Why a 110% Contract Can Pay Less Than a 100% Contract: The Target Premium Math Nobody Shows New Agents
Same client, same design, two carriers: the 100% contract paid $649 more than the 110% one. Here is why, and how to compare contracts properly.
"Who pays the highest comp?" is the question agents ask more than any other. What is your starting comp, is 40% normal, who starts at 120%, why did final expense comp fall from 110% to 70–90%. These are questions from agents like you, and a manager answered one of them with a real case that everyone arguing about percentages should read. His agent had a 110% contract with one carrier and refused to consider a carrier where the same manager could only offer 100%. So they ran one case both ways. Same client. Same design. Same solve. The case Carrier Target premium Comp level First-year commission Carrier A $7,886 110% $8,675 Carrier B $9,324 100% $9,324 The 100% contract paid $649 more on the identical sale. The agent had been holding out for a bigger number that produced a smaller check. (The figures are the manager's; we have removed the carrier names.) Why this happens Your comp level is a percentage of something, and that something is different at every carrier and often every product. Target premium is the carrier's commissionable premium for the policy, not the premium the client pays. Two carriers can set very different targets for the same face amount and the same client because their pricing and their commission structures differ. Excess premium over target usually pays a much lower rate. Product matters as much as carrier. Within a single carrier, a term product, a simplified-issue whole life and an indexed universal life can carry different rates and different definitions of what is commissionable. Percent of a percent. In a hierarchy, "100% comp" can mean 100% of the level your upline receives, which is itself a fraction of what the carrier pays at the top of the hierarchy. As one agent put it: 100% of what? Renewals. Several experienced agents point out that the carriers paying the highest first-year rates often pay the lowest renewals. A contract that pays you more this year and less for the next nine is not obviously better. None of this makes a high comp level bad. It makes it an incomplete number. The question that predicts your paycheck is: for the cases I actually write, which contract produces the most first-year dollars, and what do renewals look like after that? How to compare two contracts properly Take your last twenty placed policies. Real clients, real face amounts, real health classes. Run each one at both carriers and write down the target premium each carrier produces. This is the step almost nobody does. Multiply target by comp level for each. Add a row for year-two renewal at each carrier's renewal rate. Total both columns. That is the comparison. It will surprise you at least once. If you cannot run illustrations at a carrier because you are not appointed there, ask the upline offering the contract to run three of your cases. An organization that will not do that is not confident in the answer. The other half of the argument Agency owners make a second, quieter point. Street-level comp is offered to agents who can run their own illustrations, prospect their own clients, take a case through underwriting and service it afterward. An agent who needs help with all four and asks for the top of the grid is asking the agency to take the chargeback risk on business it also has to do the work on. Several owners said they start everyone at the same level for ninety days and then talk. Whether or not you like that policy, it explains why "what's your starting comp" gets so many different answers. Comp fell in final expense, several owners say, because organizations gave unproven agents high levels during the pandemic, absorbed the chargebacks, and stopped. Your comp level is partly a price on your own persistency. Where AgencyView fits The comparison above is a one-time exercise. Knowing what your book actually earns is an every-month one. AgencyView's CFO Center reads the commission statements synced nightly from your commission tracking account and shows commission by carrier and by policy, so every producer sees dollars received rather than the percentage on the contract, which answers "100% of what?" Our FMO Guide explains how overrides stack across levels.
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