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Understanding An Agent's Commission | IBC Global, Inc - YouTube
Channel: Insurance Business Concepts (IBC) Global
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does your agent have your best interest in mind聽
meaning I'm setting up a high cash value life聽聽
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insurance policy and is it truly maximized am I聽
using the right company the right policy design聽聽
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how do I know that the money I'm paying in if my聽
goal is to optimize the cash value how do I know聽聽
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that the dollars humping in our truly set up for聽
that purpose maximum cash and extra isn't been聽聽
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being taken to enhance compensation to the agent聽
or a different company is used for ever reason so聽聽
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to get into this when we set up policies there聽
are several different ways and companies we can聽聽
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set high cash value life insurance policies up聽
with and to be clear I am emphasizing maximizing聽聽
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the cash value of a life insurance policy when聽
we set it up to optimize the cash value there's聽聽
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two things that an agent has to know or be聽
aware of one they have to know how to design聽聽
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a policy properly and then to be willing to do聽
something so I will say that a lot that we've聽聽
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encountered over the years and we do train a lot聽
of agents we've got one-on-one training and then聽聽
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also virtual training for many with their programs聽
but many fall into the category of not knowing how聽聽
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to design properly lacking knowledge and it takes聽
time to learn and the insurance industry in itself聽聽
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is not that well-equipped so the first thing when聽
it comes to policy design we talk about this all聽聽
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the time you pay a dollar into a policy it can go聽
toward the premium or towards the PDA writer if聽聽
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we are trying to maximize the upfront cash value聽
which will maximize the long-term cash value as聽聽
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well especially based on the guarantees which is聽
what we want to look at we should see right off聽聽
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the bat 80% as the minimum and then upwards with聽
some high early cash value products 90% typically聽聽
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with a strong long-term product we'll see between聽
85 and a little over 90 percent in the first year聽聽
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he 85 to 87 we see a lot which is strong but聽
somewhere in that neighborhood we also have to聽聽
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know how or be aware of the company limitations so聽
what this means is whatever company or companies聽聽
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are familiar with with as an agent or recommending聽
to a policyholder what are their limitations how聽聽
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much can I add in the PUAs is it three times聽
does that turn in 10x or no limits when I use聽聽
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different writers and such can I request a loans聽
through a mobile app is it direct deposit is check聽聽
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whatever it might be knowing the different company聽
limitations and such and then also we have to be聽聽
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well versed or or understand the mech testing and聽
mech limits on a life insurance policy you know聽聽
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if we want to fund a policy for a long period聽
of time and optimize the upfront cash value if聽聽
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the posses not set up right and dividend rates go聽
down something happens we cut a term writer - too聽聽
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early you can run into a mech and now we've got聽
a problem all of a sudden so we don't want that聽聽
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to occur an agent has to know how to prevent聽
that from happening how to stress test the聽聽
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policy upfront so you can tell I'm going through聽
a lot here it takes some time to understand the聽聽
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ins and outs here's the other side we've got聽
to be willing as an agent so firstly on the聽聽
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policy design money can go where premium or the聽
PUA Rider compensation to an agent is primarily聽聽
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driven off of the base premium piece so we promote聽
the ten ninety split all the time and where that聽聽
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came from at ten ninety split is a lot of the聽
larger companies that we prefer that's about聽聽
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as low as you can drive that base premium some聽
smaller companies let you go lower but with the聽聽
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top carriers that have always delivered that 10%聽
premium we're squeezing it as low as the company聽聽
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will allow now we've got a lot of resistance from聽
that from competitors other agents over the years聽聽
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saying that I can't be done because it'll Mac聽
or it just can't be done they leave it at that聽聽
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the thing is if you squeeze premium down that聽
does minimize the compensation especially the聽聽
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upfront Commission more than anything else on聽
a life insurance policy off of the base premium聽聽
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plowing everything else in the PAS the other thing聽
is the company selection so if you've watched any聽聽
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of our content you've heard me use the words that聽
big four are the four major mutual companies so聽聽
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many times so when it comes to those particular聽
companies the reason I recommend them is I've see聽聽
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proof that they've always delivered the highest聽
actual cash values the thing is those companies聽聽
