Insurance Agent Forum

[theinsuranceman]

Can someone share with me a listing of final expense co.'s that do not take chargebacks out of advance commissions? I know Lincoln Heritage and Sr. Life do not. Any others? Thanks in advance.

[Newby]

Originally Posted by theinsuranceman

Can someone share with me a listing of final expense co.'s that do not take chargebacks out of advance commissions? I know Lincoln Heritage and Sr. Life do not. Any others? Thanks in advance.

I'm not sure I understand the question. Do you want to write a check to them when you have a chargeback?

A common way it's done in pre-need insurance but I don't think any final expense companys do this is: Every time you sell a policy, the insurance company holds 15% of your check in a reserve account. That account builds up and any time you have a chargeback, the money comes out of there and doesn't affect your payment for current sales.

This is actually a pretty good system because ALL agents will have deaths, lapses, and cancelations occasionally.

If you figure about 15% of your commissions will fall off anyway, this just keeps you from losing your paycheck everytime you have a chargeback.

[theinsuranceman]

Originally Posted by Newby

I'm not sure I understand the question. Do you want to write a check to them when you have a chargeback?

A common way it's done in pre-need insurance but I don't think any final expense companys do this is: Every time you sell a policy, the insurance company holds 15% of your check in a reserve account. That account builds up and any time you have a chargeback, the money comes out of there and doesn't affect your payment for current sales.

This is actually a pretty good system because ALL agents will have deaths, lapses, and cancelations occasionally.

If you figure about 15% of your commissions will fall off anyway, this just keeps you from losing your paycheck everytime you have a chargeback.

What you explained is the way Lincoln Heritage and Sr. Life does it, with the % figures slightly different. Keeps your weekly commissions based only on production, not affected by chargebacks.

[Newby]

Originally Posted by theinsuranceman

What you explained is the way Lincoln Heritage and Sr. Life does it, with the % figures slightly different. Keeps your weekly commissions based only on production, not affected by chargebacks.

Lincoln Heritage comes from the funeral preneed side of things so several things they do are unusual for final expense companies including accepting higher health risks than most companies.

I don't mind when companies hold reserves that way but since most don't, I just do it myself. I have a separate reserve acccount that I hold the reserves in.

[G.Gordon]

Dang these guys kill me.

Ok... you write a piece of biz and YOU cash the pay check forwarded to you on that biz. When that piece of biz goes bust you want to keep the money until you months and months down the road so they can recoup that advance on the back end.

Why do some of you expect more from the companies than you are willing to do? Think about it... If you paid someone for something that didn't happen... when would you wnat your money back? Now? Or months from now?

THEY PAID YOU FOR NOTHING... WHY DO YOU EXPECT TO KEEP IT? IT HAS NOTHING TO DO WITH HOW MANY OTHER PEICES OF BUSINESS YOU SUBMITTED.

Or maybe it does...

If you're really turning in the business and one does bust and you get charged back.. you don't care. The other ones cover the hickup of the bad one and you go on without incurring debt.


DEBT..

Do any of you read contracts? You know you are paying 1% or more in interest on that advance/debt you are working up? That's a bunch of money if you're really hitting the numbers.

Go as earned as soon as you can afford it.

[Newby]

G. Gordon, your post only makes sense if you are having more chargebacks than sales that stick.

Going as-earned is one good option to keep from owing the company money. There are others. That's what the poster is trying to find out.

I would take as earned on everything if there was any advantage to it. I haven't found any companies that pay higher % on as earned than they do for advanced. So advanced is SMART as long as you never get in a position where you don't have the money to pay it back.

That's the reason for the 15% reserve.

[theinsuranceman]

Originally Posted by G.Gordon

Dang these guys kill me.

Ok... you write a piece of biz and YOU cash the pay check forwarded to you on that biz. When that piece of biz goes bust you want to keep the money until you months and months down the road so they can recoup that advance on the back end.

Why do some of you expect more from the companies than you are willing to do? Think about it... If you paid someone for something that didn't happen... when would you wnat your money back? Now? Or months from now?

THEY PAID YOU FOR NOTHING... WHY DO YOU EXPECT TO KEEP IT? IT HAS NOTHING TO DO WITH HOW MANY OTHER PEICES OF BUSINESS YOU SUBMITTED.

Or maybe it does...

If you're really turning in the business and one does bust and you get charged back.. you don't care. The other ones cover the hickup of the bad one and you go on without incurring debt.


DEBT..

Do any of you read contracts? You know you are paying 1% or more in interest on that advance/debt you are working up? That's a bunch of money if you're really hitting the numbers.

Go as earned as soon as you can afford it.

Hey pal..Lincoln Heritage does NOT charge any interest on advances. When you do not have chargebacks come out of advances it is SWEET!

[G.Gordon]

Originally Posted by theinsuranceman

Hey pal..Lincoln Heritage does NOT charge any interest on advances. When you do not have chargebacks come out of advances it is SWEET!

Okay...

So... I pay you $75 to mow my yard. You don't. But, you show next week and mow it and don't want me to hold last weeks $75 out of this week's pay, but want me to wait till next season and hold it out of several of that season's services. I THINK NOT!

You're gonna mow my yard for $0 this week since I already paid you last week. Get it?
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Originally Posted by Newby

G. Gordon, your post only makes sense if you are having more chargebacks than sales that stick.

And that's the reason most companies charge back on the front end. They have no gaurantee that your business will stay on the book to pay the debt. If they don't charge on the front they probably have a high interest rate.

