Verhovayak Lapja, 1945 (28. évfolyam, 1-52. szám)

1945 / Verhovay Journal

September 26, 1945

Verhovay Journal

Page 3- BEWARE OF THE TWISTER -THERE ARE TWISTERS , AND TWISTERS!

In order to forestall the possibility of misunderstanding on part of our readers we wish to emphasize that this article is not going to be a meteorological study on the subject of tornadoes, the whirling, funnel-shaped clouds of which are commonly known as “twisters”. We differ from the weather-man in that we don’t even pretend to know anything about meteorology, weather-forecasts, or tornadoes for that matter. It is piirely a linguistic coincidence that tornadoes are known by the same name as a certain class of insurance agents and it is the latter to which the title above refers.

On second thought, we must admit that the type of insuranceagent which we are going to describe has something in common with tornadoes. Recently a tornado hit a chicken-farm and left all the chickens unharmed except that they were completely cleaned. Not a single feather was left on any of them. Twisters 'are like that whether they work in the storm-business or the insurance racket. Insurance “twisters” often leave their prospects just as naked as a tornado will clean chickens.

WHY BRING THAT UP?

There is too much of that sort of thing going on and since we are here to render fraternal service to our fellow-members we feel that it is time to protest against practices that tend to deprive many of our fellow-members of their rights and privileges which are theirs in our Association.

We have a beautiful example before us and for the benefit of our readers we are presenting it.

A young lady applied some three years ago for a Twenty Year Endowment membershipcertificate in the amount of $1,000. Being free, white and 19, the application was duly approved and the certificate issued and delivered. Some time later the young lady left the state but she remained a member of the branch which she joined and mailed her payments regularly to the manager until one day the manager received her request for a cashsurrender form. Obligingly the manager sent the form to her but he also wrote her a letter asking for her reasons to which she replied by return mail. She stated that she didn’t need the money, but that she decided to cash her certificate because she was informed that '‘the Verhovay is the only organization that has such high rates.” She stated that she compared our rates with those of “at least seven other companies” and went on insisting that three of the companies contacted by her were issuing the very same policy for so much less that she would only gain by surrendering her certificate and purchasing their policy, notwithstanding the fact that by such early surrender she was going to lose sdme fifty dollars. The letter named three of the largest insurance companies in the United States and explained that she could get a Twenty Year Endowment, Thousand Dollar, policy for payments totaling in twenty years not more than 5-600 dollars. She concluded by writing that she was very misinformed when she signed the application as all her acquaintances “faint” when they hear she pays $21.89 every six months on her Verhovay certificate.

The branch-manager was rather puzzled by the letter and sent it to the Home Office. A lengthy reply was sent to the lady hnd a digest of this letter is printed here for the benefit of those who may have similar problems.

THE TRUE FACTS OF THE CASE

The young lady paid $43.29 per annum for her “C” $1,000

(Twenty year Endowment) certificate. By the end of the 20th year she will have paid $877.80 in annual dues and will receive $1,000 in cash, which represents a total gain of $122.20 over and above her payments. In addition to this she is insured for $1,000 for the entire period of 20 years.

Since she quoted three wellknown insurance companies, we looked up their rates and found that in every case their rates were higher than those of the Verhovay. How come, then, that she claimed that these companies would issue her the same policy for payments totalling not more than 5-600 dollars? The answer was easy to find. All we had to do was to look up the rates of the same companies for their TWENTY PAYMENT LIFE policies and there we found the solution of the mystery, for the rates of these companies called for annual payments of $28.95, $30.21 and $29.59 respectively, while the Verhovay rate for the same certificate was $24.17. Obviously, the young lady mistook thé TWENTY PAYMENT LIFE policy for a TWENTY YEAR ENDOWMENT policy since the annual premiums payable for a Twenty Year Payment Life policy would add* up to 5-600 dollars during 20 years.

However, the mistake, if any, wasn’t that of the young lady for she emphasized that she was told how she would receive AT THE END OF THE 20 YEAR PERIOD 1,000 dollars in cash.

