LLC’s and Trusts: To Insure Properly or Not

The phrases that can strike fear (or should) in the heart of a personal insurance professional is when a client or prospect says: “My home is in a trust” or “I own properties in an LLC.” The practice of clients obtaining a trust or forming an LLC is becoming quite commonplace these days. In the…

The phrases that can strike fear (or should) in the heart of a personal insurance professional is when a client or prospect says:

“My home is in a trust” or “I own properties in an LLC.”

The practice of clients obtaining a trust or forming an LLC is becoming quite commonplace these days. In the “old days,” corporations belong in “Commercial” insurance and individuals in “Personal” insurance. There have always been those “gray” situations that neither wants to insure such as the insured who owns more than a “certain” number of single family dwellings. Personal insurers consider it a commercial exposure and commercial insurers will not touch them so agents have to get creative. LLC's and Trusts seem to be falling into another type of gray area. Honestly, contracts have not kept up so insurers have become creative.

LLC's: An LLC is a Limited Liability Company. It is a separate and distinct legal entity. It's owners are known as “members.” After the financial collapse in 2008, the bottom fell out of the real estate market. Sadly, many people lost their homes. People with money quickly recognized that they could pick up dwellings at a bargain and benefited from an increased need for rental dwellings. Many of these individuals opted to form an LLC to purchase these dwellings because under most circumstances, members are not personally liable for debts and liabilities of an LLC. Some insurers will issue housing fire policies with an LLC listed as the named insured- in some circumstances. This is a liability issue. Insurers are concerned (and rightly so) with getting an adequate premium for the exposure. If the members of the LLC are relatives ie: brothers or father and daughter, etc. then some preferred carriers are willing to name the LLC as the named insured. If the members are unrelated individuals then this would be a significant increase in liability exposure, which most preferred insurers are not willing to take on. (Insurers need to price for this exposure so it can be insured as well.) Therefore, it is important to understand which all the members of the LLC are and how they are related to each other to be able to have that discussion with your underwriter .

Trusts: Let's begin our discussion of trusts with a few definitions that are important.

“Grantor” is the creator of the trust and has the legal authority to transfer property.

“Trustee” handles the assets or property for a third-party beneficiary. The Trustee may also be the “Grantor;” but could also be a spouse, adult child or third-party to the beneficiary. They have a fiduciary responsibility to act in the best interest of the beneficiary.

The main purpose in setting up a trust is to avoid “probate” which can delay passing property to heirs, costs up to 5% of the value of the estate and opens the records to the public. The benefits of forming a trust are understandable especially when there are substantial assets to protect and keep private. When a trust is formed and a primary residence is transferred to the trust, the owner of the property is now the trust, which is a separate legal entity.

When the issue of naming a trust as the named insured first started many years ago, there was a “solution” which in most circumstances still is the fashion in which this situation is handled. Make the “owners” of the trust who are usually the folks that live in the home the named insured ie: Mr. and Mrs. Smith and list the trust as an “additional insured.” The argument was that doing this this way limited the liability of the trust to the residence awards (so what about vacant land owned by the trust?) It also gives the individuals living in the home CPL coverage and contents coverage.

There are only at least two problems with that. The trust legally owns the property- not Mr. and Mrs. Smith. If there is a claim- the check should be made payable to the trust who owns the property. The other issue is that the trust has a “Grantor”, “Trustee” and “Beneficiary”. These may be different people. The “additional insured” arrangement assures that the “Trustee” is living in the home. It gives no coverage to these additional individuals.

You as the Insurance Professional need to clearly understand who is living in the home and what position they play in the trust. I can think of only one preferred market who actually has an endorsement (Residence Held In Trust) who schedules the name of the “Grantor” and “Beneficiary”. It collects the Trustee is named as a named insured along with the trust. It resolves many of the issues not deal with by naming the trust as an additional insured. Again- it assumes the trustee lives in the house so may not be correct to use in every situation as the trustee may be a third-party, but at least it is a step in the right direction.

Preferred insurers need to deal with these contract issues and it appears that Agency Insurance Professionals are going to have to keep the pressure on the carriers to be able to absolutely insure their clients properly.

Agency or Producer Lead Generation – Who Should Prime the Pump?

