t presume to know exactly what’s going to, or not going to, happen in the next five years. They just need to establish short- and long-term goals and come up with the best plan on how to achieve them.”

Private Retirement Fund

The Malaysian Insurance Institute (MII) hopes the government will offer tax exemption for the costs to promote private retirement insurance schemes in Budget 2015.

Its chief executive officer, Datuk Syed Moheeb, said this would encourage more insurance companies to double their efforts to promote the products.

"There are limits in insurance companies' operating costs. We cannot exceed certain percentage.

"If there are flexibilities, it might help us to spend more to increase awareness of the products," he told reporters at the Bumiputera Life Insurance Convention 2014 here today.

The Life Insurance Association of Malaysia, which is actively promoting the products, also shared the hope of MII.

Its vice president, Kamaludin Ahmad, said the government has given a tax-exemption of RM3,000 to those who bought insurance products linked to retirement.

However, he said, the demand for group retirement insurance scheme was still small.

"One of the reasons is the lack of awareness among Malaysians and we (insurance companies) is to consider the commissions given to our agents and the returns to our customers," he said.

EPF Is Inadequate

The average working Malaysian is not saving enough for their golden years, said Employees Provident Fund (EPF) chairman Tan Sri Samsudin Osman.

“As at end 2013, 69 per cent of contributors aged 54 years old have less than RM50,000 in savings. Let’s say upon attaining 55, a person spends frugally at RM800 per month, which is our poverty line income. Then that RM50,000 savings can only last five years,” he said after an EPF international seminar titled “Demographics Changes: Recognising the threats and opportunities” held, here, recently.

To date, life expectancy of the average Malaysian has increased to 75 years. The United Nations has projected that Malaysia will become an aged nation by 2030 when 15 per cent of its population comprise the elderly.

With many Malaysians living longer, there are concerns whether they have enough savings to enjoy retirement for the next 20 years.

In recent years, the government had taken steps to address this problem by extending the official retirement age to 60 and introducing the voluntary Private Retirement Schemes (PRS).

“People think they have more time than they actually do to deal with inadequate savings upon their retirement. We’re fast approaching an ageing population,” EPF chief executive officer Datuk Shahril Ridza Ridzuan said.

“A comprehensive study regarding this issue could plot and predict the social cost of an ageing population to the country 20 years from now. We need to ascertain if it can be funded through the personal retirement savings with EPF or pension system for government servants.”

Malaysians need to calculate how much social support that government needs to provide, including health spending and nursing homes, Shahril said, adding that at the organisation level, Bank Negara Malaysia, Department of Statistics and the Economic Planning Unit of the Prime Minister’s Department are sharing data on the challenges of an ageing population.

Guaranteed Return For ILP

Officers of the National Association of Malaysian Life Insurance Field Force and Advisers (Namlifa) are reportedly talking with the Malaysia's central bank to discuss the need to offer a minimum guaranteed sum for investment-linked policies (ILP), a source said.

A minimum guaranteed sum will protect ILP policyholders against aggressive risk-taking by insurers in their investment strategies, the source from Namlifa told StarBiz. ILPs are preferred by some consumers because of more exposure, though with higher risk, which in turn transfers the risk to the consumer. Namlifa is reportedly looking at anywhere between the current fixed deposit rates and Employees Provident Fund returns as minimum guaranteed sum.

The Consumers Association of Penang, however, said consumers have not been made fully aware of how ILP works and the risk involved when the wrong product is chosen, thus the consumer ends up making losses.

Cash Value Insurance

You know or you most likely figure you know something about life insurance. Whether it's with an employer subsidized plan or your own personal plan that you set up yourself, you probably have at least a rudimentary understanding of life insurance, what life insurance is, what it provides for -- that sort of thing.

In fact, you may even be up to speed on your life insurance cash value. But, set that aside for just a moment and let's go on a little exploratory trip. Let's take this whole issue of cash value and put it under the microscope. You may, in fact be shocked at what you see once you turn up the magnification.

First up, go ahead and admit it. Life insurance, no matter how you look at it, can look ridiculously complicated. (Apologies to the insurance professionals here in this space, pardon the introductory material. But I invite you to stay with it, you may walk away a bit more informed.) Guess what, it looks complicated because it is complicated. No we aren't talking rocket science here, but then again we aren't simply balancing a checking account either. So, with that in mind, why don't we get started?