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the big four all right in offer life insurance in聽
the state of New York another smaller company does聽聽
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as well security mutual life many other carriers聽
do not write insurance or offer it in the state of聽聽
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New York we're not going to mention any names聽
here but if you're not being presented one of聽聽
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these companies there is a good chance that if聽
you live in New York you won't be able to able聽聽
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to obtain a policy through an alternative carrier聽
here's where I'm going with this the state of New聽聽
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York does regulate commissions if an insurance聽
carrier writes business in New York it impacts聽聽
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their commissions in all states so if you are a聽
top top producer meaning you're doing millions of聽聽
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dollars or hundreds of thousands of dollars in聽
premium in production with insurance companies聽聽
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they are going to how can I put a bid for your聽
business and pay you the highest rate to get聽聽
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you to replace business with that so if you're聽
using one of these companies that right in New聽聽
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York the highest you can get a commission on the聽
base premium and this is in the first year is 93%聽聽
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most will start out between 50 and 55 percent聽
until you get up to that level where they say聽聽
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okay you've done business you're proving we're聽
gonna pay you a higher rate but I'm showing the聽聽
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top levels here this is year one and then after聽
that years two through ten there's typically a聽聽
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5% renewal in p-waves pay anywhere between two to聽
three and a half percent p-waves they do pay some聽聽
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Commission but they're very level with the company聽
that is not contracted in New York don't pay up to聽聽
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a hundred thirty percent in the first year in聽
premium so to clarify if I have a policy design聽聽
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let's say it's a ten ninety split with a ten聽
thousand dollar base premium and a ninety kPa you聽聽
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see where I'm going with this one of the companies聽
that aside from the compensation have actually聽聽
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delivered strong cash values to consumers would聽
pay a absolute max of $9,300 a smaller company聽聽
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would pay thirteen thousand dollars okay I see聽
a difference there now we're going back to have聽聽
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to be willing here's the other thing will promote聽
off then a ten ninety split and again the reason聽聽
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why it maximizes cash value for the consumer exact聽
same thing that we do for banks and corporations聽聽
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which by the way use these guys we just put a聽
Boley into force for a bank a bully policy guess聽聽
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what two carriers came up top there's a smaller聽
community bank match always has a good product聽聽
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New York Life does as well with mass and guardian聽
Bank they're not going to use small companies they聽聽
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want the companies that have delivered but aside聽
from that to get back on point here 1090 split聽聽
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so we're minimizing compensation maximizing cash聽
value that's the main thing now we'll hear from聽聽
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others that use other carriers they put it over聽
here often a forty sixty perhaps it's a 30/70聽聽
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a much higher base premium with a much higher聽
compensation route and what we get as feedback聽聽
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or what you might hear is all you don't want to聽
go with a 1090 split because it might mek down the聽聽
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road millivolt if it's designed right if you know聽
how to actually construct the policy and stress聽聽
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test it's the won't mech then the next argument聽
you might hear is you need a small to medium-sized聽聽
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company to practice IBC or that's the direction聽
to go which is not the case makes no sense you can聽聽
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practice IBC or utilize cash value life insurance聽
policy how utilize cash value life insurance and聽聽
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loans and such with any cash life insurance policy聽
seriously when you look at how policies function聽聽
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so really when the agent has to be willing where聽
I'm going with this is if they're recommending聽聽
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a smaller company and it's with a higher split聽
knowing that okay now that I see the split and聽聽
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I understand what the compensation incentive for聽
them is is this truly in my best interest if I the聽聽
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consumer can have more cash up front and long-term聽
why is it not being recommended and if there's聽聽
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a reason for it then we want to hear that out聽
obviously but hopefully this was helpful in terms聽聽
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of providing some transparency in the insurance聽
industry and such if you have any questions or聽聽
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would like to see any custom proposals feel聽
free to reach out and as always hope this聽聽
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helps hey guys Steve Parisi here if you enjoyed聽
the content you just saw please subscribe like聽聽
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and hit the notification bell for future videos聽
if you'd like more information or to see some聽聽
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custom policies for yourself feel free to call or聽
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