What is OVERRIDE??

May 8, 2019

  1. SParker
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    Do I still have an upline if I am indepedent trying to get appointed by a carrier through a local agency?

    I thought I understood what override means but now I am confused after what a local agency told me today.

    I am independent trying to get appointed by this local agency to sell a particular carrier's life products.

    The local agency told me I will get 55% commissions directly from the carrier, and also a 45% override. So I asked does that mean I will have to pay the local agency 45% of the 55% commission I earn from the carrier?

    And the local agency said NO. The 45% override is IN ADDITION to the 55% commission I get directly from the carrier. In other words, I will get the following 2 streams of commissions in the first year

    #1) 55% commission directly from the carrier for selling their WL products plus,

    #2) 45% x the commissions from #1 above which I will get from the local agency.

    So in this case, the override is not what the agency will take from me, but what the agency will pay me.
     
    SParker, May 10, 2019
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  2. Tahoe Ray
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    A couple of thoughts:

    You're independent if you can do what you want, when you want, and long as you don't have exclusive arrangements. That applies to what you're trying to do here.

    Stop worrying about overrides and losing money because of them. They don't apply to an agent as long as you dont have sub agents and you're getting street comp (or in NY, a decent ERA)

    Lastly, that comp arrangement is normal for NY.

    BUT...no one is paying 100% on first year comp. That would mean that you'd make 100% of the premium in comp on target.

    In NY, the GA will take a loss on that (due to comp restrictions).

    If I had to guess, this BGA is offering 55% from the carrier, and 45% of that 55% in expense reimbursement allowance (ERA) which equals about 80% of target. Which is a really solid comp for NY.

    Good luck and hope this helps.
     
  3. Lloyds of Lubbock
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    Lloyds of Lubbock Super Genius

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    I dont understand.
    Why dont you just ask on the 1000 of base premium what comes back to you?
    Based on the above you are getting all in 80 points.
    If that is true, it is excessively high for a new agent,who has never paid for a case and is coming into the business part time.
    I would sign that agreement as fast as I could.
     
  4. rousemark
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    rousemark Still Here!

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    The upline will be the agency. Sounds as if you are working with a company that is licensed in NY where they ahve to abide by NY commission rules even in the other than NY. In this case, the agency is paying you an override on you own production. It is a portion of the override and.or office allowance that the agency receives from the company..

    I have one contract as a GA that works like that. The base commission for the agency is 55%... Then, they pay an allowance of 58% for a total of t13% of the first year premium. If I recruited, I could distribute the 58% in any manner I wanted to the down line. The problem with this arrangement is you are dependent upon the agency to keep the agreement to pay you. Should they go out of business, you might not get all you are entitled to get. .

    I would at least clarify what they are paying 45% on. If it is 45% of the first year premium then that puts you at 100% which is not bad. I see you said they are going to pay 45% of the 55% first year commission which would be 24.75% for a total commission of 79.75%. As, you can see there is a big difference between the two. ($202.50 per $1000 annual premium)

    80% for a new agent is not bad if the agency is going to give you training, support, office space, etc. Just make sure what you are getting up front so you will have no reason to feel discontented in the future. However, keep in mind commissions are just a part of the puzzle.
     
    Last edited: May 10, 2019
  5. rousemark
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    rousemark Still Here!

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    Ray, he said WL not UL.. Lots of companies pay 100%+ on WL..
     
  6. Tahoe Ray
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    Not in NY they don't.
     
  7. Lloyds of Lubbock
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    I assume GA and IMO are interchangeable, hey I am old!
    In NY the highest comp a GA can get is 100%.
    He has to hit certain benchmarks to get there.
    Lots of companies pay 100% on whole life?, I dont know the FE market but no mutual licensed to do business in NY pays 100 points.
    I cannot see any reputeable GA offering this guy much override.
    He has no experience, he is entering the business part time and making no committment to the GA.
    If he is offered 80% he should take it.
    Asking this board what he is getting is ridiculous.
    Ask the GA what he gets at $1000 of premium, that will be his final and correct answer.
    On limited pay products he will get less......that is a different discussion.
     
  8. rousemark
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    They do with the "office allowance"
     
  9. goillini52
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    goillini52 MAGA...Eat More Bacon & BUILD THAT WALL!!!

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    I associate the term override more to a captive company. When I was a Unit Mgr. with Globe Life, I was paid a seperate 10% override on the premium the agents in my Unit wrote.
     
  10. Tahoe Ray
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    OP is looking at Mass, Guardian, Penn, etc. None of those companies will come close to the 99% (that includes the ERA-expense reimbursement allowance) that the agency makes. 80% is a great deal.

    You're not going to see 100% on insurance carriers in NY that are remotely competitive in the traditional life space.
     
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