How Much Do You Budget for Chargebacks?

[Josh]

I don't think domanese is too far off. I have no idea on what the % should be, but Oxford life says it better not be higher than 15% or you are canned...Mine is 11.1%

With the new definition, I don't think it's that far off either.

That said, anyone talking about how a persistency rate should be almost flawless hasn't been writing FE full-time. When you're running 20-30 appointments a week and writing an average of $3k-$5k/week in premium, it stops being cherry picked business.

If you've been writing med supps and occasionally sell FE to a client that asked about it, your persistency should be nearly flawless. That's an entirely different type of situation than someone that's working 30-50 lead cards/week and running appointments to write FE full-time. Those are admittedly two extremes, but this thread seems to be started by someone focusing on FE full-time with folks that right it incidentally talking about avoiding "high pressure sales tactics" when the reality is they just aren't running the same type of business.

I used to work with a guy that wrote almost half a million a year in premium. His persistency was brutal, but he still had over 300k/year stay on the books. That's a lot of FE.

 

[theinsuranceman]

With the new definition, I don't think it's that far off either.

That said, anyone talking about how a persistency rate should be almost flawless hasn't been writing FE full-time. When you're running 20-30 appointments a week and writing an average of $3k-$5k/week in premium, it stops being cherry picked business.

If you've been writing med supps and occasionally sell FE to a client that asked about it, your persistency should be nearly flawless. That's an entirely different type of situation than someone that's working 30-50 lead cards/week and running appointments to write FE full-time. Those are admittedly two extremes, but this thread seems to be started by someone focusing on FE full-time with folks that right it incidentally talking about avoiding "high pressure sales tactics" when the reality is they just aren't running the same type of business.

I used to work with a guy that wrote almost half a million a year in premium. His persistency was brutal, but he still had over 300k/year stay on the books. That's a lot of FE.

Very well said. Most agents don't realize you can give the same numbers to 5 different FE Co.'s and you'll probably get 3 different persistency figures.

Co.'s use different formulas to calculate their persistency figures. Actuaries will use a different formula than the marketing side of that same Co., yielding 2 different persistency %'s.

The actuaries' formula is the real one as it's use to calculate profitability. The marketing % is exaggerated and used to impress agents so they'll be more likely to come on aboard.

 

[gordon112]

With the new definition, I don't think it's that far off either.

That said, anyone talking about how a persistency rate should be almost flawless hasn't been writing FE full-time. When you're running 20-30 appointments a week and writing an average of $3k-$5k/week in premium, it stops being cherry picked business.

If you've been writing med supps and occasionally sell FE to a client that asked about it, your persistency should be nearly flawless. That's an entirely different type of situation than someone that's working 30-50 lead cards/week and running appointments to write FE full-time. Those are admittedly two extremes, but this thread seems to be started by someone focusing on FE full-time with folks that right it incidentally talking about avoiding "high pressure sales tactics" when the reality is they just aren't running the same type of business.

I used to work with a guy that wrote almost half a million a year in premium. His persistency was brutal, but he still had over 300k/year stay on the books. That's a lot of FE.

I did it one year full time from a deal that I was waiting on with our own telemarketer for pre set apts assigned to me, I wrote about 90k that year, (actually it was about 10 months until we ran out of names to call in my area.)

I avged about 85% persistent with the main comp which wasn't bad considering I was always in the field focusing on just FE apts with some referrals mixed in between apt. .

 

[rousemark]

That's a very different situation.

May be.. but during those years, I have probably sold as least as much FE as the average two yr. agent and I still have never had an NTO.. I have had policies lapse that only paid one premium but not many of those..

 

[jacobtn]

I have written personally 125k in fe so far in 2012. Avg persistancy with my main carriers is around 85%.

Most of what I write are replacements, which can skew the numbers as well. I believe they are more likely to stay on the books since they are used to paying the premium. Although ive had a few crooked agents conserve their garbage LH, sr life etc. Or my numbers would top 90.

I still think replacements have better persistency.

 

[senior-advisor-indiana]

I have written personally 125k in fe so far in 2012. Avg persistancy with my main carriers is around 85%.

Most of what I write are replacements, which can skew the numbers as well. I believe they are more likely to stay on the books since they are used to paying the premium. Although ive had a few crooked agents conserve their garbage LH, sr life etc. Or my numbers would top 90.

I still think replacements have better persistency.

I have written $90k in FE so far this year. We are talking face amounts right?

 

[MGA]

Rouse

Am I reading your post correctly and that is you have never had an NTO?

There is not the first fe company with an 85 percent 13 month persistency PERIOD!!

Any actuary that makes an assumption of 85 percent 13 month persistency is just what he called it an assumption.

Keep in mind the market most all of us work in.

 

[rapidrobert]

Sorry but bullshit! Maybe with your FAVORITE Final Expense carrier your chargebacks are 10% or less (like mine with RNA), but with the carrier you put your not so savory cases with?

You get leads in the ghetto- or some broke rural folks; you sell them a $20 or $30 a month policy. That is NOT overselling. Truth is? The grandkid gets a toothache and the policy drops. Reardon is EXACTLY right and it is usually WORSE with average agents.

 

[Rearden]

Rouse doesn't work the ghetto or lead cards, for that matter.

 

[Norwayguy]

I have only sold final expense. Never anything else. My 1 year persistency is 86%.

The average for my 22 agents is 83%. This changes monthly though and my agency has never dipped below 80% and has never been higher than 90%. My agent with the highest persistency is at 100% but he only wrote 13 policies this year.

Even though I have lost 14% of my business this year I have only paid $3,300 in chargebacks ytd. My company takes 30% out of my advance to pay back my chargeback balance.

I have never really worried about my chargeback balance as long as I was turning in apps. You should not worry either unless you are going to be flopping business from company to company.

Good advice. Chargebacks become a huge issue when you are not selling new policies. You should have a fall back fund for the unexpected be it a really bad chargeback month or family issues that keep you from selling or being on top of your game for a couple weeks.
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With the new definition, I don't think it's that far off either.

That said, anyone talking about how a persistency rate should be almost flawless hasn't been writing FE full-time. When you're running 20-30 appointments a week and writing an average of $3k-$5k/week in premium, it stops being cherry picked business.

If you've been writing med supps and occasionally sell FE to a client that asked about it, your persistency should be nearly flawless. That's an entirely different type of situation than someone that's working 30-50 lead cards/week and running appointments to write FE full-time. Those are admittedly two extremes, but this thread seems to be started by someone focusing on FE full-time with folks that right it incidentally talking about avoiding "high pressure sales tactics" when the reality is they just aren't running the same type of business.

I used to work with a guy that wrote almost half a million a year in premium. His persistency was brutal, but he still had over 300k/year stay on the books. That's a lot of FE.

Josh this isn't just a FE issue anyone writing a lot of business off of lead cards will have issues. I've sold 403b accounts off of leads and the fact is a percentage of these people where nudged by the lead is interested in the product and wants it but once the money comes out of the budget will rethink that expense. It still should not be a huge problem because carriers will terminate your contract if your persistancy craps out.