TITLE

A Perfectly Rational World

AUTHOR(S)
Katt, Peter C.
PUB. DATE
October 1994
SOURCE
Journal of Financial Planning;Oct94, Vol. 7 Issue 4, p151
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
There are two distinct systems used to market and sell life insurance and another that provides life insurance planning and purchase advice. These are: the traditional commission-driven system, the direct-to-consumers, low-load approach and the free-only life insurance advisor, which is not so much a method for marketing and selling life insurance as it is an approach to life-insurance planning advice and policy analysis. Each system has its strength and weaknesses and there are good reasons for each system to exist. The commission-driven system features life insurance companies paying their salespeople very high commissions, usually 50 to 90 percent of subsequent premiums and 5 to 10 percent of subsequent premiums for another 4 to 9 years. Sales commissions comprise a large part of a policy's acquisition expenses. The commission structure is the linchpin of the life insurance industry. Without the offer of such a high financial reward for successfully completing the sale of a life insurance policy, the industry would have a difficult time recruiting agents and convincing them to perform the distasteful tasks of solicitation and the hard selling of potential buyers.
ACCESSION #
5559639

 

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