Who is responsible to prime the pump and fill the top of the funnel? Many agencies and brokers expect their sales team to cold call, network, and send emails to build their own pipeline, and fill the top of the funnel. It reminds me of the old slogan, “Let your fingers do the walking.” The…

Who is responsible to prime the pump and fill the top of the funnel? Many agencies and brokers expect their sales team to cold call, network, and send emails to build their own pipeline, and fill the top of the funnel. It reminds me of the old slogan, “Let your fingers do the walking.” The slogan reported to the Yellow Pages, the omnipresent database of the time. Regardless of the database used, be it the online Yellow Pages, Google Pages, or an internally generated prospect list, the question still remains. Who is responsible to fill the pipeline, and what's the most likely path to success.

Today insurance lead generation encompasses many new tools to help producers prospect, including eMarketing, Social Media Marketing, Blogging and Web Seminar Marketing, in addition to traditional cold calling and networking. Agencies and brokers must also add their website to this mix of tools, as many broker websites are out of date, difficult to navigate, and are not mobile compliant. The mobile compliance issue is very significant, as mobile searches are now exceeding PC based searches.

Many producers find these new web marketing tools, and in general the lead generation aspect of their jobs, to be arduous and challenging. That's why so many producers fail, they are not insurance lead generation machines, nor are they savvy insurance web marketers. The results are self-evident, insufficient qualified prospects at the top of the sales funnel, usually translates into inventory results at the bottom of the funnel.

A better path to success for many agencies and brokers begins with a comprehensive and consistent insurance marketing and lead generation program, providing producers with an influx of quality prospects, so they can spend more time selling and less time prospecting.

Why do not more agencies invest in these types of programs?

  • They lack the internal resources necessary to execute these marketing initiatives
  • They plan on doing this type of marketing and lead gen, but never seem to find the time to get it done
  • They believe in doing business the old-fashioned way (I built my own pipeline and you can too)
  • They over invest in sales and under invest in marketing and lead generation
  • They tried it once and it did not work
  • They tried a short pilot program and did not see an immediate ROI

These are just a few of the reasons many agencies and brokers are unable to accomplish their insurance lead generation and top line growth goals. Regardless of the reasons, agency owners and executives should review current and past producer performance and determine if it's time to refine their insurance marketing and lead generation programs, to improve the path to success for their producers specifically and their businesses in general. Agencies, brokers and wholesalers lacking the knowledge and skills necessary to undertake these marketing and lead generation initiatives can seek assistance outsourcing assistance from profitable insurance marketing agencies as a viable alternative to internal staffing.

How to Sell Final Expense – Why Agents Fail In the Final Expense Business

The reason agents fail learning how to sell final expense is fairly simple. The unfortunate reality of sales, no matter the industry, is that 90% of all sales people fail or quit within the first 12 months of starting their sales profession. Why is that the case? The number one the reason agents fail selling…

The reason agents fail learning how to sell final expense is fairly simple. The unfortunate reality of sales, no matter the industry, is that 90% of all sales people fail or quit within the first 12 months of starting their sales profession. Why is that the case?

The number one the reason agents fail selling final expense is because they give up on themselves. They go into the business with aspirations that did not match reality. Looking from the outside in, many new final cost agents have the perspective that to succeed in final expense it is only a matter of going out and talking to people. If it were only that simple!

It takes time to learn the skills necessary to sell final expense successfully. Final expenditure sales training is something that takes months if not years to develop. A lot of new agents do not understand that sales is totally different from a typical salaried employee position. You have emotional ups and downs almost daily. Being on straight commission, you literally wake up every morning unemployed; you must “eat what you kill!”

If you do not have experience, there is nothing to really prepare you for it until you understand what that is like and you are living it. It is something that many people just can not handle.

Then the other reason people fail is because they do not get involved with the right agency to help train them, to prepare them for the realities. They get involved with a business that sells “Blue Sky,” meaning all the benefits to a lifestyle of Final Expense and none of the gritty work that it takes to succeed in the long-run.

Also, new agents fail because they get involved in an agency that is designed to short change them and squeeze the dollars out of them at a ridiculous rate. It ends up being a revolving door type of sales agency.

