agent companies have a limit of at
least $6,000 per policy. Most companies pay the producer when the policy
is issued and the initial premium is
paid, the report states.
After underwriting is complete and
a policy is issued, if the client decides
not to make the purchase after all, companies consider the policy “not taken.”
Five of the 42 companies polled charge
the producer a fee for such policies, in
addition to the charge-back of the FYC,
if paid, LIMRA says.
Most contracts between an agent
or a producer and a company include
clauses that describe the employment
relationship, the type of compensation paid during and after the contract
term, how each party can terminate
the contract,
requirements to
maintain the contract and activities
that are restricted after
termination, LIMRA says.
Eleven affiliated-agent
companies restrict the agent from
operating a sales practice within a
couple of years following the contract’s termination. Five companies
restrict sales for two years, and four
companies restrict sales for one year
following termination. Six of these
11 companies operate a multiline
exclusive-agency sales force, the
report states.
Affiliated-agent companies are
much more likely to have a perfor-
mance require-
ment to maintain
an agent contract
than independent-
agent companies,
LIMRA says. Most of
these companies require new
sales. A third of the inde-
pendent agent companies have
requirements, but they tend to be
minimal, such as one policy sold every
12 months.
Thomas F. Spinelli, CLU, FLMI, senior research director in LIMRA’s distribution research department, directed
the study. For more information, email
Distribution@limra.com.
—Julie Britt
Universal Life has been
UPGRADED.
Life insurance is issued by Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company, Columbus, Ohio, members
of Nationwide Financial. Nationwide, Nationwide Financial, the Nationwide framemark, On Your Side and Nationwide YourLife are service marks of
