True Passive Income

[insure4real]

Hello,

Interested on anyone's thoughts on Renewals. Is anyone on here making $7,000 plus per month from renewals? If so what type of products and how long have you been selling?

I was speaking with an experienced final expense guy (27 years in business) and he said the way it's set up is around 25% of business falls off every year. He is only making $2,000 a month after all that time!

Curious on your thoughts?

 

[Newby]

I don't think anyone is making $7,000 monthly in renewals selling FE. That would be $84,000 per year before you ever get out of bed.

But renewals can be very substantial. I like to think of them as a big snowball of income.

Here is a realistic way to think of them. Figure on making 4-sales per week with an average AP of $600. That should give you $45 per sale of renewal income on average.

$45 x 4 = $180 x 50 weeks = $9,000 you should build each year in annual renewals for 10-years.

Let's use your figure of 25% falling off. That is actually high though. $9,000 - 25% = $6,750

A good FE agent should also average selling 4-Medicare supplements per month simply by cross selling. Let's say those average $200 commission with level renewals for 6-years. That would be $10,000 per year in renewals and if you drop 25% of that you leave $7,500.

So in year two, you have $14,250 in renewal income.

In year three you have $28,500

In year four you have $42,750

In year five you have $57,000

Many FE companies are only paying decent renewals for 5-years these days so it would taper off from there. But I would say that when an agent can get his renewal income up to the range of $50,000 most will be happy. using these examples the agent would be earning $132,000 from his 1st year sales and $10,000 from Med Sups minus the 25% so that would leave $106,500 from current 1st year to work with.

Expenses should be around $750 per week in lead costs which is $37,500 per year. $5,000 a year in home office costs. $3,000 to $5,000 per year in extra gasoline. That's about it.

So if you would be happy netting out in the ballpark of around $60,000 first year and eventually building your renewal base to $40,000+ then FE should be a good fit for you. If you have higher expectations in the beginning you will likely be disappointed. There is a LOT of hype and over promising in the insurance recruiting world though. These figures are by no means the ceiling. They are just realistic for the average guy.

 

[jdeasy]

Re: True Passive Invone

^^ That's pie in sky for an average. The average FE agent is making nowhere close to $2400/week. Nor is the average agent getting anywhere close to that renewal %.

Plus the average FE agent seels no med sups, much less 4 per month. I've been doing this a long time and ask everyone I meet with who they have their med sup with and I average less than 2 med sup sales per month.

Also the average FE loses more than 25% of the business they write.

I'm sure what Newby describes is doable and being done by some but those are the cream of the crop not the average.

 

[digfesales105]

Re: True Passive Invone

That doesn't make any sense? 27 years? $2K? A lot of questions pop in my mind right away.

How many carriers is that with? What is his renewal? 10yrs? Lifetime? Most carriers that offer under 100% comp is only giving 10 yr renewal. The carrier is going to be important also.

Listen, a lot agents always ask me "whats the renewals'. But they never, ever ask for the commission schedule. That tells me that agents ask the question but really don't concentrate on it. Why? Most agents today need and worry about the quick money.

Also, most agents do not stick with a carrier for years. Most jump from one hot product to the next. EX: a few years ago it was Foresters. Now Monumental(which they are now losing steam). It's been like that forever.

Moral of the story...27 years selling just FE? You damn well better be making well over $2K in renewals! You just have to work 90% with one carrier to do that. Now, I know most on here don't believe in that theory and that's cool. But building a renewal is like investing well...it IS investing for your retirement. If you use several carriers, your money is being invested little by little into different co's or products. If you put it all in one, the compounding money will build MORE interest sooner.

EX: When I was with Lincoln Heritage for 4 years. They have the LOWEST renewals in the business. Ridiculously low! When I left after 4 years my RENEWAL...not pay thru(most LH agents think their paythru is their renewal and it is so not!) but my renewal after 4 years was $1600. So now you can see why I'm scratching my head at 27 years and such a little renewal.

I would keep asking other veterans.

 

[Newby]

^^ That's pie in sky for an average. The average FE agent is making nowhere close to $2400/week. Nor is the average agent getting anywhere close to that renewal %.

Plus the average FE agent seels no med sups, much less 4 per month. I've been doing this a long time and ask everyone I meet with who they have their med sup with and I average less than 2 med sup sales per month.

Also the average FE loses more than 25% of the business they write.

I'm sure what Newby describes is doable and being done by some but those are the cream of the crop not the average.

When I say average, I mean of the guys who will still be left after a year. I'm not counting all the guys who jump into this and die on the vine.

I wouldn't think 4-sales per week is too optimistic for an agent that is spending $750 per week on leads which should get him around 20 fresh leads per week. The problem with most agents is they won't buy good leads. They fall for all the "sucker" traps and substandard leads.

One Med Sup per week is very doable without ever buying a single Med Sup lead. If you make it very clear that you save people money on Med Sups and you are already talking to 15 senior couples per week...they will come.
- - - - - - - - - - - - - - - - - -

That doesn't make any sense? 27 years? $2K? A lot of questions pop in my mind right away.

