For New Final Expense Agents: 4 Final Expense Contract Scams To Avoid

[VolAgent]

Are you starting to get a Southern accent Josh? Is Ben's accent starting to rub off on you?

One too many trips to the Boom Boom Room?

 

[myinsurebiz]

Assuming a TOTAL payout of 120% (it's probably more, but what do I know?)... wouldn't the agent's 50% + 70% to the "sponsoring" organization/agency also be charged back?

The risk of charge back is the same regardless of agent commission schedule.

The difference is - on a 120% advance - the upline is responsible for the entire 120% without banking any of it . . . On a 50% advance, the upline is still responsible for the 50% and the spread - but, at least the spread was in the uplines bank account.

See? The risk is the same - but, minimized since the spread went to upline . . .

 

[myinsurebiz]

Agencies mitigate chargeback risk with higher override spreads.

While the risk is the same, you can "socialize the risk of loss" with increased override spreads across the board.

Exactly.

The same idea as Insurance Carriers and their risk pools. Yes - they have to pay claims - but hopefully there is more coming in than going out . . .

 

[myinsurebiz]

You're not thinking it through. And Tom needs to be clearer, he is referring to debt roll up. Chargeback risk is the same either way, but once it turns to debt roll up then the higher comp is definitely risker to the agency.

If the total payout is 120% and 50% went to the agent and 70% went to the agency, the agency is only out 50%. After all, they are simply returning the 70%, they only have to come up with the 50% the agent received. So the higher the comp to the agent, the more risk if there is a debt roll up.

Correct!

Charge Backs are going to happen.

I'm making sure that if a agent or downlines go rogue - that the "debt that rolls up to me" is only the 50% that THEY cashed on. I'm still responsible for the spread. That is just a cash flow issue UNLESS the entire group quits writing. Then, as in my case in 2011, the Agency is Fubarred . . .

 

[HoosierLife]

Only one confused here is you.

Touché. Didn't realize DHKs first name is David. Thought he was talking about Duford.

 

[rousemark]

The difference is - on a 120% advance - the upline is responsible for the entire 120% without banking any of it . . . On a 50% advance, the upline is still responsible for the 50% and the spread - but, at least the spread was in the uplines bank account.

See? The risk is the same - but, minimized since the spread went to upline . . .

No, the risk is not the same... In one scenario you have 50% at risk and the other you have 120% at risk... There is no risk when you have banked then money in your own account. You may have to pay it back and in effect break even but you do not go in the hole.

 

[Thedude]

No, the risk is not the same... In one scenario you have 50% at risk and the other you have 120% at risk... There is no risk when you have banked then money in your own account. You may have to pay it back and in effect break even but you do not go in the hole.

leads. you also have to look at who you are hiring at those levels.....are you getting experienced agents at 50 percent? nope. You are getting newbies typically. versus hey leave that 50 point contract after you have figured it out and take my 120.

Not to mention people that are usually the type to buy leads have at least 600 dollar in their bank account haha

 

[myinsurebiz]

leads. you also have to look at who you are hiring at those levels.....are you getting experienced agents at 50 percent? nope. You are getting newbies typically. versus hey leave that 50 point contract after you have figured it out and take my 120.

The key to 50% deals is to be totally transparent about the arrangement. We show them exactly how it works. We will give them a PPT of the captive Call Center potential and the Independent Agent potential.

Our agents in the Call Center are vested from Day One! That's unheard of in a captive Call Center environment. They can move on to a different setup or they can move up to a higher contract and still earn any PT's and Renewals they earned with us. They just can't solicit Life Insurance to the clients that they wrote while working for us -or- use our Leads.

Not to mention people that are usually the type to buy leads have at least 600 dollar in their bank account haha

Why is that funny? Millions of Americans live week to week and have no savings or liquidity.

 

[myinsurebiz]

No, the risk is not the same... In one scenario you have 50% at risk and the other you have 120% at risk... There is no risk when you have banked then money in your own account. You may have to pay it back and in effect break even but you do not go in the hole.

The risk is the same. Upline is on the hook for the entire 120% ( probably more with bumps ) - I'm sure most uplines don't keep the spread in a savings account and not touch it till the advance period passes. But - I get your point.

This is exactly why we will only give 3 and 6 month advances. We can minimize our overall risk and exposure.

 

[wmilloway]

So you guys really think it's fair that if you take time, effort and training, (often hands on field training) and pour yourself into somebody that if they decide to leave you a year later for five more points they should be able to do that free and clear?

Devils advocate question

I may be wrong here, but I naturally assume that each marketing organization makes a percentage of commission or periodiocally recieves an agency bonus based upon the business written from each carrier under thier agency contract so in essence, they are compensated for their time invested in each new onboarding agent , for their invested time training and their recruiting efforts. If you are buying the leads, scouting for prospects, bringing in new contracts and spending the long hours, bearing the full brunt of the expense of working out of your car daily, beating the phones and streets to make money why would you leave any part of it for someone esle to get paid for all of your hard work? The commission earned, residual income and relationship building is the beauty of the business. Without having those perks of the industry then you may as well work for an Insurance Company as an employee so you can at least benefit from the company sponsored benefits, retirement opportunities, pensions and standard corporate training. You earn the business and your money you worked so hard to get and allowing an agent to keep it if they leave seems to the the only ethical way about it in my opinion.

Now, I have a friend who selles under an IMO who does not vest on day 1. I believe the vesting period is 2 or 5 years, but he doesnt buy any leads and all of his appointments are pre-set for him and they provide him with a competative & comparable commission structure vs the standard reduced commission in exchange for leads and in that case, I believe it's a fair excahnge but its all handed to him. He coasts by working very limited hours (11-4 most days) without a worry and makes $125 per year. Its a great set-up from what I have seen and I have not found any other IMO who offers anything like it.