Final expense agents need to ask the following question: “What are my chances of making a living in final expense burial insurance?”
It all depends! This article will outline what you can expect in terms of commission levels, and then go on to investigate the details final expense agents should be concerned about that factor into their final NET (which will differ from what they will gross).
There is a generally inverse relationship between your gross compensation level and the support you get as an agent. Agents will tell you that this isn’t always true. There are many low-brow agencies that offer low commissions but provide low support. With the information gained from this article about final expense commissions, hopefully you can determine which outfits provide the best value and gross commission levels.
Another reason I wrote this article is because most agents start in final expense business by meeting the first person they meet. They don’t have a benchmark against which to compare an offer. The bottom line is that new final expense agents don’t know what they don’t know.
Street Level Contracts
Street level contracts are entry-level contracts that agents can obtain without the need for proof of production. These are the highest-level no-production proof contracts agents can obtain. Agents can usually expect gross commission levels within the 100-120 first-year commission percentage rate ranges.
Why don’t agents just pick up street-level jobs? The exchange with a higher gross means that there is less involvement by the upline to train the agent. The street agent does not receive any marketing support. It is up to the agent to create a marketing plan, learn how sell and understand the details of the final expense business.
In exchange for training, support and access to a proven lead generation system, most new final expense agents will sign up with agencies on lower-than-street-level contracts. These organizations may require that the final expense agent purchase his own leads while other agents manage the leads.
Agents who are responsible for purchasing leads typically have a higher gross commission contract than agents who have the agency manage it. This is due to the additional investment made by the agent purchasing the leads.
For new final expense agents, it is a good idea to partner with an agency that provides training, support and a lead program. In return, you should receive a gross first-year commission rate between 80 and 100 per cent.
Final expense agents who are smart understand the importance of training. This includes product selection, underwriting, and salesmanship. All of these factors will impact your commission rate. It is a great way for you to get started in this industry by finding a final expense agency who will give you all of this and also get to know the manager.
Unfair Contracts and Blue Sky
Beware! Be suspicious of agencies that promise you “blue skies” – i.e., money, cars, possessions, etc. These agencies often gloss over the hard work required to be successful and the emotional discipline needed to do so. They excite you with the possibility of becoming rich and famous.
Beware of agencies that charge low first-year commissions in the 50-70 percent range. They may require you to purchase leads at full price.
These agencies commit highway robbery. The truth is that not all the products you sell will stick. You are also at risk of losing business. Any advance commissions you receive must be repaid with new business. This is a recipe for financial disaster when you add a full-price lead bill, which is most likely to be in the thousands.
If you value training and support, and know that you don’t know everything, then you should look for a final expense agency. They will give you the tools you need to succeed, in return for a reduction in your commission to reflect the value they are providing. You do want to work at street level, but if you are smart, the agency will help you plan how to get to the top. As I mentioned earlier, success is not determined by how much you make (your gross first-year commission), but by what you keep. This can be drastically altered by controlling lead costs and optimizing the skills level to sell more insurance.