Cash Value Life Insurance by the Numbers
A good working definition is most often the best way to begin, so here goes. Cash Value Life Insurance is a generic term that refers to what is called permanent life insurance. That means it covers you for your entire life. You may also see it referred to as Whole Life, (No, not Whole Foods). Alternatively, you may also find it labelled as variable life or universal life. All of these terms are used interchangeable to refer to the same type of insurance.

1:Your Cash Value Is NOT a Bank Account
Your Cash Value Life Insurance is not set up to be used as your own personal ATM. You cannot just pull out the money that you see as cash value and use it, at least without paying for it. Yes, it is true, you can borrow against this cash value. Yet, this borrowing must be paid back and must be paid back with interest.

Here's an analogy that will help bring this home for you. Well, with most Cash Value Life Insurance Plans you can borrow against the stated cash value. As long as you make your payments and eventually pay off that loan everything will be all right.

Alternatively, suppose you choose to stop (gasp!) making payments and make some sort of ridiculous claim that you don't need to pay back your own money. In that case you could end up triggering the lapse of your policy which will land you the cross hairs of some alphabet agency. More on this in just a moment.

2:Too Many Loans Will Sink Your Ship
Remember, at the end of the day, your cash value life insurance is an asset. But life insurance is somewhat of a unique sort of asset and must be handled with precision. For example, suppose you borrow against the stated cash value of your policy. If you stop making payments for any reason at all, your insurance company will announcer that your cash value life insurance loan value is too large and your policy is in danger of lapsing.

If you want to think of this in terms of the stock market, it's something like a margin call for an options trader. Your cash value life insurance agent will politely ring you up and ask for a prompt and immediate payment to catch your policy back up. Should you fail to do so, you can watch the dominoes fall one by one.

First, you will get an official letter from your insurance provider. Next, you will get a friendly letter from your favourite uncle. Yes, your Uncle Sam, except this time, he will bring along his friends from the Internal Revenue Service (IRS). In very official language you will discover to your dismay that you are now the proud owner of a hefty tax bill. Ouch!

3:Account Value is NOT the same as Cash Value
Heads up, quite a lot of folks miss out on the nuances of this one. You see it's like this. If you take the time to look at your last statement , you will find three different values reported. One of these is your stated account value, another is the cash value and the third is the surrender value. Now pay attention here, this is where the details get a bit hairy.

You see, if you ever read the fine print on your cash value life insurance policy you will discover something called surrender charges built in. You can find out how much this number is by comparing your account value and cash value on your statements. In other words, the difference between the two numbers is the surrender charge. You can think of this as the penalty or fee you pay for cancelling the policy.

Insider's Secret
Guess what? The amount mentioned above, the surrender charge is the preferred manner in which insurance companies bury the sales commission. So obviously, if your insurance carrier charges a lower sales commission, the surrender charge will be lower. At the same time, the lower surrender charge means the surrender cash value is higher. See how that works?

Are Your Eyeballs Bleeding Yet?
As stated above, insurance, especially life insurance is a rather complicated affair. Thus many people find themselves blindly following their insurance broker's advice. Yet, you owe it to yourself and to your wallet to at least understand the basics of your life insurance.

MLM - Mati Lagi Mati

QUESTION: Would you pay RM8,888 to invest in a multi-level marketing company selling animal placenta pills?

But what if the company selling it to you was based in a swanky office, and it promised that if you invested in said placenta pills, you’d be making hundreds of thousands of ringgit a month, all while being pretty much your own boss?

It’s the oldest trick in the multi-level marketing (MLM) book. But it works, and these days, it seems to be working particularly well with young people. Young people have higher aspirations these days. People want to have a good life. They face peer pressure to keep up. Whether they can afford it or not, gaya mesti mau!

MLM companies traditionally market products/services through a sales force which is not only compensated for the sales they generate, but also for the sales generated by the salespeople they’ve recruited. Many of these companies are now increasingly youth-savvy. They’re using things like social media, fitness club memberships, the promise of luxury holidays and a lot more.

Jessica Chan, 20, for example, is currently part of a vacation club that operates using a multi-level marketing model. It promises luxury vacations at discounted prices. You pay an initial US$299 (RM960) fee to join and a monthly fee – US$66 (RM210) – that can be waived for life once you recruit another four members to your downline. The larger your downline grows, the more cash and points (which can be use to offset the cost of flights purchases, hotel bookings, etc.) you get from the company.

“I’m doing it part-time at the moment because I’m still studying, but I have friends who are already doing this (as a full-time career),” said Chan, who declined to reveal her monthly earnings.

