Question About Collecting Monthly Dues Upfront

[harold]

Lets say someone has a policy for 90 a month, is it wrong to tell them that you are collecting an upfront of first and last month for 180 dollars and then you only sweep 90 from the agency account and apply it towards their dues and keep the other 90 as a fee?

Technically leaving the client under the impression that they have 10 payments left when its really 11?

If so, I need to get out of the office Im at.

 

[FL P&C Broker]

They doesn't sound like the best idea. I could see the insurance companies having a problem with that.

 

[djs]

Do they keep the extra $90 in the trust account to pay out in the event of a non-payment or last payment?

If its truly retained as a broker fee, then it shouldn't be presented as a last month payment, it should be presented as a broker fee, and acknowledged as such (and paying attention to state laws on broker fees).

It sounds shady, I'm just wondering if there is a part of the story missing. There has to be......

Dan

 

[harold]

Nope, the other 90 is collected as broker fee.

 

[djs]

Is it stated as a broker fee?

 

[Guest]

I dont think it is ethical, or legal, I do believe, unless the client pays in full, there is a law, statute that they cannot hold money, thats why sometimes with an over payment, they refund the money to a client.

My Gosh, I could only imagine how screwed up an account would get, so you would have to remember to stop the EFT that last month.....

Actually, stupid idea.

 

[Sales71]

You need to get out of the office you work at. Find a good honest agent to work for.

 

[Cobra443]

Very unethical-get out while you can.

 

[CLee]

I don't know what state you are in or what the state laws are but if the agency is charging broker fees, here in NC we are required by law to post a fee schedule on the wall where any client walking in can clearly see it, along with having the client sign a fee disclosure form. The fee should be the same for every client and if you charge one client a fee, you have to charge all, and it has to be the same amount. It sounds like they are charging each client a different amount depending on their monthly payment amt. If the DOI does an audit and there is no fee disclosure form and fees were charged, that could be bad. I agree, you need to get out of there.

 

[harold]

Word, thanks guys. I decided to get out last night and it feels like a load has been taken off my back. Had such a sour experience with insurance agency I was at over these last 6 months that I dont even know if I want to continue. All I think about is whether or not I want to dedicate the next few years of my life to becoming an insurance agent, monetary rewards are nice but they werent the only reason I was doing this. Unfortunately, I couldnt really see the opportunity for personal growth where I was at. So Im not sure what to do at this point, but I have learned a few valuable lessons so it wasnt a complete waste of time.