IPB 136: Leaving One Life Insurance Company for Another

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No one wants to quit or be forced to change the primary life insurance company that they are writing business with. Unfortunately, there are times when it is unavoidable…either because the company has changed a key product or because a company decided they don't want to accept new business from you anymore.

We've experienced both on more than one occasion.

Here are a few things to consider if you're forced to make a change (by choice or by force):

1. Some companies have contract terms that dictate they can hit you with a chargeback when you leave their company and this extends for a year after the policy was sold. So, you can have your contract terminated and still be hit with chargebacks. Speaking from personal experience, not very much fun to be cut off from people you sold but also be on the hook if they decide to cancel.
2. Before you sign any contracting, please be sure that you fully understand your compensation.  Typically, the compensation schedule with a detail of all the terms is NOT a part of your contracting package. In many cases, you will have to force the issue here. For some reason, insurance companies, brokerage general agencies (BGAs), insurance marketing organizations (IMOs) and whatever other alphabet soup we're using today, are the only organization I've ever transacted business with that think it's odd for you to request details regarding compensation in writing. I know, it's weird. But I implore you to demand it (in a pleasant way of course).Also be aware (particularly with BGAs and IMOs) what part of your compensation is coming directly from the insurance company and what portion may be coming directly from the BGA/IMO.
   
   Here's a short story here to illustrate this point: Re:  back in 2013-2014 it took us over a year to get paid what we were owed on a policy that we sold.We never clarified exactly how we got paid or when.We later discovered that our expense allowance would come in “pieces” as it came to the IMO.The problem, no one ever clarified this with us so we had a downline that had written business, we even paid them their additional compensation but had not yet been paid what we were owed.
   
   If you are teaming up with a new IMO/BGA that is paying you an expense allowance, it’s not unusual for that allowance to be paid after the regular first-year commissions (FYC). Our point is that you need to know when to expect the expense allowance to be paid and how it is calculated.

3. You will very likely lose control of your old business if you leave a career situation to go independent or even join another career company.  I.e. NML to independent or NML to Prudential would result in your losing access to NML clients, both insurance and investment in most cases.
4. Moving over investment business is theoretically easier. There is a process for transferring your investment clients from an old B/D to a new one. But…we've both known of situations where agents came from 0ne company to another where the investment account transfers were gonna be easy peasy. Fast forward two years and the producer still wasn't in control of the accounts and had lost all of the compensation.
5. If you stop producing business with a specific insurance company as an independent agent you can lose access/control of those policyholders.  This shouldn’t happen in theory as an independent producer should always have access.  But some companies choose to do business this way.  It is a major headache when an appointment is terminated and then you need to provide service on the policy to your client.