Life Insurance Question
I work for a broker dealer that is owned by a Life Insurance & Annuity company. I have been getting frustrated that I have to give the house half my commission when they aren't providing me with any benefits, administrative support, etc. Therefore, I had wondered if I could place my life insurance business independently outside of the company if it's fixed business. I had asked the compliance manager in my office, they told me that even if it's fixed, it would be considered selling away. However, I thought that only applied to variable business. Can someone help with this?
It depends on the contract you signed. However, as a general rule even if the contract allows you to sell outside, as a broker dealer they have to approve your outside business anyway. So if you sell a lot of business for them and want to place some outside, they will approve it, if you try to cut them out, it is considered selling away.Some are really more flexible then others.
“Therefore, I had wondered if I could place my life insurance business independently outside of the company if it’s fixed business. I had asked the compliance manager in my office, they told me that even if it’s fixed, it would be considered selling away. However, I thought that only applied to variable business. Can someone help with this?”
First, let’s clarify a few things here. You specifically refer to life insurance business, so, when you say “fixed” – do you mean “non-variable” business? Whole life, UL? Second, when you say variable – are you referring to VL?
That said, yes, as ttain said, it depends on the contract you signed. I have producer contacts with several carriers (PPGA contracts and the like). I also have several producer contracts with large firms – let’s say the Crump’s of the world – as well as several broker contracts with large general agencies. However, I can place UL and WL wherever I want – and my B/D (my old B/D) has zero to say about it. Yet, VL or private placement coverage, must go through the B/D (my old B/D).
Sorry, I am late to respond. I should have answered earlier it depends on the contract you signed and on how much the mother company likes you. If you have a large existing book of business, Life Insurance companies are very flexible. If you already sold 30 million in premium on their book, and you sell a new 10 million face whole life policy, you can place half of it with them and another half with another company. They will approve this because the alternative is that you will leave and so will a large portion of the book of business. However, if you sell 30,000 in life premium a year and have lousy lapse ratio, they wont let you sell outside. You will make more money in the long run if you were to go independent. When you are independent, you can sell almost any product you wish. Only Northwestern Mutual claims you have to be appointed with them to sell their products. While that’s true, if you have a large case, you can always find a Northwestern Agent to 1099 you if you are independent and have a large permanent life insurance case. You can broker with NY Life, Mass Mutual, Penn Mutual very easily for large cases. You don’t need an agent contract or get contracted with their broker/dealer to sell their products.
Hi. I completely agree with Ttanin. It depends on the contract also as a general rule even if the contract allows you to sell outside, as a broker dealer they have to approve your outside business anyway.