The Glidewell Story
The Glidewell Story
Paul Glidewell, CEO
“If you say I need an umbrella policy, Paul, I will buy one, I trust you completely.”
Those words changed the trajectory of my career, and the future of Glidewell…in particular, these two words; were “need” and “trust”.
Until my close friend, Chuck, made that statement to me, I believed it absolutely was in his best interest to purchase an umbrella policy. In fact, this was a belief I had held for years.
And I also “knew” it was in my own best interest. Financially at least.
For less than $200 a year, Chuck could “have peace,” for he would have adequate liability limits for nearly any conceivable scenario for which he might be found negligent.
And for me, as our insurance carrier encouraging the umbrella sales program reminded me, it would help the bottom line of Glidewell.
“Isn’t that what being an insurance agent is all about?” I believed. Doing all you can to ensure your client has adequate coverage for any or every conceivable scenario…and make money while doing it?
But I had never had a client say they would do whatever I recommended because they trusted me…nor did I recall a client asking if they “needed” a policy or coverage.
Both honored, and challenged, that someone trusted me to that degree made me ask myself, “Does Chuck need this policy?”
The truth was…I didn’t know. I knew that though the premium wasn’t a lot, it would come out of a tight budget Chuck prudently monitored.
Chuck’s question became a mystery for me…a mystery I had to solve…do people ever “need” insurance? And if so, when?
To answer the first question, I considered the times insurance is used. Every day insurance prevents financial catastrophe for someone who has experienced financial adversity, or even tragedy. A house destroyed by fire. The primary income earner of a young family unexpectedly dies. A health issue creates insurmountable medical costs. A car on icy roads slides into oncoming traffic.
Yes, I concluded, obviously there are situations where insurance is a necessity.
But is all insurance necessary? All the time?
People can buy insurance for pets. They can buy insurance for all sorts of risks that would cause minimal financial damage or are highly unlikely to ever occur.
Certainly, in most cases, those forms of insurance aren’t a necessity.
How does a client…or more importantly, a trusted agent, decide when insurance becomes necessary?
Then I had a thought, “how do insurance carriers view insurance?” They obviously are financially healthy and successful.
As I processed this, I remembered I had approached Chuck regarding an umbrella policy because an insurance carrier had encouraged it. In fact, they had created an entire campaign for us encouraging all our clients to buy an umbrella.
The answer was obvious…they would make money doing so. The carrier must, I thought, “encourage” clients to buy umbrella policies because they calculated that the money they will earn will exceed the claims they will pay.
Or at least according to their actuarial tables.
“Actuarial Tables”, I thought. And that was a ‘light bulb’ moment.
Insurance carriers view insurance strictly financially, based on actuarial tables.
They do not view insurance decisions emotionally…they do not consider their own “peace of mind”…they do not view it fearfully…instead, they view insurance strictly as a financial tool.
What if clients did this also? What if they viewed insurance as a financial tool?
I thought about Chuck and his situation. If he evaluated an umbrella policy analytically, as the insurance company does, how would he go about this?
There were two key factors he would need to evaluate:
Insurance as a Financial Tool, and Budgets:
The first rule in personal finance is to create and live on a budget.
Therefore, to treat insurance as a financial tool, it must be budgeted.
This makes sense and is critical because for most people insurance is one of their largest budget items.
But…there is an additional advantage to insurance and one’s budget…insurance can offer more flexibility within a budget.
For example, consider Chuck’s question, “Do I need this?” What he was prudently asking was, “Is it important enough that I work the cost into my budget?”
Again, there are so many policies that are offered…or by more unscrupulous agents, pushed even. And on those policies, there are multiple coverage options. If you are treating insurance as a Financial Tool, this is the most important starting point.
Ask yourself, “what policies and limits do I absolutely ‘need’?” And then consider the costs of the “absolutely need” insurance with your budget.
I wish back when Chuck asked me his question, I had reached this spot in my journey…just this budget discussion would have done more for Chuck.
But as I continued on my journey, I learned there is an even more important reason to consider insurance as a Financial Tool within one’s budget.
What is the most important budget item?
Do you know the number one statistical exposure most people face?
To answer that let’s first explore: Insurance as a Financial Tool and Balancing
The number one financial and statistical exposure most people face is outliving their income.
In other words, retirement costs such as health care or living care strip more people of all their life savings and assets then house fires car accidents, or premature deaths. Insurance is a financial tool that assists in preventing, not contributing, toward this.
And this is the most critical point of the story. When Chuck asked me if he needed an umbrella, the answer to that question is whether his insurance portfolio is balanced with his savings is it working with his long-term financial goals or is it hindering it?
The only way to evaluate if your insurance is working for you, or working against you, is to carefully evaluate and balance your policies with one another. Are your most threatening exposures prioritized before and over less-threatening ones? Are your limits within these policies balanced by the same criteria?
If today Chuck asked me if he “needed” an umbrella those are the very questions I would ask him.