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Could anyone shed light on taking 6 months advance verses 9 months advance? Maybe even no advance - does anybody on here do that?
6 Vs 9 Mo. Advance
- Thread starter hardworker
- Start date
Lots of fils on here do that. Most start off with the nine month so they can pay cash for leads then ween themselves over about two years. The goal is to be as earned.
- 17,078
The shorter of advance you take the more stable your business is. But most agents starting out can't afford the 1st year of no advancing. So most do take 9-month advances and eventually work into 6-month and finally as earned. It's all up to you to decide if you have good credit.
The above posts are right on point regarding advances. However one thing to remember is an advance is just that, the insurance company is advancing you commissions on premiums that have not been earned yet. Regardless of how good you are and how clean your business is, some will fall of the books for various reasons that is out of your control. Which means if you are being advanced that commission will be charged back. Even if you are writing consistent business and the chargebacks are coming out of your advances, you should still set aside a portion of your advances into a separate reserve account.
- 30,590
Also, an advance is a loan...and many companies charge you interest on that loan.
- 19,673
I have never been charged interest on an advance on life insurance business. I have been charged on med sup business.
As for a rule on advancing, there is none. It's personal preference. I prefer to take advances and only have one company now that I am not paid as earned with. I'm on a 6 month advance with that company.
I have been considering changing some to a 3 month advance just for the reason that rouse stated. And also some companies, like AmAm and Mon, seem to punish the as earned agents b only paying as earned once a month.
For example, I wrote a Mon in Aug. with the first draft to be Sept 3. The policy was approved and I delivered it in Aug. His first draft was Sept 3. Since I am as earned with Mon and they pay at the first of the month I won't be paid on that one until Oct.
By the time I get paid the guy will have had the policy in hand for about 6 weeks.
If I were in charge of an ins company I would reward my as earned agents instead of making it more difficult.
- 26,179
There is no correct answer. It is what works best for you.
I fall into the all of the above camp. Some of my older FE contracts are 75% most of the newer ones are 50% down to as earned. My traditional contracts tend to be higher commission so I like those as earned. FE is quick cash flow, traditional takes longer to issue pay.
I fall into the all of the above camp. Some of my older FE contracts are 75% most of the newer ones are 50% down to as earned. My traditional contracts tend to be higher commission so I like those as earned. FE is quick cash flow, traditional takes longer to issue pay.
- 30,590
You're right about that, but the OP said nothing about Med Supp or FE(even though the thread is in the FE forum, many agents do both because of the natural tie-in). I just checked on American Continental, because I know they charge interest on the supplements...but they don't on FE.
P.S. That's ridiculous to make you wait that long to get paid...especially after you've delivered the policy! They should have to pay you interest!
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