Final Expense Contract...has anyone Ever Heard of Anything Like This???

[4theloveoffe]

I'm fairly new to the FE business so I'm wondering if any of you more tenured agents have ever seen contract terms like this...

1.) 100% 6 month chargeback

According to the contract if a policy lapses within the 1st 6 months the company charges back the FULL commission that you were paid. Literally, a client could've paid 5 months worth of premium but the company will charge the agent back a full 6 months! The company charges agents back money that has already been paid by the client...is that even legal?


2.) Lost renewals for low persistency

If an agents persistence for any particular month falls below 72.5% the agent forfeits renewals for the entire block of business that was written that month for LIFE.

There are a few other things that stood out to me as odd but these two of the most concern. Is this normal?

 

[WinoBlues]

I'm fairly new to the FE business so I'm wondering if any of you more tenured agents have ever seen contract terms like this...

1.) 100% 6 month chargeback

According to the contract if a policy lapses within the 1st 6 months the company charges back the FULL commission that you were paid. Literally, a client could've paid 5 months worth of premium but the company will charge the agent back a full 6 months! The company charges agents back money that has already been paid by the client...is that even legal?


2.) Lost renewals for low persistency

If an agents persistence for any particular month falls below 72.5% the agent forfeits renewals for the entire block of business that was written that month for LIFE.

There are a few other things that stood out to me as odd but these two of the most concern. Is this normal?

curious - is this a captive company or agency?

 

[4theloveoffe]

Only captive if you're on the lead financing program. They must be your only "final expense" carrier. Otherwise no.

 

[Agentguy5]

Only captive if you're on the lead financing program. They must be your only "final expense" carrier. Otherwise no.

Don't keep us waiting, who is it?

 

[CJR]

Don't keep us waiting, who is it?

Can I venture a guess and say LH?

 

[4theloveoffe]

No, it isn't LH but I'm not really concerned about the company. I'm wondering if these are the types of clauses I should be looking for in other contracts. Is this common practice or just a new way to create more upside for the company?

 

[PA Bill]

No, it isn't LH but I'm not really concerned about the company. I'm wondering if these are the types of clauses I should be looking for in other contracts. Is this common practice or just a new way to create more upside for the company?

You don't have to put up with that. I'd pass on that "opportunity".

 

[gymguy]

No, it isn't LH but I'm not really concerned about the company. I'm wondering if these are the types of clauses I should be looking for in other contracts. Is this common practice or just a new way to create more upside for the company?

This forum can be helpful for people like you for a variety of reasons. One way you can give back, is to name the company that is offering you such a terrible contract, so other people (like you) can potentially avoid such a terrible opportunity

 

[rousemark]

I'm fairly new to the FE business so I'm wondering if any of you more tenured agents have ever seen contract terms like this...

1.) 100% 6 month chargeback

According to the contract if a policy lapses within the 1st 6 months the company charges back the FULL commission that you were paid. Literally, a client could've paid 5 months worth of premium but the company will charge the agent back a full 6 months! The company charges agents back money that has already been paid by the client...is that even legal?


2.) Lost renewals for low persistency

If an agents persistence for any particular month falls below 72.5% the agent forfeits renewals for the entire block of business that was written that month for LIFE.

There are a few other things that stood out to me as odd but these two of the most concern. Is this normal?

Yes it is legal.. There is no law determining what a comapny may or not may not put in their agency contracts. If you sign the contract, you are agreeing to it. If you don't agree, don 't sign the contract.

You are going to see more companies going to this. Wash. Nat. has that provision in their contract for commissions paid on their UL policies.

 

[Rearden]

Only captive if you're on the lead financing program. They must be your only "final expense" carrier. Otherwise no.

Are those provisions only if you are on the lead finance program, or if you are not?

Here's a video I did about other final expense contracting scams you will want to avoid, as well.