On the basis of this information it was impossible to arrive at any other conclusion but that she was approached by an overeager agent or broker who talked to her a 20 Y'ear Endowment policy but actually was selling only a 20 Payment Life Policy. We all know that a 20 Payment Life policy differs from the Endowment policy in that its faceamount is payable only upon death to ,the beneficiaries, while the amount of the Endowment policy is paid to the insured at the end of 20 years, unless the insured dies prior to that date in which event the full amount is paid to the beneficiaries.

WHAT IS “TWISTING”?

Twisting is what the agent or broker who talked to that young lady did. In the volume ‘The Fundamentals of Successful Field Work” of the “Fraternal Sales Training Course” we read the following enlightening statements in reference to this practice.

“The practice of twisting is most reprehensible and is subject to severe condemnation and in some states to penalties ... The life insurance twister “wrenches” a man’s life insurance program “'out of natural shape” so that the member gets a distorted view of his life insurance, questions his previous judgment and is led to tear down his old plan and to start a new one, USUALLY AT A GREAT SACRIFICE TO HIMSELF. LIKE A TORNADO, THE TWISTER DESTROYS WHAT MEN HAVE BUILT UP AND LEAVES BEHIND HIM A

TRAIL OF LOSS THAT IS INCALCULABLE.” (Note how well this description fits the case related above!)

“THE CRIME IN TWISTING

is not primarily in changing from one kind of contract to another or from one society to another, or from old insurance to new (steps which frequently are actually necessary and desirable for the policy-holder to take), but in the fact that the member is led to make the step WITHOUT REALIZING THE FULL EFFECTS AND LOSSES INVOLVED.

A TWISTER DOES NOT ACT HONESTLY. He practices his nefarious art in an insidious, underhanded manner. IN ORDER TO SELL THE NEW CERTIFICATE, HE MISREPRESENTS THE FACTS, DISTORTS THE TRUTH AND BLITHELY URGES THE MEMBER TO DROP HIS OLD CONTRACT SO HE CAN BUY A NEW CONTRACT FROM HIM. Knowing that his methods are shady, ha conducts his transactions with great secrecy and INSISTS THAT FIELDMEN AND SOCIETIES CANNOT BE DEPENDED UPON FOR IMPARTIAL ADVICE.” (Indeed, the young lady in this case must have been approached by a “twister” who stepped out of the books to serve as an example of what we are writing about.)

The book states that “the United States Chamber of Commerce, legislatures, judges, state commissioners, better business bureaus and a host of other impartial non-insurance people have unanimously frowned upon twisting.”

In Pennsylvania a ‘'twister” is subject to the loss of his license. Other states have provided for penalties, too. The trouble, however, is that in most cases it is difficult to catch the twister redhanded.

In our reply we suggested that the young lady write to the Insurance Department of the state where she resides, for confirmation of our statements. We also stated that “if information is filed with the Insurance Department against any agent engaged in such practice, disciplinary action follows.” We emphasized that by doing so she would “render great service to some people who, under high-pressure persuasion, would drop their old insurance and purchase a new one under the impression that they are getting a bargain.”

But—just to make it an airtight case—we added that if she should hesitate to act according to this suggestion, she may sign the application for the policy offered by the agent who contacted her, without paying the first premium. Upon receipt of the policy she should carefully study the document in order to be sure that she isn’t trading in a 20 Year Endowment certificate for a 20 Payment Life Policy.

In conclusion we added that a fraternal association, like ours, is sincerely concerned about the welfare of its members. It is not our intention to retain on our rolls members by the use of highpressure methods. If any of our members can get a better bargain somewhere else they are entitled to make the best of the opportunity. But we hate to see members throw away their accumulated benefits under the impression that they are getting a bargain. The young lady in this case was made to believe that she was misinformed at the time when she joined the Association. W(

hope that we .succeeded convincing her that she tv as misinformed when she decided to leave us.

