Final Expense Contracts – Learn The Basics

Today we’re going to talk about the wonderful world of final expense contracts, and taking the perspective of a new agent.

I will give you some information about how contracting works with final expense, what to be wary of, as well as give you some information to make apples to apples comparisons about what’s out there regarding final expense contracts, and what you’re being offered.

Here’s the way final expense contracts work: you as an independent or captive life insurance agent contracts with either one company (in a captive situation) or with a multitude of companies, or whomever you please (as an independent agent). You don’t technically work for the insurance company; you’re what’s known as an independent contractor.

final expense contracts

The best final expense contracts typically require you to be independent, not captive.

You’re not an employee; you’re technically an independent contractor, working for yourself as a small business owner, but you have contractual relationships through that agency to the actual insurance carrier to where you submit business in the manner you want.

As far as final expense contracts work, a lot of people think they can contract direct with each insurance company. The reality is that few insurance companies do that nowadays. Instead, there has been an expansion of a middle-man-type of operation where you have agencies and marketing organizations recruit and train new final expense agents to the business.

Understanding that you will be contracting some sort of middle man organization, what commission level you get largely depends on a number factors, such as:

1. Proof of production
2. Level of support desired
3. Access to marketing systems

Typically, a “no-frills” street contract will range from 105%-115% on average, but it’s highly likely that you will not get any substantial support regarding sales and marketing training. In most cases, it’s just a place-holder and you’re thrown to the wolves, you’re on your own.

And while it’s important to strive for maximal final expense contracts over the long run, it’s important to start the business trading a marginal level of commission in exchange for training, support, access to final expense leads and a duplicatable marketing and sales program.

final expense contracts

You need to optimize your final expense contracts relationships for short- and long-term benefit, not one over the other

Most people who think and value training can see the benefit giving up a few points on their final expense contracts in exchange for learning a duplicatable system of success. That’s what I do in my Mentorship program. I think you’ve got to pay your dues. So I start my guys off on a lesser final expense contract, but move them up to the street-level final expense contract, once they perform and prove they can produce on a consistent basis.

The last thing I want to mention is regarding what’s known as “releases” of final expense contracts. For example, if you are recruited by an agency, and they piss you off and don’t provide what they promised, 9 out of 10 times the agency will not allow or “release” you to move your final expense contract to another agency. You have to wait 6 months or longer to move that contract over.

final expense contract

Don’t put your final expense contracts with an agency that won’t release you!

I think this approach to not releasing final expense contracts is stupid — they should want this person to want them as a value-added component to their final expense business, versus having a gun put to their head. Simply put, it’s not ethical to force somebody to do business with you under the circumstance that, “Hey– that’s just the way it goes.”

For me, the way I do it, I offer final expense contract releases not because I want to release my agents, but because it’s the fair thing to do. I want there to be an equal amount of mutual respect between both my agents and myself and that’s the way it should work, in my opinion, and that’s the only way I want it to work.