IS YOUR INSURANCE POLICY AN ABANDONED ORPHAN?

It’s not your fault.

If your insurance advisor becomes unwilling or unable to provide service, you have an orphan policy. What happened? The causes vary. Advisors might:

• leave the business: do something else or retire
• switch firms: prohibited from taking the clients
• stop doing business with an insurer: might lose their contract
• have poor processes: makes servicing more difficult
• avoid conflicts: the policy may have under-performed and created friction
• prefer selling: dislike providing service

Whatever the cause, you pay for service you no longer get.

An Overlooked Cause

Your advisor may be active in the insurance world but is that enough? You might be on the path to the orphanage without knowing. The changes take place gradually as the service you get drops and possibly stops. You’re not alone.

Since life insurance usually pays most of the compensation at the time of sale, there is no strong financial incentive for advisors to provide ongoing service. Some products are “lapse-supported”, which means the insurer makes a profit when you cancel. Who’s on your side?

Another complication

Some insurance policies are “vested”. That means the old advisor keeps getting paid even if they tell the insurer that they won’t provide any more service. This arrangement protects that advisor at your expense. Why would another advisor help you for free?

There’s another possibility. Your old advisor may sell policies to another advisor  (e.g., for two or three times the renewal compensation). Now your new advisor has more incentives to pay attention to you.

What Makes You Valuable?

The main reason you’re valuable to a new advisor is for new business. That’s reasonable. Beside life insurance, people often need more protection against the costs of 

• disability (unless you’re retired)
• critical illnesses
• long-term care (especially during retirement)

Even if the advisor isn’t paid, you may like the service enough to provide referrals.

Tip: Be wary if the new advisor attempts to replace your current coverage with new policies. That leads to more compensation but you may get better results by modifying your current policies.

The Transition

If you’re transferred to another advisor, how would you know? The insurer and your old advisor may not inform you. If you get a letter from a stranger claiming to be your new advisor, how can you be sure?

You can check them out online (e.g., LinkedIn) and chat on the phone. You might phone the insurance company. When you’re satisfied, why not meet? Insurance requires maintenance. Your new advisor may be more diligent and consistent than the old one.

Links

• Dealing with orphan policyholders (LifeHealthPro, Apr 2010)
• Does your insurance company when when you cancel your coverage?
• Three keys to getting your insurance claim paid
• Why after-sales service stinks for life insurance
• How Tom Hanks got cheated by his insurance advisor
• Reinstatement: trying to get your insurance back
• image courtesy of Hugo Saraiva

PS If you aren’t satisfied with your advisor, contact your insurance company and ask for a replacement.

HOW TO GET A BETTER PRICE: THE FUTURE SHOP CASE STUDY

Since prices fluctuate, you might get stuck paying more than necessary unless you:

1. Collect evidence: take screenshots when you’re shopping even if you’re not ready to buy (e.g., with Evernote or Snagit). Otherwise, what proof have you got?
2. Make your case: give plausible reasons for your request
3. Ask in writing: gives you time to refine your arguments and leaves a record
4. Deal with reputable vendors: they’re more likely to make exceptions

Last time, we looked at not-so-good service from Petro-Canada. A week has passed and I still don’t have a replacement for my car wash season pass. This time let’s look at amazing service from Future Shop.

Why Future Shop?

If I can’t buy from Costco, I turn to Future Shop next. They have a wide selection, good inventory levels and great sale prices. Plus, you can visit a physical store (though I rarely do). Best Buy owns them but feels more corporate. Dell feels inflexible and doesn’t have physical stores. Staples has helpful staff but limited selection. Amazon has credible customer reviews but apparently treats workers worse than Walmart.

You might be able to get a price match but I prefer rewarding the retailer with the better price.

The Letter

Here’s my email to Future Shop about a price increase on a lens for a mirrorless camera.

Dear Future Shop, on Friday night I was looking at the Panasonic Leica DG Summilux 25mm Lens (HX025) and the price was $413.98 as this screenshot shows:

There was no mention of this being a special price or a time limited price. When you have conditions, you always show them. Here's a typical example which shows the discount and expiry date:

In the morning, I asked my wife about ordering the lens. She agreed. I didn't notice that the price had jumped to $524.98! That's a big increase — completely unexpected.

If you showed that the original price was time-limited, I would have ordered on the spot. Rather than order on a whim and return the order — costs you money — I waited. Can you kindly refund the difference? My wife and I would really appreciate your help.

Thanks!

The Reply

Here’s the nearly instant reply:

Dear Promod,

I’m happy to inform you that a credit in the amount of $111.00 has been applied to your Futureshop.ca order.

Please allow 5-7 business days for your credit to reflect on your credit card statement.

Thank you for choosing Futureshop.ca!

The Reaction

What’s not to like when you get the outcome request quickly?

Even the current Future Shop price of $525 is the best around. Some companies are charging the full list price of $649.99 — not even a penny off. Here’s a comparison on PhotoPrice.

The Steps To Take

You might get better results if you place an order first (provided you can return the item).

Links

• The dirt on Petro-Canada’s car wash season pass insurance
• Fight back against corporate trickery with Ellen Roseman’s insider tips
• Why we switched to Ooma phone service
• Why after-sales service stinks for life insurance
• Great customer service from Rogers

PS This week, I also got amazing customer service from Mercedes, so-so service from Starbucks and horrible service at Ginos Pizza. Those may be stories for later.