Jabez
Expert
I have transitioned to a combination of both, "as earned" and "advance". About half of my commissions are as earned and the other half advance.
Is It Better to Be Paid "as Is" or Advanced?
- Thread starter thuban
- Start date
- 14,808
When agents get advanced from an agency they are assigning commissions. Legally the commissions belong to the agency, not the agent.
Verbally most of these agencies will state that the agents owns the business and "everything is fine." That lasts until you stop writing. That's when commissions stop and the agent doesn't have a legal leg to stand on.
If you're assigning commissions there either needs to be this kind of language already in the agency contract or you need to draft an amendment:
1) That you own your block of business from day one.
2) You continue to own your business if you stop writing through that agency
3) All first year and renewal commissions are due even if you stop writing business
Without language like that the agency owns your block. They can contact you clients and flip them to other carriers and keep every dime in commissions...legally.
And just for everyone's information, when agencies that require agents to assignment commissions ask me for an endorsement I ask that they sign such a document as outlined above. All of agreed - not one has actually signed the addendum and faxed it back.
Verbally most of these agencies will state that the agents owns the business and "everything is fine." That lasts until you stop writing. That's when commissions stop and the agent doesn't have a legal leg to stand on.
If you're assigning commissions there either needs to be this kind of language already in the agency contract or you need to draft an amendment:
1) That you own your block of business from day one.
2) You continue to own your business if you stop writing through that agency
3) All first year and renewal commissions are due even if you stop writing business
Without language like that the agency owns your block. They can contact you clients and flip them to other carriers and keep every dime in commissions...legally.
And just for everyone's information, when agencies that require agents to assignment commissions ask me for an endorsement I ask that they sign such a document as outlined above. All of agreed - not one has actually signed the addendum and faxed it back.
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- 11,997
Life products. FE, MP, etc. I'm by no means an expert in all lines, but I don't know of any exceptions to the 75% rule.
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Then take the advance, get it direct deposited into an interest earning account, and then take out your "earned" premium every month. Obviously each person is different, but I like that you pointed out that it's an emotion.
It makes no financial sense to NOT take an advance. The only reasons to not take one are emotional.
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- 7,066
Exactly!
I don't understand the undertone of anger and accusations in some of the posts. It doesn't mean that someone who takes their commission "as earned" is a poor manager of money or is making unwise financial decisions. For others, their marketing costs are almost nonexistent, still others really don't "need" the money.
When I was captive I didn't have a choice. I had to take advances. As soon as I became independent I started taking everything as earned.
I think your earlier post did the best job of answering the original question. "I make enough per month "as earned" to cover everything and have plenty left over. Now, if you're starting out, it might be a good idea to get advanced for the reasons mentioned above, but I would go as earned as soon as possible. Personally, I took advanced commissions from some companies and went as earned with other while starting out."
I do both... I love watching my as earn check grow every month and to know that if I quit today, I would get about the same check every month for about a year.....and I also love the companies that pay me advancing...to have some fast money.
Most new agents can't afford to just take as earn and needs to get the loans of commissions.
Most new agents can't afford to just take as earn and needs to get the loans of commissions.
- 4,872
Everyone is correct. But Medicareplansolutions make the most financial sense to me.
- 5,058
Everyone has good points.
Somarco mentioned a dicked up World advance contract.
I think it's obvious if by taking an advance, you are being charged interest/losing renewals/months 10-12, then you are better going as earned for that carrier if you can not find a better contract elsewhere for the same carrier.
But I do agree with MPS, if you are trying to build a business, then it is very advantageous to be getting advanced.
Right now, I'm only doing individual health and this week I wrote $12k in Cigna premium. As earned, not very excited about that.
Somarco mentioned a dicked up World advance contract.
I think it's obvious if by taking an advance, you are being charged interest/losing renewals/months 10-12, then you are better going as earned for that carrier if you can not find a better contract elsewhere for the same carrier.
But I do agree with MPS, if you are trying to build a business, then it is very advantageous to be getting advanced.
Right now, I'm only doing individual health and this week I wrote $12k in Cigna premium. As earned, not very excited about that.
- 26,145
I like a combo of each. I have some older contracts that are at 75%, maybe 2 or three. Most are as earned or 25% - 50% max.
I agree that starting out you may need advance. But I do not understand why someone that has been doing this for a while would need advance for marketing. Now, I am talking about Life only. Health may be different. If you have been doing this for years most of your prospecting should be in your file cabinets. IMHO
I tend to agree with a blend of as earned and some advance. In a perfect world the all Advanced - Bank the difference option would be great. But...........
I agree that starting out you may need advance. But I do not understand why someone that has been doing this for a while would need advance for marketing. Now, I am talking about Life only. Health may be different. If you have been doing this for years most of your prospecting should be in your file cabinets. IMHO
I tend to agree with a blend of as earned and some advance. In a perfect world the all Advanced - Bank the difference option would be great. But...........
- 4,132
I think a factor that hasn't been considered is "What are your work habits?" . If you have a great month and get annualized commissions of 25k for some deals that came together, do you work the next month the same way?
I think the main factor in the choice is how the agent would deal with going after new business after a super successful month. There isn't the matter of the right answer, it's the answer that best suits the agent's habits.
I think the main factor in the choice is how the agent would deal with going after new business after a super successful month. There isn't the matter of the right answer, it's the answer that best suits the agent's habits.
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