What is the game that insurance agents play when they buy (pay for) clients insurance?

Question

I heard that insurance agents keep good production figures in their company thereby good pay by buying insurance. How is that game played?

Answer 1

It is HIGHLY ILLEGAL for an agent to pay for his clients insurance. This is called rebating. Not only is it illegal, it also makes for unfair competition.

If an agent pays a months payment for a client in order to get his business, naturally he's going to go with that agent. When other agents are out there trying to write business legitimately, they cannot compete.

Example:

Let's say one agent makes a proposal for a policy with a monthly premium of $50 a month. Then another agent makes a proposal, and his premium is $50, but he pays the first payment. With both policies the same, the client would likely go with the one that his first year premium is $550, instead of $600.   ($600 - $50 = $550.) Although this is illegal, there are unscrupulous agents out there who will do this to make a sale to qualify for a contest.

Let's say the above is an example for a life insurance policy. In this scenario, if the agent's first year commission is 80%: $600 X .80 = $480 - $50 (for payment of 1st premium), the net is $430. The agent still made money.

Another way an agent might consider paying a premium is when the end of a qualifying period for a sales contest is coming up, and a policy is about to lapse due to  nonpayment, he might pay that one months premuim so it won't lapse and cause him to be disqualified to win the sales contest.

It's against the company's policy, contest rules, and it's ILLEGAL.

Answer 2

Good experience you might get here.

http://insurance.online-assistant.info/i...

Answer 3

The premium on any policy is ALWAYS more than the commission earned for selling it.  If any insurance agents actually play this game, it DOESN'T work and they will eventually either rip EVERYONE off, or collapse into bankruptcy.

Answer 4

If an insurance agent is paying for premium, it is called rebating.  In many states this is illegal.  If reported to the insurance commisioner, they will face a fine or loss there license.

Answer 5

Better check the reliability of your sources.

Answer 6

In NJ you will get into a lot of trouble doing that. It is so not worth losing your license over.

Answer 7

That's illegal, to pay for a client's insurance, or even to pay part of it, or rebate some of it.  You'd get your license pulled for doing that.

You get paid, based on what you sell.  An agent averages 10% commission.  So you can't pay $1,000 for a policy, to get $100 in commission, and call that "good pay".  

New agents might "fake" clients or sign friends up for a month or so, not realizing that it takes about 2-3 months after a policy is written before they get paid, AND, when the policy cancels, the commission is SUBTRACTED from their next check.

Whatever "game" you're talking about, is in someone's imagination.  It doesn't work in the real world.