Midland National Life Insurance Company - Will Selling Life Insurance For Midland National Life Damage Your Life Insurance Reputation?
In the modern market most life insurance companies recruit and contract independent life insurance agents to sell their products. This field force is similar a network of “distributors” with the life insurance company acting as the “manufacturer”. The life insurance company depends on the enthusiasm and loyalty of their life insurance agents, and the life insurance agents depend on the life insurance company to provide competitive products and a good reputation. Both parties expect the other to treat them fairly.
Most independent life insurance agents don’t have the marketing budget to advertise their business so they have little choice but to rely on the reputation of the life insurance company, or companies, the agent does business with.
Considering the reputation they have earned in the last few years, many life insurance agents are beginning to wonder whether being associated with Midland National Life Insurance Company is in their best interest. Midland National has placed their profits before the needs and interests of the life insurance agents that sell those products, and in doing so has betrayed their sales force.
Midland National made the risky choice to use sales practices and materials that have resulted in regulatory actions, Attorney General investigations, and class action lawsuits by policy holders in multiple states. The most recent was earlier this year when Midland National agreed to pay a $1.3 million fine as part of a settlement with the California Department of Insurance and further agreed to make reforms to its business practices after a probe showed Midland National was allegedly misleading senior citizens when selling annuities deemed inappropriate.
This fine may have been a result of Midland National making a $31 million dollar payment last year as part of a settlement of a federal class action lawsuit in California that had alleged that Midland National had used deceptive sales practices in selling their products. Sammons, Midland National, and its sister company North American for Life and Health have paid settlements in many states over the past ten years as a result of their sales practices and the adverse effect it has had on the senior citizens that have purchased them.
A life insurance company being sued is not unusual; a life insurance company being sued by thousands of its policy holders across the country is a red flag. Being sued by a state’s chief law enforcement officer is so unusual it constitutes a flashing neon sign behind the red flag. Being sued under provisions of the RICO (Racketeer Influenced and Corrupt Organizations) Act, Bendzak v. Midland National Life Ins. Co., 240 F.R.D. 449, 450 (S.D. Iowa 2007) adds bells and sirens to the neon sign and red flag.
As the policy holder complaints began to accumulate Midland National had the opportunity to resolve them and avoid litigation. They chose not to. That action constituted a clear policy of contempt for their customers, and also for their agents.
Life insurance agents sell one thing: the reputation of the company. When that company places their reputation at risk by ignoring the needs of the consumer they make the agent’s job extremely difficult. How do you convince a customer that they can trust an insurance company if the reviews on that company are horrible? If any life insurance agent or potential customer simply Googles “Midland National Life” + “reputation” they will see a side of Midland National that may cause them to reconsider associating with them.
Midland National Life agents have more to worry about than just trying to sell a product for a company that has trashed their own reputation. In dealing with the various lawsuits and consumer complaints Midland, acting in its own best interests, has frequently refunded a policy to the consumer to avoid another lawsuit. Midland is then going back to their agents (who sold what Midland told them to sell the way Midland told them to sell it) and demanding a refund of the commissions they paid the agent. If an agent carefully reviews the compensation agreement with Midland National, or its sister company North American for Life and Health, they will find language like this
“In addition and not limited by the forgoing, North American reserves the right to chargeback commissions at any time, in its sole discretion, pursuant to paragraphs 7 and 9 of the agent contract, which are expressly incorporated herein.”
The reality for any life insurance agent is that they can NEVER spend a commission dollar from Midland National without wondering whether Midland will sue them for that money years later. Sometimes this is three or four years after the agent made the sale and in amounts of $30,000 or more, and Midland National is VERY aggressive in collecting their money.
Midland National gambled and lost in trying to beat the regulators and now they are demanding that their life insurance agents help cover Midland’s losses, and then suing those life insurance agents if they refuse. How can that be fair?
A life insurance agent has many reputable insurance companies to choose from so they not obligated to sell for a company that abuses its policy holders or agents. Time will tell how much Midland National Life suffers for betraying their life insurance agents.
This reviewer shared experience and wants this business to read this review and look into the issue (if any). The author is overall dissatisfied with Midland National Life Insurance Company. Reviewer wants customer support to reach out to him or her ASAP for further discussion of this matter.
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