Alan (not his real name), however, had less luck when he was recruited to an MLM company selling aromatherapy products back in college. He coughed up RM2,500 up-front, and was promised big bucks if he could recruit enough people. In the end, the company was shut down. "I didn’t usually trust MLM schemes, but this one looked legit!” he said. “They had a huge, swanky office near Pavilion KL.”

And then there’s Lee, 29, who paid RM8,888 for 14 cans of animal placenta pills. “You can earn up to RM300,000 a month in passive income,” said Lee. “One of the members was already driving a Mercedes SLK at 21!” Plus, the pills are good for health, he said.

Why not?
The problem with MLM companies, said Datuk Paul Selvaraj, CEO of FOMCA, is that many of them operate in the “grey areas” of the law; so what they do may be technically legal, but it’s not necessarily ethical. “When people lose their money through scams, they try and get their money back from the government but that’s not always possible. Gone is gone.”

“These people know the business, they know the laws. They operate schemes that work ‘in between’ the laws, which makes enforcement difficult. They are also experts with marketing language. Whatever claims they make, like when it comes to health supplements, they make sure they’re not legally binding. They might say a product boosts your immune system, but oranges can boost your immune system too!”

And without a legitimate product, an MLM scheme simply becomes a pyramid scheme, which is, of course, illegal. “Sometimes they just sell a product as an excuse (to operate a pyramid scheme). There are, of course, perfectly legit, legal and ethical MLM companies that sell actual products.

Chan, for one, is confident she knows what she got herself into. Yes, there are some multi-level marketing schemes that are unsustainable. You can do a check on Bank Negara’s website. There are some multi-level marketing companies on the consumer alert list. She is eferring to the list of companies not authorised or approved by Bank Negara Malaysia.

MLM schemes are often unsustainable because the math rarely adds up. The membership structure is like a pyramid (each downline will have more members than the level above it), so the lowest level of the structure will always make up the majority of the overall membership. And that means at some point, when the market is saturated, all the members in the lowest level won’t be able to recruit anyone, and will most likely lose money.

YSLM, the MLM company by self-styled “future richest man in the world” Zhang Jian, which made the news recently for being an alleged pyramid scheme, is an example. Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ha­­san Malek said the company is being investigated for having contravened the Direct Sales and Anti-Pyramid Schemes Act.

YSLM member Kenny Chan, 44, however, vehemently denies that the company is a scam. “If the boss is really a conman as they say, wouldn’t he be arrested by now? We have members who were close to bankruptcy, their families were starving; and Zhang was able to help them!”

Growing market
Back in 2010, R.AGE ran a story on how direct selling and MLM companies were so aggressively recruiting young people that some colleges put up notices banning recruiters from entering their campuses.

But now, with ads and opportunities pouring in via social media, young people are more exposed than ever to the promises made by MLM companies. “It’s a numbers game,” said Paul. “Bigger reach equals bigger numbers. With social media, even if 1% responds, it’s a success; and there’s no cost involved.

“In that sense, young people are definitely more likely to be targetted now.” In fact, Chan’s company held a conference recently where one of the workshops was on social media marketing tactics.

“They educated us on how to use social media to build our businesses,” she said. “But at the end of the day, it comes down to persistence.

You have to be willing to work hard (to succeed in MLM businesses). It’s not for everyone.”
Direct Selling Association of Malaysia (DSAM) executive director Lawrence Cheah, whose association regulates all legitimate direct selling companies (including MLM businesses), believes the industry will grow in the coming years.

Over the past five years, the sales turnover from direct selling businesses (at least the legit ones) has almost doubled, from RM6.8bil in 2009 to an estimated RM11bil in 2013.

Nevertheless, Cheah said he discourages students from taking part in any form of direct selling – which includes MLM, single-level marketing and mail order marketing – because they should “focus on their studies. Many young people do it because it provides an opportunity for entrepreneurship, to run and own their own businesses."

Having said that, there are of course perfectly legal and ethical direct selling companies you can be involved in. Legitimate direct sales companies focus on products. You recruit downline members, but you earn money through your own sales, as well as get a cut from their sales revenue. Scam companies pay you for each new member you recruit, regardless of whether they actually sell anything or not.

The most worrying ones though, are the companies that are perfectly legal – and licensed – but practise unethical marketing strategies. Paul cites the example of MLM businesses that encourage members to show off their wealth and success on social media, which he said is an increasingly common trend.