How many carriers is that with? What is his renewal? 10yrs? Lifetime? Most carriers that offer under 100% comp is only giving 10 yr renewal. The carrier is going to be important also.

Listen, a lot agents always ask me "whats the renewals'. But they never, ever ask for the commission schedule. That tells me that agents ask the question but really don't concentrate on it. Why? Most agents today need and worry about the quick money.

Also, most agents do not stick with a carrier for years. Most jump from one hot product to the next. EX: a few years ago it was Foresters. Now Monumental(which they are now losing steam). It's been like that forever.

Moral of the story...27 years selling just FE? You damn well better be making well over $2K in renewals! You just have to work 90% with one carrier to do that. Now, I know most on here don't believe in that theory and that's cool. But building a renewal is like investing well...it IS investing for your retirement. If you use several carriers, your money is being invested little by little into different co's or products. If you put it all in one, the compounding money will build MORE interest sooner.

EX: When I was with Lincoln Heritage for 4 years. They have the LOWEST renewals in the business. Ridiculously low! When I left after 4 years my RENEWAL...not pay thru(most LH agents think their paythru is their renewal and it is so not!) but my renewal after 4 years was $1600. So now you can see why I'm scratching my head at 27 years and such a little renewal.

I would keep asking other veterans.

Why would renewals be better selling mainly one company than selling for several?

 

[jdeasy]

Re: True Passive Invone

When I say average, I mean of the guys who will still be left after a year. I'm not counting all the guys who jump into this and die on the vine.

I wouldn't think 4-sales per week is too optimistic for an agent that is spending $750 per week on leads which should get him around 20 fresh leads per week. The problem with most agents is they won't buy good leads. They fall for all the "sucker" traps and substandard leads.

One Med Sup per week is very doable without ever buying a single Med Sup lead. If you make it very clear that you save people money on Med Sups and you are already talking to 15 senior couples per week...they will come.
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Why would renewals be better selling mainly one company than selling for several?

Selling one med sup a week is very doable with the pople you see. You don not see the people that the regular FE agent sees from lead reply cards.

Nor is the average FE doing $125,000 ap per year. That just ain't happening.

 

[gordon112]

Re: True Passive Invone

I am with JDeasy...

The bottom line, the renewals are just there to help in lead costs down the road..its not a retirement plan and should not be a plan to live on. I think those that are selling Medsups,Mapds thinking they can live off the renewals will have a big awakening. The problem is the pie in the sky numbers that most recruiters are using. I hear it from all different FMOs, IMO's, upline managers and every other guy out there trying to recruit.

Minus gas, expenses, chargebacks, etc, the avg is 35k a year. $750 a week in lead costs will have the majority of people running away.

 

[tins]

Re: True Passive Invone

I am with JDeasy...

The bottom line, the renewals are just there to help in lead costs down the road..its not a retirement plan and should not be a plan to live on. I think those that are selling Medsups,Mapds thinking they can live off the renewals will have a big awakening. The problem is the pie in the sky numbers that most recruiters are using. I hear it from all different FMOs, IMO's, upline managers and every other guy out there trying to recruit.

Minus gas, expenses, chargebacks, etc, the avg is 35k a year. $750 a week in lead costs will have the majority of people running away.

It's more realistic with Med Supps and MA's vs. FE. We are in the business for the renewals. I've been independent a few years now (not getting a dime of renewals from my time captive before this) and if I wanted to, I could literally sit home every single day in 2013 and have enough coming in to pay every single bill and living expense and have enough left over to go to the asian massage parlor every week. Another agent on here, Senior Advisor Indiana, actually does this. He works hard for a couple years until the renewals build up. Then, basically doesn't do anything for a year or 2 until some of the renewals start dropping down a little.
Med Supps and FE are 2 different animals.

 

[gordon112]

Re: True Passive Invone

It's more realistic with Med Supps and MA's vs. FE. We are in the business for the renewals. I've been independent a few years now (not getting a dime of renewals from my time captive before this) and if I wanted to, I could literally sit home every single day in 2013 and have enough coming in to pay every single bill and living expense and have enough left over to go to the asian massage parlor every week. Another agent on here, Senior Advisor Indiana, actually does this. He works hard for a couple years until the renewals build up. Then, basically doesn't do anything for a year or 2 until some of the renewals start dropping down a little.
Med Supps and FE are 2 different animals.

I did that as well selling MedSups for 2 years, but in the long run you need to be consistently producing and bringing in organic business.

I am also referring to the ever changing landscape in the senior market and the next target is Sups/Mapds. If Obama comes through we have more reason that the whole market could evaporate and go away....which leads to another thread!

That's the rude awakening I was referring to!

 

[tins]

Re: True Passive Invone

I did that as well selling MedSups for 2 years, but in the long run you need to be consistently producing and bringing in organic business.

I am also referring to the ever changing landscape in the senior market and the next target is Sups/Mapds. If Obama comes through we have more reason that the whole market could evaporate and go away....which leads to another thread!

That's the rude awakening I was referring to!

Ahh, Obama. I gotchya...Well, I'm thinking we won't be hearing much more from him come Janurary time.