Selling Life Insurance As “Investments”

This message is prompted by hearing about yet another agent last week (not associated with CG Financial Group) that got herself in trouble by selling cash value life insurance as an “investment” without regard to the actual death benefit need.

As you may or may not know, prior to starting CG Financial Group, I spent 20 years on the carrier side of things where I have been privy to many complaints about this topic. Therefore, I feel that I have a unique perspective which I am obligated to share with you, the financial professional reading this column. Plus, these thoughts are inherently unique because I am not an attorney but am agreeing with the caution that the home office attorneys often express on this topic. Afterall, distribution folks and attorneys do not always agree!

Sales folks often view attorneys as being afraid of their own shadows and attorneys often view sales folks as being motivated to cram a square peg into a round hole to make a commission. Obviously, I am usually one of those “sales folks.” But not with this topic.

Selling life insurance as an “investment” without ever discussing the death benefit need and costs is a great concern that attorneys in carrier home offices have around cash value life insurance sales.

Now, I have spent my career educating financial professionals and consumers on the value of various cash value life insurance policies. I will continue to do this, and CG Financial Group will continue to support agents with our number one product sold—cash value life insurance! Why? Because it’s a great product for the right clients.

However, it is my obligation to make sure the fine financial professionals reading this column can create and/or maintain flourishing and “lawsuit free” businesses. I will always tell the truth, even if the truth leads to fewer sales. Eventually integrity wins the day.

Here are my thoughts:
When selling life insurance, there must be a life insurance need!

I know that when you look at some of the benefits of IUL, whole life, VUL, etc., that one may be able to make a case for why they are “suitable” even without the death benefit. After all, you have tax advantaged growth, great interest rates on loans, tax-free loans, and the “possibility” of decent growth rates. One may think that those traits alone would justify a sale to a client that is merely looking for an “investment.” Not so.

The bottom line is that the client is paying COI charges that are paying for a death benefit. I know that I/you could also make the case that some of those COI expenses are just “the cost of doing business” in a product that has benefits that other “investments” don’t have, but that does not fly in arbitration/lawsuits.

Hypothetical lawsuit:
Let’s say you or I discussed IUL or whole life with a client that did not “need” the death benefit but loved all the other accumulation and income traits previously mentioned. Thus, you/I sold the product as solely an “investment” to this client. You/I sold this life insurance without assessing the client’s need for life insurance and therefore you never really discussed the death benefit.

My vision of how the court process would go:

Opposing Attorney: “Mr. agent, tell me in a yes or no answer. Is it true that there are charges in insurance policies that are solely for the purpose of creating a death benefit for the consumers?”
You/Me: “Yes”

Opposing Attorney: “What are those charges called?”
You/Me: “Cost of Insurance Charges.”

Opposing Attorney: “Now also tell me—yes or no—is it also true that my client paid X thousand dollars in these COI charges over 10 years to have that death benefit?”
You/Me: “I don’t recall the exact amount of COI Charges.”

Opposing Attorney: “Well I have the exact number here and it is X thousand dollars over 10 years. Does that sound about right to you?”
You/Me: “Yes, it does.”

Opposing Attorney: “Is it also true that you and my client never even discussed the death benefit component that cost my client X thousand dollars, and as a matter of fact my client had never even expressed a desire or a need to purchase additional life insurance coverage?”
You/Me: “Correct.”

Opposing Attorney: “So, to summarize, my client has paid X thousand dollars in expenses—that was not disclosed to him—for a benefit that my client did not even need? Does that sound correct?”
You/Me: “umm, uhm…”

Opposing Attorney: “I rest my case.”

In the above scenario, even if you had some fantasy life insurance product that guaranteed the client 50 percent per year tax free, the conversation would go the same way! So the point is, even if you wholeheartedly believe you are doing the right thing, understand the need for the “death benefit.”

Lastly, lawsuits are not the only risks to one’s business that may cause significant loss. Large chargebacks (without the lawsuit) are also a risk. And those chargebacks can happen—even after the chargeback period—if it is deemed by the carrier that you sold an “unsuitable product” based on that client’s needs.

Last Christmas my wife and I agreed to not get each other anything. Well, I found a very nice watch that she wanted at a very good price. I recalled our agreement, but I also knew I was doing the right thing by taking advantage of the sale. There was no way she would get mad at me because I was doing a smart and well-intentioned thing. Plus, I knew it would save her money in the long run. Well, on Christmas day I gave it to her. I got in trouble even though my intentions were pure.

Charlie Gipple, CLU, ChFC, CFP, is the owner of CG Financial Group, an innovative and full-service independent marketing organization (IMO) that serves independent agents that sell life insurance, annuities and asset-based long term care. He also owns “The Retirement Academy” (, which is a subscription based online training platform for agents, reps, and company wholesalers.

Gipple is recognized throughout the industry as one of the foremost thought leaders and subject matter experts on annuities, life insurance, long term care, leadership, storyselling and behavioral finance. He is also an industry keynote speaker conducting 100-150 speeches per year. He has spoken at the MDRT Top of the Table as well as other large forums and has also appeared on and AM Best TV.

Gipple has vast leadership experience in the insurance industry as he has been an executive of various insurance companies and large independent marketing organizations. He is unique in his broad knowledge across the life insurance, annuities and securities businesses. Additionally, within these businesses, he has a deep understanding of the distribution aspects of these products along with the actuarial and hedging aspects. He holds a bachelor’s degree in Finance from the University of Northern Iowa, is FINRA Series 7 and Series 66 licensed and also holds the CLU, ChFC, and CFP designations.

Gipple can be reached by phone at 515-986-3065. Email: