How would you interpret this contract provision?

[PhxSunsFan]

why the secrecy?? which carrier??

 

[shonceman]

why the secrecy?? which carrier??

"Discretion is the better part of valor."

 

[ATM]

This has been on their sign in page for a long time:

You hereby agree to NOT induce or attempt to induce, or cause or aid in any manner whatsoever any other agent or other person to induce or attempt to induce, any policyholder to terminate any policy issued by _____.

Have no problem with that. I am not going to replace them anyway and it is pretty common contract language.

However, it goes on to say this:

You further agree to NOT solicit, or cause or aid any other person to solicit, any policyholders of _______ to purchase policies of another life insurance company. These restrictions shall continue for a period of two (2) years after the termination of Your authority.

If that is strictly construed, it means if you go into a house and find the client has a policy with them, you cannot even offer the client additional coverage with another company.

I have a problem with all of it. If company X's product that you sold is suddenly uncompetitive and client is better served with a new or different policy from a different carrier, your responsibility is to the client, not the insurance company.

I would not sign that contract because it can put you at odds with your client with whom you probably have a fiduciary relationship (at least your client expects that and I would think a court might side with them.)

 

[rousemark]

I have a problem with all of it. If company X's product that you sold is suddenly uncompetitive and client is better served with a new or different policy from a different carrier, your responsibility is to the client, not the insurance company.

I would not sign that contract because it can put you at odds with your client with whom you probably have a fiduciary relationship (at least your client expects that and I would think a court might side with them.)

We are talking about life insurance... It doesn't usually suddenly become uncompetitive.

 

[rousemark]

why the secrecy?? which carrier??

I wanted to give the carrier's people a chance to address it. They have been a great company to do business with and I am not trying to cause them a problem. Was just wanting to see if others interpreted it the same as I.

I tend to read contracts a little closer than many. I shafted myself (the company did shaft me) by not reading a contract closely. They had a clause in their contract that after termination they charged the agent a 5% service fee. I assumed it meant 5% of commissions paid. After I terminated, I discovered it was 5% of premiums paid. I had life policies paying 3% renewals that were costing me 2% out of my pocket for them to stay on the books. Also had health plans that paid a 5% renewal so on those I received nothing. Cost me a few thousand dollars and after that I began reading the contracts and interpreting them in the strictest sense. If a company sales. "well, we would never enforce that", then my question is. "why is it included."

I will never be a big producer again so it will not cost me a lot and the companies really won't miss my production very much but that is not the case with some of you and you should be aware of what is in the contracts you sign.

 

[ATM]

We are talking about life insurance... It doesn't usually suddenly become uncompetitive.

But it can become uncompetitive for at least three reasons:

1) Competitors products may be better suited for a variety of reasons - pricing, added benefits, underwriting being just three.
2) Current carrier may become uncompetitive due to interest/dividend or expense changes.
3) Current carrier may become a financial risk that client is better served leaving behind. In today's interest rate environment I am paying much closer attention to insurers financial situation (and not just ratings, because as we saw in the late 2000s, the rating agencies are not out front on carrier financial conditions. hell, AIG was A++ when they were bankrupt!)

 

[rousemark]

But it can become uncompetitive for at least three reasons:

1) Competitors products may be better suited for a variety of reasons - pricing, added benefits, underwriting being just three.
2) Current carrier may become uncompetitive due to interest/dividend or expense changes.
3) Current carrier may become a financial risk that client is better served leaving behind. In today's interest rate environment I am paying much closer attention to insurers financial situation (and not just ratings, because as we saw in the late 2000s, the rating agencies are not out front on carrier financial conditions. hell, AIG was A++ when they were bankrupt!)

WE are talking about an FE company, so #2 does no apply.. #1 and #3 do not occur overnight, particularly #1 so if that was the case, you should have written the other company in the beginning. The #1 reason life insurance agents replace a policy that they wrote originally is the new policy will pay a new first year commission.

 

[DHK]

How would you interpret this provision?

During the term of Agent's authority, Agent shall NOT sell or attempt to sell, or cause or aid any associate, agent or other third party to sell or attempt to sell, any insurance or annuity product of any company or entity other than a member of the Company Group, unless the Company Group does not offer a similar product.

Looks like a W2 position to me. They would probably ask about terminating any other selling contracts based on that language.

 

[rousemark]

Looks like a W2 position to me. They would probably ask about terminating any other selling contracts based on that language.

They have a captive side and I can see that language but this is on their brokerage site.

 

[DHK]

They have a captive side and I can see that language but this is on their brokerage site.

Sounds like lazy attorneys that just copied one contract to another.