As earned vs advance

Wprice · 04-26-2007, 01:39 PM

I've spent the majority of my insurance career as a captive agent. Not really worring about advance or anything like that. I'm strongly considering going independent. What do you think is the better avenue? Can I say, "I want a 3 month advance and rest is as earned!"

angwagner1974 · 04-26-2007, 01:54 PM

most companies advance 75% of your contract. That has been the case with the companies that we represent.

Example:

1200 annual premium x 50% contract = 600 total commission * 75% advance = $450

Frank Stastny · 04-26-2007, 01:58 PM

It really depends on what the company is offering. Some will offer a 9 month advance, others a 12 month advance, etc. There are usually no other options available other that what the company offers. If they are not offering a 3 month advance I doubt that they will do that for just one agent.

When I went independent after being captive I took "as earned" from all the companies I contracted with. I didn't need the extra up front money so I didn't see any reason to contract that way.

I like having all my clients, except the ones paying annually, on my commission statement each month. I also understand that some companies will hold back a little when you ask for an advance to cover any cancellations.

I guess it really comes down to a personal preference.

somarco · 04-26-2007, 06:18 PM

If you can afford to go as earned, you will probably be ahead of the game after 6 months or so. Depending on the product you sell, how quickly it get's thru underwriting, etc. if you work it properly in about 6 months you will have enough coming in every month so you don't have to worry if you are going to make your house payment that month.

In 18 months or so you will be glad you never took advances.

healthagent · 04-26-2007, 06:48 PM

You can also mix it up. Take an advance from one carrier and go as-earned with the rest. Then you get the best of both worlds. You have nice as-earned business built after a fews months but also a decent up-front check.

Don't worry about lapses. If you're selling the correct way to the correct clients they won't be remotely an issue.

Wprice · 04-26-2007, 06:58 PM

That's what I was thinking.. I was thinking build with one company and pay out with another.

David C · 04-26-2007, 06:59 PM

As earned is wonderful! My friends with real jobs take a hit if they don't work for 2 weeks, I don't!

Wprice · 04-26-2007, 06:59 PM

Before I go independent I think I need to get about 5 grand up to do it right. Bills plus marketing for three months... No I don't have that many bills!

salpro22 · 04-26-2007, 07:24 PM

Quote:

Originally Posted by Wprice

Before I go independent I think I need to get about 5 grand up to do it right. Bills plus marketing for three months... No I don't have that many bills!

If you want to do things right I recommend the following...

1) Pick one or two niches (health, life, seniors, etc.) and master the material.
2) Either sign up under a senior agent or find a mentor while starting your agency. There are quite a few people on here who have been in the trenches a while and all of us are happy to make recommendations.
2) Calculate your bills and save enough to cover at least 3-6 months worth. 3 months is the bare minimum.
3) Calculate your marketing costs for 3 months and save up that amount.
4) Devise your business, marketing and financial plans.
5) Go get em.....

-J.R.

*midwestbroker* · 04-26-2007, 09:34 PM

Salpro said it best. Find someone that will teach you and motivate you. That will keep you on track and hopefully from getting discouraged.

healthagent · 04-27-2007, 12:27 AM

As far as getting off the ground just don't fail to calculate when you receive that 1st as-earned check. When I sell Aetna or Blue it's 2 to 3 months before I see my 1st commish after the approval. That's fine once you're chugging along but don't forget to account for that.

With life it's easy to have something baking for a month just in underwriting. Then you miss the commish cut-off and it's the following month for the 1st check.

Again, not remotely an issue once it all kicks in. Could be an issue getting off the ground.

senior-advisor-indiana · 04-27-2007, 01:21 AM

DO the deadlines come into play if you are on direct deposit or is that only if you have a check mailed to you.

David C · 04-27-2007, 01:53 AM

Direct deposit gets your money to you much faster AFTER all underwriting requirements have been met.

For instance: my Ohio National contract is set up to pay me as earned. Say I sell a life policy on 4/27/07, it will take some time to get the exam done, commissions are disbursed on 5/03/07 (not likely enough time to have conditions met), the next final requirement cut-off date is 5/11/07, IF the customer and the examiner have not pissed time away, and if nothing is needed from the applicant's doctor then I will have my commission deposited sometime right after 5/18/07.

Time can slip up on you and you really have to stay on top of commission cut off dates and final requirements dates.

healthagent · 04-27-2007, 08:07 AM

I haven't seen advances be an issue. I know rotten agents who have had a bunch of business blow back on them. Either on advances or as-earned if your placement and persistency are horrible you're out of business on either method. If your placement and persistency are great then the advance doesn't matter. I love the advance.

Wprice · 04-27-2007, 08:55 AM

Well can we talk a little bit on persistancy and placement? I know persistancy has a huge part to do with Customer service, but how do you know that in three months someone isn't going to cancel? How are some soft ways to get that information? When you qualify what are specific topics that you hit on?

salpro22 · 04-27-2007, 09:58 AM

Quote:

Originally Posted by Wprice

Well can we talk a little bit on persistancy and placement? I know persistancy has a huge part to do with Customer service, but how do you know that in three months someone isn't going to cancel? How are some soft ways to get that information? When you qualify what are specific topics that you hit on?

Money aside, clients who "value" health insurance should not cancel. Are you marketing towards potential clients who value insurance or feel obligated to obtain a policy? It is one thing to talk about the dangers of jeapordizing the ability to qualify for health insurance, but if the person does think it is importance do you really want that person as a client?

We have no control over anyone's finances, but we do have control over what we tell clients about the importance having something in place to protect against the unforeseen because if something major happens they will be screwed and hospitals don't care about using condoms. "Nice house, you want that surgery huh???"

But, then again, if they do not have the interest or value and simply decide to buy it because you are a "Great" salesman, that is a lapse waiting to happen.

I think it is important to determine early on and keep an eye on the types of clients you want. They represent your agency just as much as you do and the agents under you do.....

healthagent · 04-27-2007, 10:18 AM

Neither here nor there if you're talking about as-earned vs advance. If a clients cancels quickly you're not getting paid on either method.

That being said, there is liability with an adavace you don't have with as-earned. If you sell a lot of policies that blow back on as-earned and see this biz isn't for you - or maybe the product isn't for you - then you simply quit. However, with an advance you could have a negative balance that needs to be satisfied if you choose to throw in the towel.

Wprice · 04-27-2007, 10:32 AM

Well I'm used to being a life agent. Health is a different and new thing.