Commission Split on Life Insurance with Customer?

Oct 8, 2015

  1. rrajeshh
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    rrajeshh New Member

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    Folks,
    Please forgive me if this question is not appropriate by any means.

    Here is my challenge... I am an individual planning to buy life insurance for my personal family protection. I have been doing lots of research. I do not need much guidance and know pretty much what I need. I am looking for a specific policy from Guardian which is kind of close to my needs.

    I am planning to buy a large policy but I hate losing first 2 years on investment in agent commission and other fees. Its sadly the ugly side of whole life insurance as consumer loses in first 5 years.

    Is it ok for me to ask the agent to split his commission with me in the first year to soften the burden? This large fee/loss has kept me on the side lines for last couple of years and its just too hard to bite the bullet and take a substantial loss.

    Please advice how to proceed. I dont want to offend someone and dont know if it is something that will be acceptable to the agent.

    thanks
     
  2. bluezebra48
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    bluezebra48 Expert

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    A 'kickback' is 100% illegal. If you don't want to give the agent the commission they earn, then take the time and expense to get licensed yourself. I'm not gonna walk into the McDonalds where you work and ask for you to pay for part of my Big Mac. Don't ask for an agent to pay for part of your policy.
     
  3. liorselamb
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    liorselamb Guru

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    Why only 50% kick back? You should ask the agent to pay you all the commission and some....
     
  4. STIBROKER
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    STIBROKER Like My post and enter the DRAWING,,,, Moderator

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    If you use a agent or not the fee's are still set.....will cost the same.........
     
  5. cowgoesMoO
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    cowgoesMoO Super Genius

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    Since you were very cordial, and trying to be non offending I will give you the same courtesy. The first poster already answered the main question. It is illegal.

    Also there certain requirements that prevent individuals from getting their license just to write the policy on themselves. One needs to write at least the same amount of commission on other cases in order to take out a policy on one's self. I'm not sure how that is monitored or regulated, but I know that is the rule. So, you could get full commission on your policy if you got licensed, but you must also write other business to "balance" it out for lack of a better term.

    Life insurance doesn't work like car insurance like you are implying. IF you buy car insurance direct through a carrier via web portal without an agent, the rate is cheaper because there is no agent to receive commission.

    However, If one buys life insurance direct from the carrier with no agent. The premiums are the same. In other words Agent commission has nothing to do with the reduction in cash value accumulation in the first couple years, and it has everything to do with cost of insurance and actuarial guidelines.

    The consumer doesn't lose in the first 5 years, you simply don't understand life insurance as well as you think you do. (no offense meant, you seem intelligent enough) What if you get hit by a bus in the first 5 years? Did your family lose out?

    Maybe the better question is: what if something would have happened to you in the last 2 years while you were "on the fence" about setting up a protection plan for your family? wouldn't it be silly if your family missed out on having life insurance protection because you didn't want an agent to get a commission?

    I hope this puts it in perspective for you.
     
  6. Lewis_FL
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    Lewis_FL Super Genius

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    Rebating used to be legal in FL and CA.
     
  7. GreenSky
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    GreenSky Guru

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    Just buy term insurance and put the difference in an annuity.

    Problem solved.

    Rick
     
  8. pcbinsurance
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    pcbinsurance Guru

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    Zero premium term life seems appropriate for this guy.

    Also, annuities pay commissions too.
     
  9. pfg1
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    pfg1 Guru

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    Just to add to what has been stated. The way I (and many of us) design policies like this, sure the growth may be less in the early years...but it is SIGNIFICANT in the later years. Most WL policies if designed properly the cash value will be above cost basis in 7-10yrs. Many of my clients policies grow by more than their premium amount as early as year 3.

    I've never had a client ask me what you are asking...but if they did it would be like me asking the client for half of their gains after year 10. Inappropriate and illegal.

    You waiting on the sideline has cost you. You haven't lost the money in the early years, you've just lost access to it for a while. I'm assuming you are looking at a max funded policy (hopefully), I'd get moving.
     
    pfg1, Oct 9, 2015
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  10. rousemark
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    rousemark Still Here!

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    Yes but it is my understanding that, in FL at least, it has to be across the board. You have to give the same rebate to everyone, not just a select few. You can't pick and choose.
     
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