GOOD INSURANCE-MEN ARE NOT TWISTERS

It is emphasized in the “Fundamentals of Successful fieldwork”—the book quoted above— that in the long run it is the twister who loses. He gets the commission for the new application but he forfeits the good-will and confidence 6f his clients. The writer states: “If you would be a good life insurance salesman, a financial counsellor, to whom clients will return again and again ,for advice and guidance and to whom they will give their business over and over again, do not for a moment be tempted into the shady practice of twisting, for an honest life insurance man regards the twister much as any honest man regards the holdup man.” And don’t even believe that this is an exaggeration. The young lady in this case would have suffered a loss of $50. Lifeinsurance policies have the lowest cash value at the time when nonforfeiture values become effective, that is, three years after the policy had been issued. From then on the cash value of the policy increases every year and in later years the annual increase amounts to more than thq annual premium. In this case, the member would have suffered the maximum loss, yet the agent urged her to take the loss anyhow, in order to secure the application and get the commission. At the same time he would have sold her a less valuable policy pretending that it was the same type of policy she already had. He intended to rob hér of fifty dollars and to cheat her out of the 1,000 dollars she expected to get after 20 years. He is a holdup man on two counts.

Let’s suppose that she heeded his urging and signed on the dotted line. Sooner or later sh^ would have run into someone whb knows something about lifeinsurance and she would have suffered a bitter disappointment. The thousand dollars she hoped to get at the end of 20 years, would have dissolved in thin air. Naturally, the agent would have lost a client and with her many of her acquaintances, too.

The business of an insuranceagent (or fraternal field-man) is built upon what we call '“centersof influence.” Each family represents such a center. Once you write up a member of the family, you can go back to write up the rest, the husband, the childrfen, the sister, the brother, the relatives and friends. Getting one application by twisting the agent loses twenty or more prospects. It’s bad business.

Most insurance-men know this and if they see that the prospect has a good policy, hé will express himself to that effect. From our own experience we know that such approach actually will pave the way for a sale. People like to have others approve their insurance-program and they resent being told that they have not been circumspect in their deals. There is hardly a person who does not need some additional insurance protection. By approving the prospect’s previous deals, he is put into an agreeable frame of mind in which he will react favorably to the agent’s presentation of an additional policy which will fit into the prospect’s insurance program.

IT’S NOT ALL THE AGENT’S FAULT

Most insurance agents are well aware of the ethics of their profession and adhere to its principles, the much more so because it is good business, too. If there are twisters among the agents, it is not only their fault bui> that of the system. Most insurance agents are kept under constant pressure by their companies. The District Manager is harassed by the company, the Superintendent by the District Manager and the agent by the superintendent. All depend for their livelihood on the agents’ production. Every agent has his quota. There is always a drive on. And many a time the agent is pressed into applying unethical methods in order to produce the volume of production required from him. Thus he struggles between pressure fiom above on the one hand and ethical inhibitions on the other hand. The pressure from above will never relent and, therefore, he will suppress his ethical inhibitions, to satisfy the pressure from above. A successful, talented agent will not need to resort to unethical practices, neither will the man whose integrity resists temptation. But a man who is hard up for prospects, will invariably end up as a twister, regardless of the fact that his success will be shortlived for he will never succeed in retaining the confidence of his clients, which is the foundation of successful sales-work. For this reason the twister is a man to be pitied rather than condemned but, of course, he cannot be absolved entirely because he causes serious damage to his clients and causes them losses by undoing the work of conscientious sales-men who have served them honestly.

THE TWISTER'S COMPLIMENT

We have heard of innumerable cases when agents tried to sell their companies by be-littling the Verhovay and misrepresenting the facts. We have talked to many of our members who were subjected to such approaches. Our managers and organizers complain, of being handicapped in their efforts because of the twisting practices of agents.

It would be well for us to see that the twister unconsciously pays a compliment to the Verhovay. An agent who has a better policy to sell does not have to misrepresent the facts, he does not need to resort to twisting. It is sufficient for him to present the FACTS which he can prove by letting the prospect look into his rate-book and compare the rates and the beneiits of his policies with those already owned by the member. Of course, few lay-men understand a rate-book and it is rather easy for the smart salesman to twist the facts to suit his purpose, it is for this reason that we invite cur members to write to us if they are approached in such manaer. In our reply vve will give the true facts which the Insurance Departments of all the states will gladly confirm. As a fraternal association we are in business to render service and not to outsmart the uninformed. We want our members to get the best for the least and if they can get the best for less anywhere else, we will not attempt to dissuade the member by misrepresenting the facts. So, don’t hesitate to call on us if you have any doubts concerning your insurance. We will serve your interests and not ours. And until you get cur reply . .. BEWARE OF THE TWISTER!