Life insurance industry critics like to say that the industry will never change, that it completely deceives consumers and should be junked for a fresh start.

Life insurance industry apologists like to say that agents perform a crucial service and deserve every penny of their commissions, which eat up most of the first year's premium paid by the policyholder. After all, don't agents force people to buy life insurance, which they need but probably wouldn't buy on their own?

And finally, we have a third group, which is, happily, growing. These critics acknowledge that life insurance is an essential part of financial planning and risk management. But, they add, the way that it works benefits the agent more than the customer.

Many of the folks in this last group, a knowledgeable crew, are actually doing something about it, trying to make certain that life insurance buyers get a fair shake. Financial planners should be very interested in what is going on here and how it might impact their own fiduciary responsibility if they are just handing off clients to a life insurance agent.

One of the favorite tools of this group is  "blending," an exercise that mixes term insurance and whole life in a way that both decreases the agent's commission and enhances the policy's value. These consultants have carved out a niche for themselves. Many of them are fee-only insurance consultants or agents who made the decision to put the interest of the insured first. They offer blended policies with lower commissions and with a substantial cash value at the end of the first policy year, as opposed to nothing.

Interestingly, many-but not all-are Northwestern Mutual Life Insurance Co. agents like Chuck Hinners in Middleton, Wis., and Brian Fechtel in Port Chester, N.Y. Others are former Northwestern agents like David Barkhausen in Lake Bluff, Ill. One, Scott Witt, in Milwaukee, is a former pricing actuary at Northwestern Mutual. He, too, works as a fee-only consultant, building custom policies for each client. And, of course, I must mention Peter Katt in Mattawan, Mich., who has trained many of these people in his consulting business, and James H. Hunt, an actuary and former insurance commissioner of Vermont, who evaluates policies for consumers from Concord, N.H.

Actually, perhaps it's not so surprising that many come from Northwestern Mutual Life, which is considered to be the gold standard in life insurance. Many people trained by Northwestern are bright and creative. Indeed, they sound a lot more like fiduciary financial planners, always putting the client's interest first, than like life insurance agents, always selling a product.

Blending is a method of rejiggering a whole life insurance policy to reduce the amount of whole life, which gets maximum commissions, and increasing the amount of term insurance, which carries very low commissions. The policy is then set up to use term and paid-up additions riders that can be added to the base policy.

Blending is not new. Chuck Hinners, who's been a life insurance agent since 1974, says blending emerged from the competition with variable life policies in the mid-1980s. Because variable policies offered the policyholder so much flexibility, the whole-life companies agreed to "allow agents to dial in the amount of their commissions so they could be competitive," Hinners says. "That's how the secret leaked out," the secret being that a policy could be dismantled in this way to reduce the agent's commission and increase value for the customer.

But for the most part the secret is back in the bag. Why? Maybe it's tough for agents to stomach the idea that they should make less so the customer can profit. "The young agents are not taught anything about blending," Hinners says. "If someone asks, they're told: 'Oh, that's advanced stuff. You don't need to worry about that.'" What do new agents learn? "They go to a six-week boot camp to learn how to ingratiate themselves with people and how to sell," he says.

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