MYGA commission reversals at death or surrender soon after renewal

[Allen Trent]

Any MYGA writers have familiarity with how carriers back out commissions at death? IE: does it apply based on issue age or attained age & is it a 1 year or 4 year schedule of pro-rata backout of the commission?

What happens if a MYGA book was sold, does the backout of commissions for a death claim reverse from servicing agent at time of death or from the writing agent that wrote it or earned the most recent commission?

lastly, same thing for a surrender within say 1 year after newly written or 1 year of renewed?

thanks for the help, have a friend looking to buy a Life & Annuity book with sizeable MYGA book with a lot of clients age 80+. So he is wanting to see how most carriers handle these potential backouts so he can use that in determine fair purchase price, etc

 

[Tahoe Ray]

Every carrier is different but many are going to be a 100% chargeback in the first year on death or surrender with the chargeback being assessed on whatever comp was paid to the original producer (and should be to the original producer/upline, not the agent of record).

Some are more friendly, like American Equity and Oceanview are pro rata the first year (1/12 per month "vested") and Athene and GILICO are 100% months 1-6 and 50% 7-12.

Others may be more punitive such as F&G who is 100% yr 1 and 50% year 2 for surrenders.

Tell him to make sure he picks up a few carriers that write to age 100 (like GILICO).

 

[Allen Trent]

Every carrier is different but many are going to be a 100% chargeback in the first year on death or surrender with the chargeback being assessed on whatever comp was paid to the original producer (and should be to the original producer/upline, not the agent of record).

Some are more friendly, like American Equity and Oceanview are pro rata the first year (1/12 per month "vested") and Athene and GILICO are 100% months 1-6 and 50% 7-12.

Others may be more punitive such as F&G who is 100% yr 1 and 50% year 2 for surrenders.

Tell him to make sure he picks up a few carriers that write to age 100 (like GILICO).

Excellent info. Thank you