2008 Woodie Awards
Introduction to Life Insurance
A Financial Advisor Offers His Wisdom to College Students
By James Larsen
9/3/07 - Features
Last month I had the privilege and pleasure of participating in a Professional Development seminar entitled "Cornerstones of Investing," hosted by the Colorado School of Mines Alumni Association. In my introductory remarks, I said that I was glad to have the opportunity to talk to students about investing as I don't think the Financial Services industry does enough to prepare young adults for the challenges and opportunities awaiting them upon graduation. In the paragraphs to follow, I aim to address in a small way that shortcoming and provide to you knowledge about products and services you will encounter throughout your careers.
I'll begin with a personal experience I had as a senior at Mines. Back then, graduating seniors were approached by insurance salesmen seeking to sell them life insurance as they started their careers. I was approached by someone I knew and trusted, a former athletic coach from high school. The company he represented marketed specifically to graduating seniors and their product was designed to postpone premium payments until employment and a steady income were secured. Naturally, I bought a life insurance policy as it seemed the appropriate thing to do and I didn't have to pay premiums before I had an income. I paid little attention to the details of the policy and was totally unaware of the fact that my future employer offered no-cost life insurance as part of their benefits package.
After about seven years of paying premiums, I questioned the need for this private life insurance as it seemed to duplicate the insurance provided by my employer. I asked another insurance agent who worked for the company to conduct a policy review and I will never forget his words. He said, "Son, we in the industry call this policy 'The Golden Cadillac'." The policy was for permanent life insurance and it contained riders for accidental death and dismemberment as well as disability income. If I had been self-employed, it would have been a totally appropriate product, but as it was I worked for a major corporation that provided all those benefits. I felt I had been oversold something I didn't need by a person I trusted. In the end, I asked for a revised policy and retained only the life insurance which I ultimately let lapse years later.
I'll begin with a personal experience I had as a senior at Mines. Back then, graduating seniors were approached by insurance salesmen seeking to sell them life insurance as they started their careers. I was approached by someone I knew and trusted, a former athletic coach from high school. The company he represented marketed specifically to graduating seniors and their product was designed to postpone premium payments until employment and a steady income were secured. Naturally, I bought a life insurance policy as it seemed the appropriate thing to do and I didn't have to pay premiums before I had an income. I paid little attention to the details of the policy and was totally unaware of the fact that my future employer offered no-cost life insurance as part of their benefits package.
After about seven years of paying premiums, I questioned the need for this private life insurance as it seemed to duplicate the insurance provided by my employer. I asked another insurance agent who worked for the company to conduct a policy review and I will never forget his words. He said, "Son, we in the industry call this policy 'The Golden Cadillac'." The policy was for permanent life insurance and it contained riders for accidental death and dismemberment as well as disability income. If I had been self-employed, it would have been a totally appropriate product, but as it was I worked for a major corporation that provided all those benefits. I felt I had been oversold something I didn't need by a person I trusted. In the end, I asked for a revised policy and retained only the life insurance which I ultimately let lapse years later.
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