Leaving a Legacy with your Agency

Mar 12, 2019

  1. BuckNasty
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    BuckNasty Super Genius

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    Currently sitting on a Medicare book of roughly 2,300 med supps, 1,000 pdps, and maybe 12 MAPDs. It occurred to me recently in light of recent travel with my spouse that I really need to figure out a way to maximize the money that gets passed on to my small children if we both go down unexpectedly.

    Half the book pays to my agency that I own and the other half is coming in as a 1099 directly to me. All new business is being written under the agency. I have one downline (my mother) who is a LOA for the agency that is currently producing in addition to me.

    Does anyone have any advice on how to structure things so that if I croaked, the agency renewal commissions (or even 1099 income) could still be paid out to benefit my kids? My spouse is not licensed and my kids are all under age 10. I do trust my mother, and since she is licensed, do I somehow structure things to where she becomes the owner upon my death with instructions to pay my kids? Do I make my kids who are still minors some type of owners in the S corp/agency?

    Would love to hear from some of the other agency owners who have this figured out.
     
  2. somarco
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    somarco That Medicare Expert Guy

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    First, congratulations on the success you have had. As I recall you were struggling a few years ago to "find your way" and determine a way to build your block. FWIW I have suggested agents read your threads on DM. Every successful agent has stumbled, often more than once, trying to figure out what works for them.

    From my perspective you are an inspiration.

    Most of us with a family would like to believe their business will survive them. However, the odds of that happening are slim. Succession planning is something that takes time. It also involves mentoring a prodigy for years, allowing them to gradually assume the role.

    Your business has been built person by person based on your personality coupled with your system.

    A system can be duplicated.

    Personality, not so much.

    I have been in this industry over 45 years. So many changes that it is impossible to count. When I entered this business I never imagined the path I would eventually take, and many of the things I have done along the way are connected but in odd ways.

    While it is great to think about leaving a legacy, the only sure thing is life insurance. Others may see it differently.

    Good luck!
     
    Last edited: Mar 13, 2019
    somarco, Mar 12, 2019
    #2
  3. VolAgent
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    VolAgent Guru

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    I agree with Bob, life insurance.

    If you can find someone to buy your book at your passing, great! But no matter what life throws at you, as long as you pay the premium, the life insurance will be there.

    Also, saving is not a dirty word. Don't count on your business to fund your retirement, save now while you can.
     
    VolAgent, Mar 12, 2019
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  4. sshafran
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    sshafran Guru

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    Nice. That's awesome. :noteworthy:

    Do you still have the gas pedal on with "cold" marketing or are you basically at the point where you want to service the book and work referrals?

    I mean, 2,000+ is quite the book.
     
    sshafran, Mar 12, 2019
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  5. rousemark
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    rousemark Still Here!

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    I would assume you are vested on the med supp commissions? If so they are payable to your heirs without them being licensed. However, since no one would be servicing the business, the drop off in commissions will be drastic since the decent size renewals only run through the 6th policy year. If the agency is incorporated, the commissions will continue to be paid to it but you need some sort of succession plan for it..
     
  6. BuckNasty
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    BuckNasty Super Genius

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    Thanks for the kind words Bob. Yes, direct mail has treated my well and I think the folks who are interested in doing direct mail themselves would be best served coming up with a unique piece to separate themselves from the crowd. I agree about life insurance. I have a lot of LI, but it concerns me to think of the renewal "asset" being wasted if my kids can't get that too.

    Yes, saving as much as possible. Hope to be out in 7-10 at age 50-53.
    Yes still prospecting hard. I have $275k in overhead so shooting for 4k clients which should put me at a "magic number" after expenses.

    Succession plan is what I am trying to figure out in terms of my mother being able to take over the biz in the event of my untimely demise. Trusting her to payout my kids. Guess I am going to talk to a lawyer but I don't think many of them will be familiar with insurance agency commission structures.
     
  7. rousemark
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    rousemark Still Here!

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    Why don't you talk to a few of the larger agencies in your area and find what attorney they use? There are definitely attorneys out there that understand the ins and outs of the insurance business.
     
  8. somarco
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    somarco That Medicare Expert Guy

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    Da-hum!

    I am not anywhere near that. How much are you investing in DM each month?

    Your market and mine are different. I believe you still do F2F while I do everything by phone & email.

    My marketing costs are in the $7k range. Overhead (internet, ISP, phone, etc) around $30K.

    But I only have 500 clients, not 2300. Not sure I could/would be able to deal with 2300. About 700 - 800 is right for me.

    I do a lot of hands on . . . from a distance. People call and email me all the time. Clients and prospects. I give them something no one else does.

    That said, I DO admire what you have done and seems more duplicatable (is that a word) than what I do.

    How old is your mom? How is her health?

    Based on your comments, you are around 40, mom is probably 65+.

    As much as you think your income stream can continue for years after you are gone is a pipe dream. No matter how much you trust your mom to step in she isn't you.

    I figure if I stop, retire, quit or die, my income stream will remain about the same for MAYBE 3 years. After that it will go to $0 rather quickly.

    My U65 biz went from $100k to $5k in 3 yrs after I walked away from it. Of course Obamacare completely changed the market. But no guarantee the same won't happen with the Medicare market.

    Life insurance, or some form of lump sum cash, is the only thing you can count on. Expecting your kids and mom to hold your busi ness together is nice but probably not reality.

    "Who is your agent? Buck Nasty's mom? Seriously? Let me show you what I can do."

    I talk to people every week who haven't heard from their agent in years. You probably run into the same thing.

    You can believe me or not, but once you are out of the picture the chances of keeping your block more than 3 yrs are slim.

    I have a couple of guys who want to buy my block once I retire or buy the farm. My bride will get about 1.5 to 2x gross commissions. That plus SS (I am older than you) isn't enough.

    This is why I say life insurance is the best kind of legacy you can leave.

    Best to you.
     
    somarco, Mar 14, 2019
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  9. yankee466
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    yankee466 Guru

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    I was contracted by a medicare agency here in Georgia who wanted me to consider my plans in the event that that I either passed away, or could not continue to take the AHIP tests...and all my renewals would be lost. They obviously wanted to take my block of business for an up front fee. Now my wife is not licensed...I have no one under me to pick up the business......no one even knows what I do and who I do it with insurance wise but me as a one person shop.

    So, it is an interesting concept if you rely heavily on MAPD/PDP renewals to get by. Luckily, most of my renewals are from LTC, Medicare, and ACA.......but it would make a dent if I got Alzhiemers and could not pass that AHIP test. God forbid I would ever have to study for it, as it is the same silly answers to the same silly questions every year. :biggrin:
     
  10. Bevo
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    Bevo Guru

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    "Welcome to Buck Nasty insurance, home of Buck Nasty...can I take your order?!"
     
    Bevo, Mar 15, 2019
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