Single Premium Life Insurance

Winter · 03-15-2008, 12:38 PM

In general, how does commission or payout work on a single premium life insurance sale?

You must get an immediate percentage of the total lump sum premium, I would imagine. What is that percentage in general without getting into a big street level versus MGA discussion. Just looking for a sense of how that type of product pays out.

Thanks.

Winter

Dave020 · 03-15-2008, 01:03 PM

I believe that it is similar to an annuity commission as opposed to a life premium commission. Probably something like 3-4% on the lump sum.

ims01 · 03-15-2008, 01:30 PM

It is going to depend a lot on the product you use: Whole Life, UL, EIUL, etc. But in general, you will be paid First Yr. Commission on the target premium and then a much smaller amount on the "Excess". You should expect 50-80% for the FYC, again depending on the product.

senior-advisor-indiana · 03-15-2008, 02:40 PM

SPWL will pay 9-15% on lump sum. SPUL 70-80% for target and 3% on excess.

Dave020 · 03-15-2008, 02:48 PM

Originally Posted by senior-advisor-indiana

SPWL will pay 9-15% on lump sum. SPUL 70-80% for target and 3% on excess.

Cool, thanks. I knew it was lower than the traditional premium commission on regular WL/UL, but couldn't remember the range of numbers.

Basically it gets treated for commission more similar to an annuity than a life product.

Newby · 03-15-2008, 03:49 PM

It's usually from 7-14% and it's paid on the face amount not the premium. There can be quite a difference.

al3 · 03-15-2008, 04:10 PM

How do you define "target premium" in this context?

Al

senior-advisor-indiana · 03-15-2008, 05:47 PM

Originally Posted by Newby

It's usually from 7-14% and it's paid on the face amount not the premium. There can be quite a difference.

The companies I use pay on the premium, not the face amount. Was that a typo?

Newby · 03-15-2008, 05:55 PM

Originally Posted by senior-advisor-indiana

The companies I use pay on the premium, not the face amount. Was that a typo?

Hmmm. I could be wrong on most companies. Forethought, Monumental and NGL pay on the face of their single pay pre-need policies. I'm not sure if they all do the same on their final expense versions.

senior-advisor-indiana · 03-15-2008, 06:30 PM

Originally Posted by Newby

Hmmm. I could be wrong on most companies. Forethought, Monumental and NGL pay on the face of their single pay pre-need policies. I'm not sure if they all do the same on their final expense versions.

I haven't looked at Monumentals single pay FE, but I would bet that it is paid on the premium.

Steve · 03-15-2008, 08:50 PM

I've been getting 4% of the premium on single pay whole life

senior-advisor-indiana · 03-16-2008, 11:45 AM

You must be captive.

Steve · 03-16-2008, 12:16 PM

Originally Posted by senior-advisor-indiana

You must be captive.

At this time I am captive in a multiline (primarily P&C) group...

4% can seem low, but there are frequent bonuses and incentives built into the contracts that can make up a fairly significant amount.

senior-advisor-indiana · 03-16-2008, 01:00 PM

I was not saying anyhting bad. Just wanted to clarify the 4%.

Steve · 03-16-2008, 04:12 PM

I didn't take it bad at all -- Sorry if my reply made it seem that way. I've been captive for about a year now, and there are plenty of positive things about where I'm at... but I'm contemplating a switch to independent and focusing on life products. Maybe my response had an undertone of my ponderance.

theinuranceguy · 03-17-2008, 03:30 PM

Steve Dont Mind Indiana Jones, Hes Just Like That

senior-advisor-indiana · 03-17-2008, 03:35 PM

Originally Posted by theinuranceguy

Steve Dont Mind Indiana Jones, Hes Just Like That

Do you ever use apostrophes?

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theinuranceguy · 03-17-2008, 04:14 PM

Lol the english teacher is coming back out of you again Mr. Indiana

arnguy · 03-17-2008, 05:42 PM

Originally Posted by senior-advisor-indiana

Do you ever use apostrophes?

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Do you really think he knows what is an apostrophe?

Winter · 03-17-2008, 07:38 PM

Originally Posted by Steve

I've been getting 4% of the premium on single pay whole life

Just to follow up on this I asked Bysis/Crump what they pay on a Genworth permanent policy single pay (Lifetime Flex Plus/UL). They said it is based on target premium which you get off of the illustration. They pay 80% of the target premium and then 2% of the remaining 20%.

I ran an illustration on a 60 year old, standard , male, single pay 0f $20,000. After calculating the numbers based on the target premium, the payout looks like 6% of the single pay amount. I imagine if the client was rated preferred that the payout would be less, or your payout might be more if you have a better contract for Genworth products. But that is what it looks like to me as a rough sizing. Again, I dont think it can be directly calculated as a per cent of premium or face amount because you have to know the target premium, for Genworth anyway but it would seem to make sense for other companies as well.

Winter