Realistic Expectations of Residual Income

Dave thanks for that it was very well put and the only other question somebody touched on a little was the retention rate of customers you sign up. Is there an average that people stay on policies? Have some of the vets noticed a trend in terms of people dropping coverage after 1yr, 5yr, or 10yr at that. Dave do all UHC contracts suck including goldenrule? Thanks for all the help.
 
On IFP business (at standard rate):


Group:

Standard is 10% life of contract with decreases at premium points during the focal year.

Where do you get 10% for group. I only get 7% on group do you have a GA contract for group? Also where do I find that information about Pacificare contract. I have a 25% percent 1st and 7% renewals with them but can't find the no vesting you are talking about? Can you shed some light on this Dave.
 
As far as % drop off each year, I have no idea. I worked with a broker who after 20 years in the business, had $350,000 in residual income each year. The residuals and openess of people to talk health insurance over the phone is what made me attracted to this side of the business.
 
On IFP business (at standard rate):


Group:

Standard is 10% life of contract with decreases at premium points during the focal year.

Where do you get 10% for group. I only get 7% on group do you have a GA contract for group? Also where do I find that information about Pacificare contract. I have a 25% percent 1st and 7% renewals with them but can't find the no vesting you are talking about? Can you shed some light on this Dave.

I write mostly Blue Cross CA for small group and they pay me 10% on the premium. No GA contract, just straight agent commission.

PacifiCare is now going under UHC and AMS for PPO and eventually will do the same for HMO products. UHC contract for IFP business does not have a vesting, you do not own the book of business and they can take it back at any time. PacifiCare really does not exist anymore.

Phil from LISI has made quite a bit of noise about this exact contract in various NAHU events over the last year or so. You can probably find old posts on it on the NAHUnet forum (http://mail.nahu.org/pipermail/nahunet/)


Dave
www.davefluker.com
 
Dave thanks for that it was very well put and the only other question somebody touched on a little was the retention rate of customers you sign up. Is there an average that people stay on policies? Have some of the vets noticed a trend in terms of people dropping coverage after 1yr, 5yr, or 10yr at that. Dave do all UHC contracts suck including goldenrule? Thanks for all the help.

I find it involves two things:

1 - the type of business you are writing

2 - the area of California in which you are writing it

For me on 1 it is a mixed bag, I write a lot of HIPAA and if they get a new job they leave me, otherwise they stay on to 65 long-term. Small group I write specialty (spousal, etc) and they tend to stick long-term. Regular individual, it will always depend on employment and benefits.

on 2, southern California has a more stable market for long-term client retention, historically. Not a lot of job-hopping down there. Northern CA has been, at least until recently, more prone to job hopping and people tended to go on and off a lot more frequently.

Dave
www.davefluker.com
 
Also where do I find that information about Pacificare contract. I have a 25% percent 1st and 7% renewals with them but can't find the no vesting you are talking about? Can you shed some light on this Dave.

If you review the UHC contract section five, you will find all of the variables UHC puts in place under "Term and Termination". Now go back and look at your Blue Cross CA and Blue Shield CA contracts. Blue Cross CA asks for beneficiary designation in case of death of the agent. Shield pays out 70% residual in perpetuity (for life of the contract). With Blues in California, you can surrender your license and retire, or die and they continue to pay to designated beneficiary (ies). UHC cancels the contract immediately and takes the entire book of business.

Blue Shield CA contract item #18 "Survivorship" - pays 70% to designated beneficiary and 100% if beneficiary is licensed producer.

Blue Cross CA contact signature sheet IS 20 80 6/99 (mine is likely an older version since i have been licensed with them 7 years) - pays 100% to beneficiary whether licensed or not.

Also, both Blue Contracts require mutual consent to terminate the contract, UHC has unilateral authority to terminate with just 30 days notice to the agent.

Dave
www.davefluker.com
 
UHC CA contract Section 5:

5.3 If, at any time during the term of this agreement, agent does not have or fails to maintain, a license required to perform services or receive compensation under the agreement, it shall be considered a material breach of this agreement by the agent and this agreement shall be terminated as of the date the agent first lost, or failed to maintain the license without regard to when UHC learns of the loss, or failure to maintain the license or when when UHC notifies agent that the agreement has been terminated. UHC may recover any compensation paid to agent after agent loses or fails to maintain any such license.

5.4 This agreement shall terminate automatically upon agent's death, dissolution, receivership, insovency or bankruptcy.

No other contract reads like this. If an agent dies, obviously they are not going to be able to meet the terms of 5.3, therefore all reverts back to UHC. Don't retire or die with UHC or you will lose your entire book of business.

I would never sign a contract like this.

Here's another favorite part I particularly love:

Section 4, 4.1 and 4.2

I won't type it all here but suffice to say UHC has final decision authority in regards to agent of record changes if requested by the subscriber for individual & family business.

Now Blue Cross - only with release notorized by original agent of record

Blue Shield - ok, but original agent keeps 70% and new agent gets 30%

Dave
www.davefluker.com
 
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