Insurance: It’s an important tool that protects our finances from costs related to our health, our cars and homes, our lives, our families, and even our pets. In other words, it offers protection for the things we care about most. You may have even built a strong relationship with your employer’s human resources manager or your insurance agent over the years. But not all insurance is equal … and neither are all insurance salespeople. Due to the nature — and expense — of certain insurance like life insurance, annuities, long-term care insurance, and more, it’s especially important to know when these policies are right for you, when they’re not, and what can motivate some agents and brokers to sell them to you.

To help you make the best long-term decisions possible — and not derail your retirement plan through the purchase of unnecessary insurance — it’s time for a fire drill. After all, fire drills at school, work, and home help everyone prepare for an emergency. Similarly, this first blog in our new fire drill series can help you prepare for the worst while you hope for the best: That comfortable future you’ve been saving for and planning for so long!

A fiduciary is obligated to work in your best interest. Although generally not a fiduciary, a trusted insurance agent or broker will do his or her best to help you stay protected and maintain the professional relationship. But some insurance salespeople use tactics to make it appear as though they’re working in your best interest … while they may have their own interests in mind and even ahead of yours. Avoiding such harm to your comfortable future begins with knowing what to look out for. This is especially true when considering insurance with a large purchase price (and probably a large commission for the salesperson).

Sales pitch versus advice

You don’t have to be vulnerable to risk making a poor insurance decision. What could sound like advice even to a savvy investor may actually be a sales pitch in disguise. When it comes to pricey insurance, educating yourself on some of the tools salespeople use can make a world of difference. Be on the lookout for:

Positioning — Remember the fiduciary standard? Just another reminder that some commissioned insurance salespeople make it sound like they’re acting in your best interest — when they’re actually not. They might focus on the benefits a certain insurance product could bring you … but without mentioning the risks, costs, or both. They may also give you longer- or shorter-than-standard historic data timeframes to make the product — and the potential benefits — seem more appealing than they’re most likely to be … but may not be giving you the full picture. Some may also offer what might seem like advice, but it’s just a sales pitch disguised as such. For example, suggesting that you reposition part or all of your investment portfolio in a way that suddenly makes the insurance product more appealing. One specific example would be suggesting you move to cash and then remarking that cash doesn’t provide the same return as the insurance product.

Keywords — If you’re considering purchasing insurance, keep an eye out for some terms that salespeople use when selling what could be a risky investment to you as a potential buyer. These include keywords like “guaranteed high returns,” “premium protection,” “no market risk,” “guaranteed not to lose money,” “has the inside scoop on _______,” and “highest possible returns.” While the entire point of insurance is to provide some guarantee where there otherwise would not be one, statements using these keywords are often positioned in a way to sound too good to be true … and they usually are. This is especially true if you’re also not hearing the keywords “surrender charge,” “surrender period,” “cap on return,” “mortality & expense fee,” “participation rate,” and more.

Scare tactics — Here’s another one to look out for: A salesperson using urgency, encouraging you rush into purchasing insurance without fully understanding what you could be getting yourself into. Another common scare tactic salespeople use is warning potential buyers of a slump, downturn, recession — or even depression — to make the guarantees sound like a magic bullet. If you’re tempted, it’s a great opportunity to take a look at your financial plan. Review and understand how your plan is considering these risks and how you’ve positioned your savings and investment strategy to deal with them. While insurance can sometimes help smooth out a rough edge, it’s a trade-off — of expense, liquidity, and control — that you should consider carefully and in moderation.

Lack of transparency — Rather than going with the sales pitch flow, consider what a salesperson might be leaving out when selling you insurance. Play the “devil’s advocate” to get the other side of the story. Listen for both sets of keywords discussed above and ask questions about the ones you hear and even the ones you don’t. And, of course, obtain the prospectus or contract and all of the small print — where fees are disclosed — in advance. Then, take time to digest the information and make sure it’s the right option for your future before taking the leap. Of course, a check-in with a fiduciary financial professional and your plan is always a good idea when you’re considering a major purchase.

Oh, and one final note on sales pitch tactics: Remember, there’s no such thing as a free lunch … or dinner … or special limited-time-only seminar where — sure enough — they’re offering a free lunch or dinner. If my mailbox is stuffed with offers for them, I can only imagine that yours is, too.

Tools you can use

Even if you know which insurance sales pitches to look out for, you may find it difficult to tell if a salesperson is offering a product that could truly benefit you. And it’s often because of how they use the information they provide to their advantage. For example, a salesperson may only give some of the options … but not all. If you’re considering buying insurance, you can do a simple online search. Just look up the type of insurance a salesperson is offering to better understand what he or she is selling and help better educate yourself.

Remember the fiduciary obligation

I said it before, and I’ll say it again: Insurance salespeople are generally not obligated to act in the buyers’ best interest as fiduciaries. There are some great insurance agents and brokers out there offering products that can really be beneficial. But it’s always best to get a second opinion anytime you make such a large purchase. If you’re unsure, find an advisor who acts as a fiduciary — obligated to give you advice that only considers your best interest. He or she can provide you an opinion of what the salesperson is offering and how it works within your financial plan. You can find fee-only fiduciary financial advisors using search tools from the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network:

NAPFA Find an Advisor

Fee-Only Network Search

XY Planning Network Find an Advisor