“That’s what attracts young people. It’s not illegal, but it’s unethical,” he said. “In the past, most of the victims were older folks. But I was at a gathering for an MLM company recently, and there were so many young people! And many of them now are professionals – lawyers, bankers, accountants and so on. We even had a complaint from a PhD holder!”

So, is there any way at all the government can get to the root of this issue, by making sure these companies don’t get approved in the first place?

According to Paul, it’s pretty much impossible because of how well these companies operate between regulations of the different governing bodies. By the time the authorities finish their investigations and ban these scams, many would have already lost huge amounts of money.

Life Agent

Looking for a career that offers a big potential financial upside, a wealth of job opportunity and the lure of self-employment? If you enjoy forging relationships and are committed to client service (and can handle plenty of rejection), insurance sales could well be for you.

The dirty little secret of capitalism is that many — if not most — white-collar jobs require little more than showing up and going through the motions. Not so for insurance sales. It’s the ultimate commission gig, its practitioners fully dependent on their customers’ premium payments. Convert more prospects, get correspondingly richer.

Slow-Going...At First
Like retail, customer service, and similar lines of work with high attrition rates, insurance sales typically doesn’t pay all that well at the onset of one’s career. However, unlike those other occupations, the longer you stick around in insurance, the easier and more remunerative it gets, thanks to referrals and residuals.

It’s sticking around that’s the hard part. A 2010 study by the Life Insurance and Market Research Association claimed that the median salary for second-year agents is somewhere south of $30,000. Also, the median salary for those same agents two years later is…well, technically zero, because four out of every five agents have quit by then.

But Plenty Of Opportunity
If you’re serious about selling life insurance for a living, here’s one positive. It’s a job-seeker’s market. Major insurers have watched their workforces dwindle from their late 20th century zeniths. Some agencies going from having tens of thousands of agents on the payroll to having merely a couple of thousand.

Be Prepared For Rejection
The actual execution of the job of life insurance agent can be disheartening, at least at the start. The first lead you contact is going to say no. The second lead is going to say no. Eventually, after you’ve shadowed the established agents in the office long enough, you make your first sale.

Hitting The Books
The job can be thankless, at least until that first 70% commission check clears. The best agents are the ones with the most and most respected designations – Chartered Life Underwriter; Fellow, Life Management Institute; Certified Insurance Counselor. Dozens of hours of study and instruction, followed by an exam, separate the less committed and less ambitious life insurance agents from the ones truly devoted to the career. Combine flawless ethics with real-world education – and a healthy dose of that persistence that’s a prerequisite for the job – and there’s no reason why you shouldn’t flourish.

What NOT To Do
While there might be a code of conduct that registered agents are obligated to honor, occasionally it brushes up against the limits of common decency. There indeed is such a thing as bad publicity. And that even insurance agents who’ve managed to make a career out of the business can fall victim to negativity.

The Bottom Line
If entrepreneurship is your goal, there is plenty of opportunity for someone seeking a career in insurance sales. That said, it'll be tough going, especially at first. Agents have to have a thick skin and handle rejection. After all, they're all selling the same products, for the most part. So if client service and building relationships isn't your thing, you might want to pass.

Mortgage Life Term Assurance

Research from Sainsbury’s Bank Life Insurance reveals 64% of people who have moved up the property ladder in the past five years, and have a bigger mortgage as a result, did not review their life insurance.
 
Mortgage payments are generally the biggest monthly outgoing, so having adequate life insurance cover could give peace of mind that your family could afford to continue living in their home, even if you are not there.

Reasons homeowners with mortgages gave for not reviewing their life insurance include thinking it wasn’t necessary (39%) and that they could not afford it (37%).

The findings also reveal that  44% of homeowners who have a mortgage do not have any life insurance at all, and 10% of these people had life insurance but no longer do. A further 3% said they didn’t know if they had cover.

As official figures reveal that house prices rose by 9.9% in the year to April 2014 and the average property now costs £260,000, Sainsbury’s Bank Life Insurance is encouraging homeowners to ensure they understand what cover they have and decide if it suits their needs. Those who do not have cover should consider if this is something they do need. In addition, Sainsbury’s Bank Life Insurance customers have the flexibility to increase their cover with any lifestyle changes they may make.

“Moving home can be an exciting but stressful experience and with such a long checklist of things to do, it appears that life insurance is often forgotten about. We would encourage anyone who is moving home or may have just moved to take some time to check their policy and the level of cover they have and make sure it’s suitable for their change in circumstances.”