The Truth About Chargebacks

[Frank Stastny]

John is right. If the policy is "sold right" then charge backs will never be a major problem that the agent will have to deal with.

The only exception I see to what he has said is when working the senior market. Most seniors I have sold a Med Supp to, regardless of how much money they have, want their checking account drafted after their SS check is automatically deposited.

Every company I have worked with has been more than willing to allow the senior/me set the draft date. Most all Med Supps will have an effective date as of the first of the month.

 

[Crabcake Johnny]

Rob, you actually need a book of business to write referrals and rewrites - call me tomorrow and I'll explain it to you:-)

 

[Full Throttle]

Charge backs suck.

When I was still brand new, I wrote anything and everything with a pulse. I sold the products correctly and explained them, but sold to financially irresponsible people. Almost all my charge backs have been do to overdrafted checking accounts. A few due to non-controllable circumstances, for example, I had a $1200 charge back to Assurant recently when a 1099 contractor got hired into management and was eligible for their group plan.

It's better to not sell a product today because you are upfront about how it works than to gloss over it and deal with the charge back / service issues later. You can not save the financially irresponsible either, if they have a history of issues, this is not going to change. It becomes a 6th sense over time, but I still get suprises from time to time. It amazes me how sloppy some people are with their finances, but plenty of those people are out there. Even people that have businesses with full time employees.

 

[Josh]

At NYL after 6 months if you where at certain production levels they sent you out to Dallas for special training and to meet some of the big shots of the company.
We met one of the companies top agents who did over a million per year in life premiums.
His measurement as to how the year is going, was by how much in chargebacks he has. It was June and he had $100K in chargebacks....and he said it was a good year!!
I could barely fathom that much in chargebacks!!

But on a normal scale, they are an unfortunate part of the business. But they can certainly be minimized.
Depending on what market I worked, I would be worried if my chargebacks where over 5-8% of my sales.

There was a gentleman at an office I worked at that wrote over $250k in premium in one hear and I thought that was pretty fantastic. As things progressed I found out only around 50% of his business actually made it passed the free look period. I rode with him for a few days and found him selling on the free look and saying things like "Why don't you try it out for a few months and if you don't like it you can just cancel it."

I'm going to completely agree with Frank that the truth about chargebacks is that if you sell the product correctly then they'll rarely happen.

 

[Newby]

Depends on your product.
I sell a lot of final expense and Preneed funeral.
There are deaths and there are lapses. It's part of the business.
I put the 15% back to allow for it and keep going. It has served me well for over 13 years.

 

[Guest]

I have the sickest story, I was managing an agency and the owner would not let me train people, he was a total micro manager/control freak, so I said fine. He comes in on day complaining that we didn't get the weekly transfer from Assurant, I knew what happened. The charge backs ate the entire advance he was expecting, so he had to lay out all of the cash for payroll. ; )~

He let me train the agents after that LOL

Charge backs suck.

When I was still brand new, I wrote anything and everything with a pulse. I sold the products correctly and explained them, but sold to financially irresponsible people. Almost all my charge backs have been do to overdrafted checking accounts. A few due to non-controllable circumstances, for example, I had a $1200 charge back to Assurant recently when a 1099 contractor got hired into management and was eligible for their group plan.

It's better to not sell a product today because you are upfront about how it works than to gloss over it and deal with the charge back / service issues later. You can not save the financially irresponsible either, if they have a history of issues, this is not going to change. It becomes a 6th sense over time, but I still get suprises from time to time. It amazes me how sloppy some people are with their finances, but plenty of those people are out there. Even people that have businesses with full time employees.

 

[Crabcake Johnny]

So you're reminding me why I shut my agency down?

"WTF!!! I was up to $1,400 and I NEEDED that money to make my rent! DUDE! I checked my account and I'm NEGATIVE $250! This is BULLH**T." Man, you need to loan me like $1,000."

 

[Benefits Man]

chargebacks suck but if you plan/budget right they shouldn't hamper you...

 

[johndale]

Chargebacks should be utilized effectively. It's a good idea to have a separate account.