Companies

Insurance is BROKEN!

While it is true that there are a lot of agents who can “sell” you a policy, what you need to know is if they are just a sales person (only sell one or two different options) or if they are actually an advisor (advise you on the best coverage with the best company for the best price).

What you need to know:

All insurance companies try to do their best at defining “risk”.  So when they are trying to build a risk pool the goal is to use the law of large numbers to help spread out risk.  Out of X number of people there will always be a predictable percentage that will experience some type of financial hardship due to a certain type of incident.

If you are that one person who experiences that bad day and has that incident, life gets a little easier if that burden is reduced if you get help from your friends.  Those that don’t experience that hardship, have the piece of mind knowing that if they did they would get the help too.

Here is a cheezy but good video from Metlife about how insurance works (more of what you need to know below the video):

So now you know how insurance works, what about how the companies work:

For each company, to decide what kind of pool they want to build, they have to define a profile type.  This profile type is completely different from one company to another and one product to another.  Depending on the product there could be 125 things or more that help define that profile.

The closer you are to that ideal profile you are, the better your rates are, and you guessed it, the farther away from that ideal profile you are the higher your rates are.

The problem today is that most of the big companies do all this heavy advertising “Save $492 dollars by switching to us” and “Our clients save 15% in 15 minutes or less” is just marketing to get you to call because they know a select percentage will save money by switching because they did not fit their current insurance companies profile as good as they did with theirs.

What you need to do:

The problem with the agents from companies such as State Farm, Farmers, American Family, Allstate, and Shelter is that they can only “SELL” you one product and that is from whatever company they work for.  They are not an advisor because they can not match you with the ideal company to get you the best coverage for your money.

Find a good independent advisor, that has access to many different companies and have them compare the companies for you so your profile can best be matched with the company.  (Notice I did not say agent! Advisors are not sales people, they are advisors!)

But Travis, what about rate increases?

Oh yeah, as you know things do change. This world continues to change and so do the companies, which is why you need an independent advisor because a good one can keep you current, not only with coverages but with the proper company if the companies decide to change their ideal profile that they are looking for.