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  • What should I know about my insurance adviser?
  • July 26, 2013
  • Tony Steuer

    By Tony Steuer, CLU, LA

    Information about an insurance adviser can be found at the state’s Department of Insurance in which they are licensed to sell and service insurance.

    Additional information can be found at the National Association of Insurance Commissioners (NAIC) and the Financial Industry Regulatory Authority (FINRA), if applicable.

    NAIC is a regulatory support organization, which is governed by the chief insurance regulators from the 50 states, District of Columbia and five U.S. territories. They have established standards and best practices that are continuously regulated.

    FINRA is the largest independent regulator of securities firm whom do business in the United States. Their mission is to pursue investor protection and market integrity, which is carried out in every aspect of the brokerage industry.

    NAIC and FINRA provide additional information that everyone should know about their life insurance adviser.

    Both of these services will review the following information.

    How long have they been a life insurance adviser and what percentage of their practice is life insurance?

    They should gather and discuss your basic personal financial information, such as income, assets and debt. This should give them an understanding of your insurance needs and goals, which are typically different. Needs are necessities, while goals are desires. Unfortunately due to cost and reality, a middle ground is often made.

    Everything should be in writing, which includes all proposals, illustrations and any additional marketing or advertising materials.

    If they don’t know something, they should admit it. And, they should either volunteer to research it themselves or suggest a specialist.

    They keep your life insurance portfolio up-to-date by continuing education, reviewing your situation, and discussing new products that may be suitable for you.

    Every industry has a variety of designations, making it a challenge to determine which ones carry any weight. The insurance industry and the financial service industry as a whole have been faced with a wide range of designations.

    In summary, there are two types of designations:

    Professional Designations:

    Agents may earn designations, such as Chartered Life Underwriter (CLU) and Life Underwriter Training Council Fellow (LUTCF). Agents who also are financial planners may carry such credentials as Charted Financial Consultant (ChFC), Certified Financial Planner (CFP), or Personal Financial Specialist (CPA – Pf).

    These designations indicate that the agent has completed advanced training, passed rigorous exams, and is serious about professional development.

    However, the CLU is the only one that specifically focuses on life insurance only and is by far the most comprehensive in the life insurance area.

    Designations for “Sale” or “Rogue Designations”:

    These designations can be earned through simplified courses over the Internet or by attending weekend seminars. Meaning, they do not require any level of in-depth studying.

    However, they may be close enough in name or sound impressive enough to imply mastery of a certain subject. This has become a source of concern for regulators and U.S. legislators.

    The American College provides information and support in this process called the “Designation Toolkit”, which is available here. This includes tools for companies to use in evaluating the quality of professional designations and for advisors regarding how to use professional designations with the public.

    All of the previous information will help you get a better understanding of your adviser’s professional background.

About Tony Steuer

Noted insurance author Tony Steuer has spent over 25 years in the life insurance industry. Steuer’s leadership roles include serving on the California Department of Insurance Curriculum board and the National Financial Educator's Council Curriculum Advisory Panel as well as having served as President of the San Francisco Chapter of the American Society of CLU & ChFC, President of the leading Life Insurance Producers of Northern California, and as a board member of the San Francisco Life Underwriters Association. Mr. Steuer is the author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, The Questions and Answers on Life Insurance Workbook and The Questions and Answers on Disability Insurance Workbook - the first two were awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy. Steuer holds a Chartered Life Underwriter (CLU) designation and also holds the Life and Disability Insurance Analyst License, a designation that is held by less than thirty people in California.

Creative Commons License
Questions & Answers on Life Insurance by Tony Steuer, CLU, LA, CPFFE is licensed under a Creative Commons Attribution 3.0 Unported License.

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