The Terms of Our Strategic Partnership

The Terms of Our Strategic Partnership

Commission splits and other compensation details.

Who should participate in a strategic partnership with my firm?

As mentioned in my paper, “Why You Need an Impaired Risk Life Insurance Broker on Your Financial Services Team,” two types of financial services firm generally thrive in a strategic partnership with my life insurance brokerage:

1. A firm with core proficiencies outside of life insurance, such as in financial planning, investment management, or employee benefits, can utilize our talents to handle all life cases professionally. Life insurance can become a major source of revenue.

2. A firm that is well-established in closing jumbo and/or low-cost term cases may not have the prequalification system in place to effectively handle substandard cases. My brokerage can then be brought in to close those sales. The firm now has the capability of handling all levels of risk.

In both cases, the business model of the financial services firm calls for outsourcing specific client services to specialists with expertise in that particular field. It also upholds the standard of an approval at the rate quoted, and supports prequalification as the means of accomplishing this goal.

The commission split.

The typical commission split is 50/50. This includes both broker-level commissions, and any GA overrides that are applied.

Minimum premium commitment.

My brokerage will take on cases with a client commitment to $2400 or more of annualized premium. Smaller cases may be accepted on an exceptional basis, and the commission percentage for the referring firm can be reduced.

The commission payment.

The referring broker will go down on the app as a service agent. They will get paid directly from the carrier and the GA. Since they are on the app, they will have access to policy data directly from the company.

If the referring broker is already appointed to the carrier on the sale, then one of the following options will be utilized for payment:

1. A dual appointment to the carrier through the GA I am using on the sale;

2. If the carrier refuses (which is not often the case,) we will attempt to utilize a single case agreement;

3. We may also seek to get you paid through your GA while I am getting paid through mine.

4. Our ace in the hole is to pay you through my payroll service. Of course, that will prohibit your direct access to policy data from the carrier.

The sale of simplified issue and guaranteed issue policies.

The sale of these products is handled differently. I will still prequalify the client, but you will manage the sale and receive 100% of the commission. See my paper, “The Sale of Simplified Issue and Guaranteed Issue Policies” for details.

Policy audits and repeats sales.

The client’s life insurance coverage should be audited every year. It is possible they qualify for a lower rate due to an improved medical condition or change in lifestyle. They also may need additional coverage, or to change the beneficiary designation. An overview of the policy audit can be found here:

Once you initiate the audit, you can bring me in and we will collaborate on the sale. The usual 50/50 split will apply. If you choose not to conduct the audit, and the client connects directly with me, then I will handle the case exclusively and pay you a gratis of 5%

Referral fees.

Compensation is available for firms and brokers who refer other brokers to my firm. Eligibility is based not just on the volume of potential business, but on the quality of the cases, and very importantly, on the capability of the broker to thrive within the prequalification model.

Requests for other products.

If the client asks me for a request for another financial product, such as disability insurance, mutual funds, etc. I will refer them to you. If you do not have someone to recommend, I will offer the services of someone I know. You will work directly with that person, and I will not participate in the sale.