– Why pension products are good to sell even with zero returns –
Numerous rulings of the higher courts prove that the insurance intermediary himself has to prove that he has given correct advice when brokering an insurance product if his customer specifically claims that he has given incorrect advice and the documentation does not show the opposite. This is called “reversal of the burden of proof” because, in principle, the policyholder would have to prove the misadvice.
It is not a question of proving, on the basis of the textual content of the advice documentation, at which point incorrect advice was given – otherwise no documentation at all would still be the best solution for the intermediary. Rather, it is about the superficial weaknesses of the documentation or about what should have been correctly checked and said, but is not found in the documentation at all. If damage has then occurred and the intermediary cannot prove that he nevertheless gave correct advice or that the damage would have occurred even if he had given correct advice, he is liable for up to 10 years after the advice was given.
If the error lies in the omission of correct advice, the statute of limitations does not begin at all until the point in time at which he could still have provided the correct advice – this is particularly the case with brokers who have undertaken to provide ongoing support. The promise of policy administration then also proves to be a trap for insurance agents and brokers. In addition, such activities are usually not covered by the agent’s own liability insurance.
Hardly any intermediary is aware that he is liable for advice even if no insurance is concluded in the end, namely for the missing insurance or the missing old-age provision contract. Since documentation is not even required in such cases where only oral advice is given, it is generally absent altogether here. This makes it all the more likely that inadequate provision and falling pension levels will lead to old-age poverty, for which insurance intermediaries will be liable en masse because, in the absence of documentation, they will not be able to prove that they have given correct advice. Those who later receive social assistance or basic benefits could even be forced by the authorities to enforce recourse claims.
Retirement provision is not a question of returns, because there is no alternative to retirement provision. It must be to avoid old-age poverty for one’s own provision, even if the pension saver would still have to pay interest on it.
The answer to falling interest rates is to save even more. After all, what does not come from interest must be saved from one’s own funds. It is therefore all the more incomprehensible that only inadequate old-age provision is being made on a massive scale. Has no intermediary ever made their expected situation in old age comprehensibly clear to them and advised them to make appropriate provision?
It is not true in most cases that the people concerned do not have any money to make provisions. However, they are often not aware of the extent and seriousness of the situation – the suspicion of consulting errors is then particularly obvious. Quite typical is later the behaviour of the ex-client, who explains to the judge that he has not understood the content of the advice and possible documentation to this day – and neither has his own lawyer or tax advisor, by the way.
So why not use the documentation for sales purposes to make the hesitant customer aware of the seriousness of the situation once again? All the more insistent if the intermediary has the advised person expressly sign why the advised precaution is necessary – but the advised person nevertheless does not want it and therefore the intermediary is not liable for the damage.
If you as an insurance broker need such and further suggestions on how to broker pension products even in a market that is becoming more difficult, please refer to the book by Jens Rockel “Vorsorgeprodukte erfolgreich verkaufen” (Pension products sold successfully), which with 168 pages was published in a 2nd revised edition in 2014 for EUR 35 by Verlag Versicherungswirtschaft. Thus, one also learns here why, in the case of a basic pension, the question of how long one has to live until the contributions have been repaid as pensions neither makes any real sense, nor is an answer to it directly necessary.
Insurance brokers are suffering from a massive drop in sales in the life insurance business, especially as unsettled customers are shying away from making long-term decisions about their retirement provision. At the same time, the demand from customers with the desire for a secure livelihood in old age is more present today than ever before. The book is aimed at all insurance intermediaries who want to help clients make the right decision for them. They will receive a variety of suggestions on how to address the topic of retirement planning in a targeted manner and how to deal with objections. The techniques presented for practice give the mediators the opportunity to achieve success quickly and without complications.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (Expert Report 06/2015)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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