A MUST-SEE for new final expense agents - beware the fine print in final expense agency contracts - this information will literally SAVE your final expense career!
While it's important to understand the financial numbers behind how to sell final expense, I am excited to provide important information most new agents aren't aware of regarding the proverbial ‘devil in the details’ when it comes to signing a contract with a final expense agency.
Every day, a bad final expense agency somewhere is screwing over a new agent. Misrepresentation and hype gives my industry a bad name, so much that many potential final expense agents wonder if selling final expense insurance really is a good career.
The purpose of this presentation is to show you what to look out for as a new final expense agent. Also, I will discuss the contracts that agencies give you so that you are better informed when it comes to selecting the best sales opportunity for the short- and long-term of your career. Lastly, I will talk about how to make sure you're not getting involved in final expense relationships that are hazardous for your career.
This is the legal disclaimer: I am only a final expense agent. The information provided is not intended to be consumed as legal counsel or advice, but understand it is purely informational in scope. This is not designed to be specific legal counsel. This is just information; you use it to the extent that you feel necessary. Please consult a professional, licensed attorney for any questions regarding final expense agency contracts. Again, I am not a lawyer; I'm just an agency operator and a final expense agent expressing personal commentary about what I see wrong with how many a final expense agency will treat their agents.
With the legal disclaimer behind us, let's get into the final expense agency contract discussion.
First of all, final expense agency contracts are used to reduce legal and financial risk exposure to the agency. Contracts are designed to protect both parties, and to expressly discuss the responsibilities of each party in the business relationship. It names specific rules of procedure so that there's no confusion on how the relationship is supposed to work.
Regarding final expense agency contracts, most are designed to give the agency extreme leverage over the agent. They're designed to penalize agents, and extract more control from the agent to the agency regarding commissions and business.
Final Expense Agency Scam #1 - "The Company Named After A President"
Now let's talk about some final expense agency contracts in specifics. The first contract you'll see is regarding, "The Company Named After a President." If you watch my videos, it should be obvious as to which one I'm talking about. If you've done any due diligence regarding final expense agencies, you'll know exactly who I'm speaking about.
What we're going to talk about with this particular contract is what's called 'vesting'. Vesting refers to when you sell a final expense policy regarding commissions and renewals. With the company named after a president, they stipulate that vesting does not occur until two years after the agency agreement is in effect. This contract further clarifies that compensation payable under the contract will be forfeit if the agency contract is not vested.
What does all this legal mumbo jumbo mean? The takeaway point here is that if you terminate the contract or if you are terminated, that agency owns all future income to the company, your future income becomes the company's-- most likely, your direct report, your up-line that trained you/will train you.
Here's some food for thought: what if you're terminated in month 23 of your final expense agency contract? You've got a lot of business on the books after 23 months; what happens to that commission that you haven't received yet? The commissions and the renewals become the ownership of the agency. And yes, you signed off on this. There's nothing that you can legally do.
What if you hate the final expense business? We all think we're going to get in this business and succeed. But many people just don't like it for whatever reason. What if you did 6 months and you hate it and you want to move on? What happens? With the company named after a president, you will be terminated. Your renewals and commissions you haven't received become the final expense agency's.
Let's call it what it is - it's bullshit. Independent agents are IMMEDIATELY vested. If you leave an independent agency and did not sign off on a vestation contract, your renewals come with you.
Most new agents don't have any idea about the subject of vesting. This is one of the biggest things that a big final expense agency will do to make the most money possible. In the company named after a president, it's the managers make the big money, not the agents, and pilfering agents' commissions and renewals is why.
(Note: If you want to know more shocking things agencies try to one-up final expense agents on, make sure to check out my article detailing the dirty truths about selling final expense insurance.)
Final Expense Agency Contract Scam #2 -"Very Popular, High Google-Ranking National Final Expense Agency”
Hopefully, you understand why I don't give out specific names of final expense agencies. However, if you've done any type of due diligence via Google, you've probably run across these guys.
Just like most final expense agencies, these guys look great on the surface, but have a number of festering issues beneath the surface designed to screw over agents.