Going as-earned is one good option to keep from owing the company money. There are others. That's what the poster is trying to find out.

What he was asking is are there other companies that don't front end charge.

I would take as earned on everything if there was any advantage to it. I haven't found any companies that pay higher % on as earned than they do for advanced. So advanced is SMART as long as you never get in a position where you don't have the money to pay it back.

That's the reason for the 15% reserve.

OK... thanks for the laugh. They HOLD 15% of your money incase you write bad business and the OP says they don't charge interest on advances. WHAT THE HELL DO YOU THINK HOLDING 15% OF YOUR MONEY FOR A YEAR OR MORE IS?

You haven't found a company that pays higher interest for as earned? BS. All companies charge you in some way for advances. Either they "reserve" some of your earnings or out right charge interest. So... if they hold 15% of your money and you've written a ton of business over the year... how much interest do you think they're earning on that "reserved" income that they DIDN'T pay you?

So no matter which way you cut the pie... you get less if you take advance. PERIOD!

Say I have a 100% contract and take as earned. I get 100% of all commissions every time.

You have a 100% contract and take advanced. If they hold 15% you only have a 85% contract on advance... until they give you the 15% much later it ain't yours... get it?

I've seen advanced contracts that charge anywhere from 1-1.75% monthly. If you're a heavy hitter and selling like mad that can be a hefty fee every month until that balance if paid off. So, if you have a 100% contract and take advance on a 1% interest contract you're making less than 90% on the annual commissions. Get it?

There ya have it.

[Newby]

Originally Posted by G.Gordon

Okay...

So... I pay you $75 to mow my yard. You don't. But, you show next week and mow it and don't want me to hold last weeks $75 out of this week's pay, but want me to wait till next season and hold it out of several of that season's services. I THINK NOT!

You're gonna mow my yard for $0 this week since I already paid you last week. Get it?

G. Gordon, you need to read the posts and not have pre-conceived ideas about what people are saying.

What we are talking about is: the insurance company holds out an account on all your business where they hold 15%. It builds up.

Then when you do get a chargeback, they take the chargeback from there and it doesn't affect your paycheck for this week.

It's just a way to even things out and agents don't get hit with money they can't pay back or go without groceries.

You're going down a whole other path in your assumptions and your lawn-mowing and your paying for things that don't happen...

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[G.Gordon]

Originally Posted by Newby

G. Gordon, you need to read the posts and not have pre-conceived ideas about what people are saying.

What we are talking about is: the insurance company holds out an account on all your business where they hold 15%. It builds up.

But... if you had that 15% in your pocket wouldn't that be sweeter? If you had that 15% in your pocket instead of theirs every you could afford to get charged back every 5th case... that's extreme.

Then when you do get a chargeback, they take the chargeback from there and it doesn't affect your paycheck for this week.

It's just a way to even things out and agents don't get hit with money they can't pay back or go without groceries.

Go without groceries? Someone needs to work harder or smarter if getting charged back for a case is going to take their ability to buy food.

You're going down a whole other path in your assumptions and your lawn-mowing and your paying for things that don't happen...

I'm just trying to get the OP to think beyond trying to find a company that does not charge on the front end. Getting him/you and everyone to read and really think about what advances COST is my point.

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I've taken advances in the past and hated it. I read and understand the cost of taking advances. Really look at a commission statement where you've taken a tens of thousands of dollars of loans (that's what advances are) and see what you're getting charged... it'll hit you in the gut to see $100's of dollars per month going to pay for you cost of a loan.

It's just a way for the companies to make money, cover their butt, and increase production.

[Newby]

You're forgetting that many of the new agents getting into the biz really are going paycheck to paycheck. They really DO have to have a check each week to buy groceries. And if they don't have a reserve of some kind, getting hit with chargebacks will kill them.

Yes, it's better to build your own reserve. That's what I do as I've posted many times. But if someone doesn't have the willpower (or a spouse that's a spender) having the company do it is the next best thing.

Which companies charge interest on the advances? It is my understanding that if I have a charge back and pay them promptly there is no interest. If I don't pay them within a time period there would be interest. Is that wrong?

[G.Gordon]

Originally Posted by Newby

Which companies charge interest on the advances? It is my understanding that if I have a charge back and pay them promptly there is no interest. If I don't pay them within a time period there would be interest. Is that wrong?

Almost every contract I've ever read has a fee/interest charge for the agent account balance.

I understand the state of new agents finances. I lived it. I just want to draw their attention to the fact that taking an advance is not something you want to do for your whole career. Get off the tit ASAP. Unless you can find that one-in-a-million advance contract that does not charge any fee what so ever... it's better to take as earned. That and it builds a real sweet feeling knowing you have $xx,xxx dollars coming in next month without making any sales.
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And...

IMO taking advances cripples an agents production more than not. Say Joe needs $800/wk to survive. 9 out of ten 10 weeks all Joe is going to sell is about $801-1000/wk worth of advance commissionable sales. Now let one fall off or get charged back... WHAM!.. Joe's week sucks.

So instead let's assume Joe forces himself to take a 6 mo. advance instead of 12 months. Now Joe has to sell twice as much to make it. The positive to this is that when all those policies reach the 7th, 8th, 9th months, etc. he's got one sweet and secure as earned income stream.

As that as-earned-stream increases Joe goes for the 3mo advance then later none...

[jjjtrio]

Hold 15% out and place in a 30 day CD or Money Market account to earn some interest.