It is important that agents do their research on the front-end. Talk to different agencies. Get a feel for your managers personality type. Figure out who has been successful. How long agents have been working with them? Ask for proof. Are they transparent with what to expect as far as commission and percentage advances based on merit and production history?

What do you get for your investment? Because the manager makes money off of your production. You just have to make sure value is there. Take the time to ask these questions. Again, it is really important you are reading this because most agents do not go into this business even knowing what to ask, much less what to expect.

Many agents do not understand that you must come into this business with a business mindset. Most agents must buy direct mail, and will not have the benefit of a referral network or an existing book of business. Instead, they have to buy leads to get going.

My recommendation is to have about $ 4,000 to $ 5,000 to invest into a final expense direct mail lead system, or if you have less than that keep a full-time job and then also you know if you got $ 2,000 or $ 3,000 minimum into telemarketing final expense lead system.

You MUST start on the right foot. You MUST be prepared for the ups and downs. You MUST be willing to work through it with the understanding that the long-term is what makes it worth having. What makes it all worthwhile.

That's the reasons why most agents fail learning how to sell final expense. The important thing is to go into this with the right group that shows you transparently what to do. When you know that you have gotten that on your side it is really up to you.

Do you have the X-Factor to work hard and follow the system that is laid out upon you?

That's really the ultimate determine of your success or failure.

How To Sell Final Expense: Should Agents Follow A Script?

There are a couple of different perspectives in how to sell final expense; should your presentation be canned, word-for-word, following a specially designed script? Or should you follow a final expense sales process that is more open-ended, and not so scripted? The truth is this: if any method is validated by real-world results, it is…

There are a couple of different perspectives in how to sell final expense; should your presentation be canned, word-for-word, following a specially designed script? Or should you follow a final expense sales process that is more open-ended, and not so scripted?

The truth is this: if any method is validated by real-world results, it is probably going to work for the agent that gets to work and puts that method into practice. What matters most is to lock into a system that has historical proof of working, and works for your personality.

How you sell should fit your personality, first and foremost. For me, being more inquisitive and deliberative, I take what is known as the consultative approach to selling final expense.

The consultative approach is based on open-ended, non-assumative language through most of the presentation, which is designed to figure out why the prospect is concerned with what it is they are concerned with.

Surprisingly to many salespeople trained in the traditional approach to selling, there is very little usage of “tie-downs,” closed-ended questions, and the typical “hard sell” language most sales people are accustomed to using when selling business-to- consumer products.

Understanding that taking a consultative approach to selling final expense, there still is a path in which the agent follows, but there is certainly not a hard and fast script for most of the presentation.

There is repetition between presentations; the language, the emphasis, the words selected. Ultimately, a presentation is a unique occurrence independent of all other presentations. There will always be randomness, but following a specified progress is soonless important. As the legendary life insurance agent Ben Feldman once said, “A life insurance agent has to have a track to run on!”

Agents should learn how to approach each phase of the presentation naturally; they should know what to say and how to say it, but also develop their intuition and sense to know when to move to the next step of the sales process.

While there is very little scripting in sales process, where it exists, it is very important to memorize not just the word choice, but the body language and tone inflection. Final Expense agents should learn not just what to say, but how to say it. How to emphasize the importance of the points with correct body language, eye contact, and tonality in the voice is important when learning how to sell final expense.

The Lies Told to Insurance Agents

When you have been involved in the Insurance game as long as I have you come across some pretty disturbing practices done by a few (not many) of the companies that represent insurance products. This is not to say that everyone is out to take advantage of someone. Far from it. I think the reason…

When you have been involved in the Insurance game as long as I have you come across some pretty disturbing practices done by a few (not many) of the companies that represent insurance products.

This is not to say that everyone is out to take advantage of someone. Far from it. I think the reason a lot of abuse happens to agents is that companies and managers fail to understand the person they have just contracted to work for them.

Consider the following “lies” told to agents;

1) “You are an important part of this company” – If that were true then the focus would be on protecting what is important to your business. Consider a restaurant; it has to serve customers good food or it will go out of business. So a smart restaurant considers its customers to be the gold of the company. No customers, no sales, no business. Yet in insurance agents are no more than cattle. The focus for so many companies is to recruit, recruit, recruit. And once an agent joins on they are then left to fend for themselves. Some companies even penalize the managers if they fail to recruit a certain number of new people each month.