Have you seen the movie Braveheart? In the movie, nobles would exact "jus primae noctis" on newly-married couples (I'll let you Google "jus primae noctis"). Jus primae noctis in the context of a final expense agency allows them to "own" you, preventing you from pursuing advantageous relationships outside of their influence.
Let's go into specifics. According to this particular final expense agency's producer contract you MUST sign to work with them, if you terminate your final expense agency contract with this agency, you must return all leads and any referrals gained to the agency including from third-party associations like lead vendors that you paid FULL price for. While this may sound reasonable on the surface, this particular agency does NOT pay for your final expense leads.
If they DID pay for your leads, then they own your leads. You should return them. The point here is that you pay for your leads full retail cost. They simply referred you to that lead relationships. They're demanding that you have to send not just the leads, but also referrals that are generated by policy holders who were sold policies through this particular agency. They claim legally they own BOTH your referrals and your final expense leads, even though you paid full price from them. How stupid is that?
I will acknowledge that it's one thing to PUT silly language into a final expense agency contract. But can actually follow through? I can't say for certain. But the fact they're putting this restrictive garbage in a contract MEANS they have thought through ways to take legal action against agents.
Let's continue analyzing this final expense agency contract scam. Further investigation shows that agents may associate with other life insurance companies, ONLY with prior consent from the agency. And that's whether or NOT the current agency even OFFERS the carrier to contract with!
Simply put, you're a slave to this final expense agency. Let me show you how. Let's say you find a great final expense carrier, or even a great life insurance company to offer non-final expense products like term insurance.
The problem still remains. You still have to get "permission" from this agency to run your business the way you want!
If you leave this final expense agency, you also agree not to associate with any current or past carriers the agency was associated for 1 year. So, if you worked 6 months, then quit, not only are CURRENT relationships with carriers at jeopardy, the past relationships, even if this final expense agency currently doesn't DO business with them!
If you decide to leave them, they own you for the next year on current and past relationships.
The real kicker is this: how do you know who your former agency has had an association with? What if the agency does a bad job for you? Too bad. You're still screwed!
Hopefully, it is obvious how silly the restraints are on the individual final expense producer. But you cannot think, "OK, it's just a contract, who cares? How would the final expense agency follow through on this? " Here's where it gets ugly.
The consequences of breaking these rules is that the final expense agency contract stipulates that all future commissions and renewals become the property of the agency.
For example, if you leave this final expense agency, associate with a former carrier the agency used to work with but does not currently, you're toast! If the final expense agency you left finds out, you have signed off saying that they have permission to take your commissions and renewals.
When you come aboard, you are a captive agent to their final expense agency. They own you! And the sad thing is agency presents themselves as the "aw-shucks, family-oriented, religious piety" type of organization. But is that truly the case, after taking a hard look at how prohibitive and potentially-damaging the final expense agency contract can be?
It's actually very simple for this final expense agency to claim "breach of contract," and take your remaining first-year commissions and renewals as settlement. Every state's department of insurance publicly lists each licensed agent, and which carriers they are with.
These particular final expense agency contracts are so one-sided and designed to screw you as an agent. How can you trust these agencies?
A conversation about final expense agency contracts must cover what he ideal final expense agency contract actually is.
The ideal situation is to only sign carrier contracting. Every carrier has a specific contract to sign. The contracts will stipulate commission levels, what will lead to termination, etc. When an agency provides their own contract in addition to the carrier contract, be worried about more disclaimers and contingencies. Most likely this means the agency is attempting to pull "gotcha clauses" on you to take away your hard-earned commissions.
That's how these final expense agencies make a killing as managers. They take over renewal streams and commissions that were earned by the terminated agent. You must be totally aware of what you are signing.
Remember the best final expense agency to get involved with is the one that has both short-term and long-term advantages. Get involved selling final expense with an agency focused on providing you the short-term advantage of training, but also the long-term ability to grow.
There are agencies like mine, at Final Expense Agent Mentor, where I don't have anybody sign a final expense agency contract above and beyond what the carrier signs. You know exactly how our relationship works, and how I deal with my agents. I want our relationship to be simple, straightforward and transparent with no bullshit!