Photo by HikingArtist.com

The good times are back! And it has spread to the life industry; in the form of firms dangling top dollars to lure top performers. The Straits Times article – Windfall for jumping ship, published on 10th July 2010 highlighted this phenomenon.

According to the article, “total compensation package could range from a few hundred thousand dollars to $1 million on top of usual commissions”. And “to sweeten the deal, the insurer will pay a portion of about 30% of the compensation package as an upfront cash incentive when the agent joins the firm”. These are to compensate the agents for losing the renewal commissions on the old policies when they jump ship. Of course there are no free lunches in this world. The package is tied to a sales quota.

The article also pointed out the risk of policy churning. Policy churning is the surrendering of an old policy and using the proceeds to buy a new policy to generate commissions for the agent. Read more…