The “Grouping Effect”

It is reported that when Hillary Clinton diverted from her scripted speech and spoke from her heart saying, “…you could put half of Trumps supporters into what I call the basket of deplorables,” that one of her closest advisors texted a friend, “With that statement, Hillary just lost the race.”  And today we know that her close advisor was right. You don’t group people together without risking offending some and vilifying others.  Now hold on, I am not going political on you, I just want to extract the wisdom from this historical event.

  • When we attempt to group everyone or everything together, something always gets lost. The loss could be as unpretentious as overlooking the individuals in a group or it could be a more detrimental and substantial loss that involves money, emotions, friendships, marriage or an election, like with Clinton.  Regardless of the loss, the point that the loss originated because of mischaracterized, misrepresented or misclassified facts is important to remember.  That is because the “Grouping Effect” always precipitates a loss.

Nothing demonstrates the “Grouping Effect” better than the broad sweep of the broom that politicians, pundits and other public figures use metaphorically, to sweep certain segments of the population into separate corners where they can be either vilified or praised accordingly.  But think about it.  How do you feel about the following statements?

  • Middle class Americans give little to charitable organizations.
  • 10% of middle class Americans give little to charitable organizations.

The answer is glaringly obvious, if you are a middle class American; and the less inclusive statement is more agreeable simply because it doesn’t apply the “Grouping Effect.”  Furthermore, the more agreeable statement provides a specific, definable, and rational account of what is really happening.  Here is where inclusiveness can become detrimental, i.e., when it no longer gives room for specifics or individuality.  In other words, inclusiveness can be guilty of employing the “Grouping Effect.”  And the “Grouping Effect” will always trigger a loss of some sort in the future.

Many pundits and gurus are guilty of using the “Grouping Effect”.  They love to exploit it to scare, brow beat or force you into thinking differently than what you know to be true. Here are some examples of the “Grouping Effect”, used by two well-known financial “gurus”, used to make people unsure about what they understand about whole life insurance and mutual funds.

  • “I HATE WHOLE LIFE INSURANCE, I HATE UNIVERSAL LIFE INSURANCE, I HATE VARIABLE LIFE INSURANCE, THE ONLY TYPE I LIKE – FOR THE PURPOSES FOR INSURING YOUR LIFE – IS TERM INSURANCE! If you are smart with the money you have today…you don’t need insurance 30 years from now…![i]
  • “Cash value life insurance is one of the worst financial products available.”[ii]
  • “Mutual Funds average 12% annually in returns.”[iii]

Fascinatingly, the “Grouping Effect” used by these two pundits has been proven false time and time again.[iv] So, even though it may seem they are speaking from the heart, they are wrong to be so inclusive in their conclusions and therefore are culpable of creating losses for those who heed their advice. Pathetically, these two don’t seem to care what the facts are because they continue to pound away hoping to scare, brow beat and/or force people into accepting something that empowers themselves rather than their listeners.

At Life Benefits, we have two important parameters that we live by:

  • What is it that you can Afford?
  • What is your Comfort zone?

Because let’s face it.  If it isn’t affordable for you, then you can’t do it.  And if it isn’t comfortable for you, then you won’t do it.  Of course, what is affordable and comfortable for you may be different than what is affordable and comfortable for your friend, family member, neighbor or business partner.  And that is why the “Grouping Effect” never works when it comes to engineering your life insurance contract.

We want you to have the best coverage AND keep more of the money you make.  That’s a tall order, but it is an order that is all together possible with specifically engineered policies like we design.

Far too often, we see policies that have been sold using the “Grouping Effect.” Those policy owners will inevitably pay thousands, if not tens or hundreds of thousands, too much for their insurance.  Fortunately, you don’t have to be subject to that kind of loss.

Perhaps you’ve experienced the brunt of the “Grouping Effect” and would appreciate being noticed as an individual. Or maybe you feel like you’ve been swept into some huge big pile where nobody gives a hoot about you or your specific needs anymore.  Give us call.  We might not be the biggest or brashest agency in the country, but we do care.  We care about you individually, which means no “Group Effect”!  We always speak from our heart because we don’t believe in a plug and play life insurance contract that fits everyone. After all, YOU are an individual and your individual rights, concerns and privileges should NEVER be restricted or subjected to the “Group Effect.”

[i] Suze Orman, Financial Solutions For You

[ii] David Ramsey, The Truth About Life Insurance

[iii] Ibid

[iv] https://www.life-benefits.com/dave-ramsey.html