2) “If you follow our proven plan you will become successful” – I have yet to work for a company who did not swear by their training program. But here is the problem: most companies are plagued by high agent turnover. If the program was so great why can not more agents make it work? Because the programs new agents are taught is not the same programs top producers go by. Cold calling, knocking on doors, selling all of your friends and families is archaic at best. Yet new agents are brainwashed into thinking this is how to go. Do that and you will starve.

3) “You can make as much money as our top producers” – Yes you can but you probably will not. Why? Because in order to be successful you have to emulate success and no one tells a new agent how a successful agents really makes his money. Does he run the same 2 year old leads you do? Does he set all his appointments on his own or does he have some help? I am not knocking a top producer; you pay the cost to be the boss. But new agents have no chance.

Remember, success is able to be imitated. So unless you can imitate success, you are destined for failure.

Final Expense – The Truth About Final Expense Commissions

A common yet important question all final expense agents should ask is, “What can I expect to earn in the final expense burial insurance business?” The answer, of course, is, “It depends!” And this article will set out to define what to expect regarding commission levels and also to further investigate what details final expense…

A common yet important question all final expense agents should ask is, “What can I expect to earn in the final expense burial insurance business?”

The answer, of course, is, “It depends!” And this article will set out to define what to expect regarding commission levels and also to further investigate what details final expense agents need to be concerned with that factor into what they will absolutely NET (which is different from what they will GROSS).

For the most part, there is an inverse relationship between your commission commission level and the level of support you receive as an agent. However, many agents will attest that this is not always the case, as there are plenty of low-brow final expense agencies that con agents into low gross commission contracts yet do not provide a high level of support in return. Hopefully, with the knowledge gained from this article on final expense contracts, you will be able to determine which outfits will provide the best balance of value and gross commission levels.

Another reason I have written this article is that most agents get involved in the final expense business through the first person they meet; they have no benchmark to judge an offer against. Simply put, new final cost agents do not know what they do not know.

The Benchmark – Street Level Contracts

Street level contracts are defined entry-level contracts any agent can get without requiring proof of production. These are the highest no-production proof contracts new agents can get. Normally, agents can expect gross commission levels in the 100 to 120 first year commission percentage rate ranges.

So why do not all agents simply pick up street-level contracts? Because with the exchange in a higher gross, comes less involvement from the upline to train that agent. Additionally, there is rarely any support in the form of marketing for the street level agent, either. The agent is left up to his own abilities to find a marketing program, learn how to sell, and learn the nuances of the final expense business.

Most new final expense agents shack up with an agency on lower-than-street level contracts in exchange with the expectation of training, support, and access to a proven lead-generation system. Many of these organizations will require the new final expense agent to purchase his own leads, while others do all the lead management for the agent.

Agents that are responsible for purchasing leads usually have a better gross commission contract than those who have the agency manage the lead program to reflect the added investment on behalf of the agent purchasing the leads.

A good rule of thumb for new final expense agents is to work with a final expense agency that will provide training, support, and a lead program (optimally using your own money) and in return, you should have a gross first year commission level between 80 and 100 percent.

Smart final expense agents understand that there is a lot of training he'll have to undertake, from product selection, lead selection, underwriting, to salesmanship. all of these factors into where your commission rate should be. Finding a final expense agency that will provide all of this to you, along with you getting a feel that you get along with the manager responsible for you, is a great way to get started in this business.

Blue Sky and Unfair Contracts

Beware! Always be suspicious of the agencies that sell you on “blue sky” – IE, they show you money, cars, material possessions, et cetera. Many times these agencies gloss over the extreme level of hard work and emotional discipline that it takes to succeed, and excite you with the possibilities of being rich and famous.

Also, beware of agencies with super-low first-year commission levels in the 50 percent to 70 percent range that actually require you to buy leads at full pricing.

These agencies are committing highway robbery; the truth of this business is not everything you sell will actually stick, and you are at some financial risk from business that falls off the books and any advanced responsibilities you receive have to be repaid out of new business placed. Couple that with a full price lead bill, mostly likely in the several thousands, you have a recipe for financial disaster.

