3 Gotcha Clauses In Your Final Expense Contract

By David Duford - May 10, 2023 - 5 Mins Read

Aspiring final expense agents: did you know there are several gotcha clauses in many final expense agency arrangements that may potentially damage if not outright end your career, BEFORE it starts?

I’ve sold final expense since 2011 and have recruited agents since 2013, and I have seen a multitude of terrible final expense contracts through the years. 

Today, I want to give you a heads up on the most pernicious gotcha clauses and what steps you can take to avoid them:

1. Non-vested.

In short, if you’re “vested,” this means you own your book of business. So, when you are “non-vested,” the business you think you’re building for yourself is ACTUALLY your upline’s!

It’s a sad fact; there are many organizations – many in which you’ve heard of – that actively restrict ownership of the business you write for two, three, even 10 years! 

And with many of these organizations, even if you’re terminated not for cause (for example, the agency owner doesn’t like you anymore), the non-vesting provision still stands, and you lose your unearned residuals and unearned first year commissions.

2. Releases.

Getting a “release” refers to your ability as an agent to move your carrier appointment from one agency to another.

This is important because if you’re recruited into an agency and promises of support, training, leads, etc., weren’t kept (which happens frequently), you want to have a “Plan B” to reorient yourself to another agency that will be a best-match for your career goals.

Without the ability to secure a release, you’re effectively stuck from moving those carrier contracts and cannot move for at least six months, and in some cases, twelve months! 

And the unfortunate truth is that the big MLMs which shall rename nameless (because they’ll cease and desist me if I speak their name) almost never release anymore AND have effectively harassed many carriers into keeping agents from moving their contracts for 12 months!

3. Lack Of Commission Level Transparency.

Several big name MLM agencies publicize their commission level contracts as their “ABC 120” level, insinuating that ALL carrier contracts pay at that level.

Of course, this is not the case at all. In fact, the carriers that actually pay those levels usually are the highest priced, most easily-replaced products, while the ones you actually want end up paying out 20% to 40% less.

In summary, how do you avoid these final expense contract gotcha clauses? 

1. If it smells like multi-level marketing, run! Most of the problems mentioned above are associated with agencies who will hire anyone that can fog a mirror, or spend more time flexing and showing off their cars/boats/airplanes. By simply AVOIDING agencies that use this methodology to recruit, you’ll largely avoid most contract problems.

2. Ask questions. Review the contract. Ask point blank about vesting, releases, and commission levels. If you don’t get a straightforward, clear answer, just stop where you’re at, and find another agency to interview with. 

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