As Benjamin Franklin once said, “… in this world nothing can be said to be certain, except death and taxes.” Unfortunately, Ben was not licensed to sell insurance, so we never got his advice on the certainty of commissions. What do you think will happen to your commissions down the road . . . when you retire . . . when you die?
Commissions today and later . . .
It’s common knowledge that protecting your commissions while working requires your license to be in force. That means paying your license fees every two years and completing your required CE. Easy, right? You would be surprised how many agents forget to do an ethics course, sufficient CE hours or repeat a course too early. They usually only find out it’s a problem when their commissions are held until these courses are completed. Don’t let this happen, call us to see if you are up to date.
Another area of concern are commissions that “trail” you into retirement. A lot of agents think they are exempt from continuing education once they retire. The fact is, in California, you are only waived from CE when you reach age 70, and have 30 years of continuous licensing (Section 2749.3 ( c ) ) Even then, you may still have to fulfill TRAINING REQUIREMENTS, like those specified for long term care or annuities. Forget to do them and you might have commissions delayed, held or refused. You worked too hard to get here, call us to make sure you’ve met the guidelines.
Commissions for the hereafter. . .
No one likes to talk about it, but after you “kick the bucket”, what happens to your commissions? Would they continue to be paid to your unlicensed spouse? California stipulates that the payment of deceased agent commissions “shall be governed by the written contract between the broker-agent and the insurer” (Section 781 Insurance Code, Article 5.3).
So what does your agency agreement / commission schedule say? If your insurance carrier is generous enough to allow hereditary commissions, all unpaid commissions due will probably be paid to the beneficiary designated on the Agency Contract Application, or, if no beneficiary is designated, the executor or administrator of the Agent’s estate. But, not everyone is so kind. Another insurer requires the spouse or designated person (s) to be licensed in their respective to receive them. Still another will pay commissions for six months, then require a license. And one simply terminates the agreement and your commissions altogether; no assignments or transfers . . . OUCH!
While the commission schedule you agreed to when you signed up seems cast in stone, everything is negotiable. You might also consider incorporation so your agency and your commissions live on after you. That would be a nice legacy. Lots to think about here, but it certainly warrants some attention, consultation with an estate attorney and perhaps a revisit of your agency contract.