Ultimately, if you value support and training, and understand that you do not know what you do not know, you want to find a final expense agency that will provide you the tools to succeed in exchange for a short-term commission level reduction to reflect the value the agency is giving you. Yes, you do want to be at a street-level contract down the line, and if the agency is intelligent, they will show you to plan on how to earn you way to a top commission contract. Because, as first mentioned, your success is determined not just by what you make (your gross first year commission), but what you keep, which can be dramatically altered in a positive way by controlling lead costs, and optimizing your skill level to see more people and sell more insurance.

How to Choose The Right Insurance Agent for Your Needs

When you need coverage for your life, your house, and your automobile, it can be hard to know where to turn for the best rates and services. Use this guide to help you choose the right protection for your many lifestyle requirements. Availability You want to choose an insurance agent who will be there for…

When you need coverage for your life, your house, and your automobile, it can be hard to know where to turn for the best rates and services. Use this guide to help you choose the right protection for your many lifestyle requirements.

Availability

You want to choose an insurance agent who will be there for you when you need them most. This means you need to pick someone who is going to be able to give you plenty of time when you sit down with them. The best people to represent your coverage needs are going to be those that have a low workload. Try to stick with individuals and businesses who have less than 10 clients apiece. The less clients you have to compete with for attention, the more quality service you will be able to receive.

Variety

You may just need protection for your vehicle for now, but health, home, and life needs are not usually far behind. For this reason, you need an insurance agent who can help you with all the necessities. This is beneficial for a few reasons. First, you will not have to worry about dealing with different companies just to get the protection you want for common things, such as your home or car, and secondly, you often get discounts for bundling many services with one representative. Work with a person who can provide you with a variety of coverage even if you do not need a large selection right now.

Reputation

In the business of insurance, reputation is everything. Before you choose an insurance agent, ask your family, friends, and coworkers who they use for their protection and why they have chosen them. A great reputation usually means that a company handles claims within a timely manner, does not have huge deductibles, and offers fair and affordable service to all their clients.

Before you choose

As you embark on getting an insurance agent of your own, consider what your needs. If you require home coverage, for example, think of the common dangers in your area that you should be protected against. Flood, fire, theft, and even appliances breaking down are things you should take into consideration as you are applying for home insurance. In regards to your car, think about who will be driving your vehicle, and how many miles he or she will drive each day, to help you get the right coverage for your needs. For life insurance, you want to consider the recipients of your funds (should something happen to you), your age, and your overall health. A great representative will help you choose the right protection based on your unique factors.

Choosing an insurance agent is a wise way to make sure you always have the coverage you need for all your things, from expensive to priceless. The right agent will make sure you feel secure and confident in all your choices, so you can feel safe no matter what happens.

Know the Benefits of Hiring a Business Insurance Broker

Insuring your business is very essential, especially when your business involves lots and lots of risk factors. These policies not only cover you from such hindrances but also gifts you a peaceful life. Whatever the size of your business, policy coverage is highly essential. There are several professionals in the market, who can help you…

Insuring your business is very essential, especially when your business involves lots and lots of risk factors. These policies not only cover you from such hindrances but also gifts you a peaceful life. Whatever the size of your business, policy coverage is highly essential. There are several professionals in the market, who can help you choose the best policy for your company. If your business is a small one, go for an agent. But if it is a big one considering hiring an insurance broker.

Comparing Sites Does Not Prove Beneficial Every Time:

There are many people who depend on the internet for selecting the cheapest business insurance policy. But this does not prove beneficial all the time. Comparing various sites for getting the most affordable policies may not always give you the best results. Here, it is always better to take help of the broker who is highly skilled and knowledgeable in this subject.

Here Are A Few Advantages Of Hiring An Insurance Broker:

There are multiple reasons for which, you should hire a broker.

Comparison sites never give you best results for your research because they try to promote the products of the companies who pay enough contracts to these websites for selling their products. These things never happen with the insurance broker. They ask for a nominal amount from their clients and in exchange of that genuinely helps them to buy the perfect policy.

• Know The Various Options:

When you directly approach an assurance company, they never offer you or discuss with you about all the variety of insurance policy that they offer. But with the help of a broker, you get the opportunity to know every policy in detail. They even help you point out the various types of policy covers that your business might need to stay secured from every kind of risk factors.

