Monday, May 12, 1997
Insuring
Foolishness
or
I'll Bet You Can't Believe I'm This Nasty
by
TMF Runkle
Recently, my wife and I were
going through our finances, and we realized we'd been making $100-a-month
payments on a whole-life policy we still held on her. I wrote the company
and told them to stop the automatic withdrawals from the checking account,
and cancel the policy. One of their agents wrote us a letter urging us not
to cancel the policy, and advising us to speak to him first. The company
itself wrote us and stated their agent had to come to our house to "pick
up the policy." This is the slightly edited (I took the company name out)
letter I wrote back to the agent:
Dear Bill,
My wife and I received your letter dated 5/8/97. In the letter, you caution us against canceling the whole-life policy we hold on my wife. You mention the wealth your company has as an insurance company. You also urge us to consider how the policy will pay off for both of us "as an insurance and wealth builder." You also asked my wife to call you so you can personally explain what we are giving up. I would like to take up some of your time to go over the chronology of how we came to purchase this policy.
In 1990, I first purchased an insurance policy with your company. During that time, Saddam Hussein invaded Kuwait, and war was looming. As a member of the Air National Guard, I was concerned about the chances of being activated. I wished to provide for my family should anything happen. I purchased a $200,000 term policy from your company, and was pleased with it. However, at the same time, the Soldiers Group Life Insurance I was eligible for was increased to $200,000 and the premiums were a much lower rate than you charge. I wrote and asked to cancel the policy shortly after moving here to Pittsburgh in 1991.
A salesman called, again, to help me by explaining what I was giving up. He tried for a few minutes to talk me into continuing my policy, stating my Soldiers Group Life Insurance would no longer be in effect when I leave the military. Since I had another 8 years to serve before I could retire from the Guard at the time, your salesman quickly abandoned this pitch. We were then shown projections of how well your whole-life policies do, and urged to turn in our whole-life policies with another company (which we have since canceled) to purchase policies with your company. We resisted this pitch too.
Your salesman never gave up, throwing guilt trips on us, and cautioning us about our need to "invest" in your company's insurance. He was in our dining room for hours. He made me feel stupid for refusing to turn in our existing policies for new ones from him. Finally, he sold us a $77,000 whole-life policy on my wife, for $100 a month. This was supposed to be an investment.
Things have changed since that visit. Primarily, my wife and I have learned about how to handle our own finances, and about investing. Here is a quick analysis of the value of investment for the policy your company sold us. Historical returns on the stock market are 12% annually. Assuming we meet that in the next 20 years, $100 saved at that rate will grow to $98,925.54. I am certain the cash value of this policy will not be that great. Not only that, neither of us has to die to see the money. As for insurance, we purchased adequate term insurance from a company that does not engage in the same high-pressure tactics that yours performed on us.
I know that you will argue that the stock market is risky. You will bring up the scare of the crash of 1929, and other bogeymen. We understand the risk, and I do not care to have an agent come to my house and feign concern for us, and attempt to save us from our folly. We are fully capable of making our own decisions. Please cancel the policy, and return to us the cash value. You are not to call us on the telephone, or visit us. Thank you for your time and consideration.
Sincerely,
George W. Runkle
You probably read this letter, and said to yourself, "I can't believe he really sent that letter!" Well, I didn't. I wrote this letter at 3 AM in the morning when I woke up mad about the high-pressure tactics used to sell my wife and I the insurance policy. However, I don't really need to blow off steam at the agent himself. He knows what he is doing, and my letter isn't going to stop him from using the same type of tactics on the next person.
I'm just going to send him a letter thanking him for his concern and asserting the policy is canceled. No need to visit or call, thank you. Writing this letter sure made me feel good though. It feels even better to put it in a Fribble. And although that letter to him wouldn't have stopped his tactics, placing it here in Fooldom might stop a few of you from being taken by him and his colleagues! In other words, I'm keeping him from getting some more suckers. Now that is being nasty!
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