Charging a Fee for Insurance Advice

[Franz Kafka]

Try it. If they laugh or cuss at you, stop. If they pay, keep increasing the fees until they laugh or cuss at you.

 

[COInsguy]

What would you do with this scenario:

Low income client, eligible for exchange subsidy and needs insurance. Exchange does not pay any commish. No cross sale opportunity. But the client is confused by the complicated system that's been created, and has health problems/takes meds. Would you take the time, everytime, to do this for free? I want to serve these clients, and figure out a fee based/pay pal model.

Information may be for free on the internet, but applying it to an individuals' situation is sometimes impossible. I can read the tax code, but I still pay a CPA for advice. I could short sale my home, but the internet does not answer my specific situation, so I hire a realtor. Same with BK and a lawyer, ch 7 or 13 eligible?

When you're dealing with the 2nd biggest expense behind their mortgage payment, and dealing with the most important facet of their life, their health, people will seek expert advice.

If, there is no agent compensation to left in the exchange than this would be viable from a DOI standpoint. However, they will dangle some cherry in front of your face such as a $25-$50 commission 1 time payment or some joke of a compensation like that.

In Colorado the law states you may not collect fees for the sale of insurance where commissions are paid unless those fees are for services above and beyond the scope of the insurance sale.
(Roughly)
I know this because I charge fees for some non-insurance products and I have one hell of a disclosure to go along with every one of these sales.

So if you are getting commission most DOI's won't allow this.

 

[JamesGeorge]

Disclosure - disclosure - disclosure - disclosure -
disclosure -

in writing

 

[yorkriver1]

Fee based insurance advice is called an insurance consultant. In my state it's a separate license, with a $50 fee for the license. These classically are the folks who advise corporations on P&C or group insurance plan design and assist them in going to market for the best deal. As far as I know, no large corporation group insurance pays a % commission on their group to an agent, instead the consultants make a hefty fee.

In our state, consultants are allowed to charge fees, as long as the duties and fees are in writing, & signed by both parties before the work starts.

Also, here in my state, with a consultant's license, you can charge a fee *and* receive commission unless doing the insurance consulting for a "public body".

"Service fees" are also allowed in my state. Usually, the agents who do this are writing high risk auto insurance with a clientele that lapses and reinstates coverage often. Profitable agencies charge service fees for paperwork heavy procedures, like reinstating or rewriting a lapsed policy. Covers staff time.

Service fees are OK in my state if they are posted in writing, a copy is shown to the applicant, and they are consistently applied to all similar situations.

You may want to call your DOI to ask whether your work with exchange clients is a considered to be a consulting or service fee situation, if the state offers those categories.

 

[Cory]

Good thought but I tend to agree with somarco. So much free information out there and people willing to give it for free. However, like many fee-based businesses who offer the same product at cost or for free... it's all in the branding. Good luck!

 

[steven2244]

I get grateful enrollees that want to pay me, have had my RIA for years.

I laugh it off with 'the main way I get paid is referrals from (satisfied) people like you.'

Try it, much more effective, profitable and comfortable than messing with fees. It works - haven't had to buy a lead in 10 years, am always busy with new referrals.

This is trust business, fees are creepy - they're spending enough $$ with us already

Old school Rule #1: Never think about your own money. It never works out - people can smell conflict of interest a mile away.

Just 1 'super referrer' can end up equaling 100 new clients over time as word spreads. Some people are 7th or 8th generation...

 

[yorkriver1]

Couldn't agree more, in most settings.

To clarify for some prior postings: Fees for insurance services are not really a gray area in the technical sense, and are allowed by law, with certain guidelines and restrictions. Each state will have these laws. In some less familiar settings they make sense, and are somewhat customary, on one end, larger entities paying for consultants to manage their going to market to negotiate for employee benefits (sometimes there are no commissions involved in the transaction, think Fortune 100 size enterprises), and on the other, non-standard auto insurance agencies with a clientele that lapses/reinstates policies frequently, requiring more staff time to do the paperwork. They would go out of business paying staff if not for fees. I see a parallel here, potentially, with subsidized health insurance and service (not consulting) fees.

LIS > Code of Virginia > 38.2-1838

§ 38.2-1812.2. Administrative charges in excess of premium prohibited; exceptions.

 

[steven2244]

For sure - but this is the Indiv. H.I. Forum - was only addressing that realm

There are actual 'brokers' of all kinds of insurance that use fees; financial, transport, B2B...

We're just agents

 

[AIABROKER]

I suppose most states have rules on this sort of thing. Georgia has a counselor's license that allows individuals to charge a fee for advice.

The problem with charging a fee is like internet sites wanting to charge for access to content. There is so much free stuff out there people balk at paying for access to information on the web.

Same would be true here.

The model is, you can get information for free. How valuable and useful that information is remains to be seen.

If you and I are competing and you are charging $250 for advice I will offer for free, who wins?

You can try to charge a fee, and can get away with it in the large group market. But if you are wanting to charge a fee for advice on individual products you are probably barking up the wrong tree.

I know this is an old post but... With the changes in healthcare reform, I'm giving alot of advice. Advice on how to apply for the subsidy and comparing plans on the exchange. I feel that advice is worth something. I'm a licensed health insurance agent in Michigan. I would first like to know how to find out if charging a fee for providing health insurance advice is legal. Is there an additional license or certification?

The other motivating factor for me is giving out this advice and then the client never buys from me or thinks they found a better deal somewhere else. I'm a broker, non-captive and appointed with all the health insurance companies in Michigan. I would like to be able to cover expenses for my time and gas. I'm not talking about being greedy, but a charging a consulting fee of maybe $49.95.

I've been in the business for 14 years so I'm not some new kid in a cubicle who doesn't know what they're talking about.

Just wanted to get some opinions on this.

 

[moonlightandmargaritas]

I am an RIA, and can legally charge a fee for any advice I give.

Investment advice and health insurance advice are wildly different things.

What would you do with this scenario:
Low income client, eligible for exchange subsidy and needs insurance. Exchange does not pay any commish. No cross sale opportunity. But the client is confused by the complicated system that's been created, and has health problems/takes meds. Would you take the time, everytime, to do this for free? I want to serve these clients, and figure out a fee based/pay pal model.

There must be some reason you feel that these "low income" folks can afford to pay your fee?

...and dealing with the most important facet of their life, their health, people will seek expert advice.

Sounds like you're hoping. Are they seeking "expert advice" now? Wouldn't it be great if logic sold?