• Helps You Finds The Perfect Policy:

Brokers will analyze the risks factors and dangers that your company mostly faces and also requests you about your demands and requirements for selecting the right policy. They will also help you know whatever your existing policy needs an upgrade. Moreover, they know every detail about the various insurance companies in the market and then, can help you find the best policy for you at a reasonable price.

These are some of the most common advantages that you can get by hiring a broker. Apart from these, there are various other advantages that your insurance broker may offer to you and your business.

A Strong Insurance Lead Generation Program Should Include an Educational Webinar Series

Insurance Webinars help showcase expertise, demonstrate thought leadership and elevate the conversation from insurance sales to partner and consultant. When combined with insurance email marketing and social media marketing campaigns, they can be a powerful source of leads.

Insurance Webinars help showcase expertise, demonstrate thought leadership and elevate the conversation from insurance sales to partner and consultant. When combined with insurance email marketing and social media marketing campaigns, they can be a powerful source of leads.

How to Become a Property/Casualty Insurance Agent

Once you have decided that a career as a professional Property / Casualty Insurance Agent is what you would like to pursue, just how do you go about accomplishing that? The following steps are required: • Obtain a Property / Casualty agent / Broker license . Insurance is state regulated so you will need to…

Once you have decided that a career as a professional Property / Casualty Insurance Agent is what you would like to pursue, just how do you go about accomplishing that? The following steps are required:

Obtain a Property / Casualty agent / Broker license . Insurance is state regulated so you will need to get your license from the state in which you stay. There are schools specifically geared towards providing the continuing education hours required to get your license. They also usually have preparation classes specifically for taking the test and offer continuing education that is required to renew your license every two years. Most classes are available online.

Become educated in the insurance business . Some universities offer degrees in insurance but they still tend to be somewhat rare. Insurance carriers used to offer training for insurance agents but that is not as prevalent as it once was. Insurance agencies will sometimes hire inexperienced people but the training may be haphazard. If a carrier or local Insurance Professionals offer a “Producer School,” this can give you a very good basic education while gaining experience.

Determine how to gain access to markets. There are several options:

o Join an existing independent agency as a “Producer”. The agency will manage the business, give you access to markets and provide office space with possibly clerical support. Typically you do not “own” your business.

o Join an “Aggregator.” These are operations with access to markets which would allow you to operate as your own business but rarely give you direct access to markets or binding authority. (Binding authority allows you to provide coverage without confirming with the carrier first.) Typically you do not “own” your business.

o Join a “Cluster.” These are agencies that work together to pool their business to create a bigger “presence” with a carrier. This allows them to optimize growth and volume bonuses. This is usually not an option for a new agency.

o Join a “Captive.” These are insurance carriers that hire agents to represent them. They provide infrastructure to manage your business but the inflexibility of representing just one market. You may or may not receive renewal commission. You may or may not have “binding authority.” You may or may not “own” your business.

o Open your own “Independent Agency.” “Preferred” Insurance carriers look for a minimum of 3 years loss ratio experience to consider “appointing” an agency. “Standard” markets can be easier to get appointed with. Optimally, you will want to build your business with “preferred” markets to earn bonuses and for your business to have a much higher value if you want to sell it at some point.

o Join a “Hybrid” organization . These agencies provide infrastructure to manage your business and direct access to carriers. They typically allow you to operate as an independent entity but pools business to maximize bonuses. They give direct access to carriers they represent and allow ownership of business.

All of these options have varying commission levels and / or fees. They will also require that you sign contracts. These contracts vary wildly so it is imperative that you read and compare contracts before you sign.

Learn how to sell . Selling Property / Casualty insurance is unlike any other type of sale. You are not selling a tangible object. You are selling various contracts that promise to perform when there is a loss. The public does not understand insurance. Whether they realize it or not, they need professional advice in most situations to identify their best solution. This is a sale based on educating the client and listening to their needs. We call this “needs” selling or “consultative” sales. Professional Insurance Agents put the needs of the client before their own. They leave the “hard” sell to people selling other types of products.

That's it! Do your homework and you will have a very lucrative and fulfilling career in front of you.