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My First Death Claim
Monday, 19 October 2020 00:00

The very first death claim I paid on a policy that I wrote was coverage on a 12-year-old girl. It was during my freshman year as an agent.

My experience was unusual. Most agents, if they survive in this business long enough, are going to pay claims on insurance policies they write. But it often takes years, even decades, for that to happen.

I paid my first claim on a policy I wrote before I had my first anniversary as a life insurance agent. Moreover, the claim I paid was on a child that died in an accident caused by one of her siblings.

If not for the death benefits I paid on that claim, the parents would have been in dire financial straights to pay all the final expenses, which were much more than just a funeral, burial, and casket.

One of the lessons I learned is that when you dial 911 and request an ambulance to pick up your loved one, who is already deceased, then your health insurance may not cover the ambulance ride. That ambulance ride can be costly, especially when you live in a rural area. This ride was over $2,000 in unreimbursed expenses because the ambulance ride was not medically necessary.

I didn't know then that when a deceased child is wheeled into the Emergency Room, there will be fees. Hospital charges, attending physician charges, etc.

And when the child is already deceased, that emergency room visit isn't medically necessary, so neither parent's employer-sponsored group health insurance paid those claims. These hospital charges amounted to several thousand dollars.

Even though this was three decades ago, the total out of pocket costs were much more than $10,000, so a child term rider on a parent's policy wasn't enough. Neither was the $1,000 and $2,000 dependent life insurance provided by both parent's employers group life coverage.

Another lesson I learned is that parents will spend more on funerals for children than they will for their grandparents.

And the big lesson - the lesson I learned that so many financial "experts" fail at - is that the financial losses caused by the death of a child can be much more than final expenses. Sure, a child probably doesn't work and earn an income, so replacing their economic value doesn't generate a large need for death benefits like it does for a working parent. But, grieving parents often take time off, sometimes voluntarily, sometimes involuntarily, and sometimes out of absolute necessity. Grief has known and predictable stages, but the one thing that is always uncertain: The time each person needs to move through the grief process.

Some may recover within days or weeks. Some parents need several months. A few may need a year, or more. Some argue that parents never fully recover, and there may be some truth to that, but in my experience, it always takes more time than anyone can predict.

Time is money. Taking time off to grieve requires money to replace lost income. For working parents, especially where work is an economic necessity, having financial resources that enable and allow a surviving parent to take time off can be a godsend.

The pundits, talking heads on the radio, academics without real-world experience, the self-anointed experts that wax rhapsodic in the media, and even my peers that are life insurance agents, often do not fully comprehend what happens when a child dies, and how much money is needed. I have met the elephant, and it changed how I viewed my work.

I didn't always intend to pursue this career path. My parents had always encouraged me to become a professional, like an attorney, or physician, or engineer. At some point, I decided I wanted to become a dentist. I can't remember why, but I do recall the literature from pre-dental university programs that advertised substantial average salaries for new dentists.

My major when I matriculated at Kansas State University was pre-dentistry. I remember coming home for Christmas that first year and walking in to see my father doing some work-related planning on the dining room table. Dad was the General Manager at the Principal Financial Group, and he had about 45 agents working for him full-time. One of the things he did every year was set some goals for each of his agent's annual production: a low goal, a target, which was where he expected them to be, and a 'shoot for it' high goal. His budget for the agency was based on these projections.

I didn't know much about insurance back then, but I thought I knew money. When I saw how much his top agents were earning, I asked "Why in the hell am I going to go to school for another seven years to earn a fraction of what these guys make?"

Dad told me right then and there that I did not have the personality for the life insurance business.

And knowing what I know now, he was right, at least regarding who I was at that time.

Over the next few years, he actively discouraged me from pursuing a career in the life insurance business. But I'm not always a good listener, and I made my own decisions. I changed my major to business and signed up for some classes on insurance and financial planning. On my own volition, I sought out some sales experience. I sold Cutco knives one summer; the next summer I sold new Fords at a large dealership.

When I left the Ford dealer, I was number two on the sales leader board out of over thirty full-time salespeople. When I showed my father a print out of my success, he finally acquiesced and sent me to a week-long prep course to take the life and health insurance agents exam.

After passing the state test and getting my insurance license, I went through some training, both at the agency and at the home office in Des Moines, Iowa. I learned how to prospect, how to conduct fact-finding, how to design solutions to problems, present those solutions, and close the sale. I learned about time and expense management. I learned a lot about target marketing, product differentiation, how to compete against other companies and other agents. I learned how to submit new business, navigate underwriting, get a policy issued, and then delivered so that I could get paid a commission.

But nobody ever taught me how to deal with a death claim.

I figured perhaps this was something they trained us on in the future, so I did some looking. No such training course existed then. There was no manual for agents, no guide, no instructions. Our agency staff handed me a claim form and told me to mail it to my client. That's it.

I learned the hard way.

Real-world experience is a tough teacher.

The reason I chose the life insurance business over other career paths was because of my own personal desire for financial success.

The reason I have stayed in the life insurance business is that I learned during my first year that my success isn't determined by how large my commission check is, but by how much I help survivors cope with the loss of a loved one.

When non-thinkers attempt to insult my prospecting and sales efforts with demonstrably ignorant statements like "You only sell this stuff for the commission" or any other lame attempt to belittle my career and my industry, I know full well that they have no idea what they are talking about. I feel sorry for them, these sad examples of petty jealousy and irrational anger.

They haven't met the elephant.

And it shows.