Principles of Agency Building

9th Edition May 12,2009

By: Roberto H. Bruce, MS, CLU, ChFC,

LUTCFCavaliers Insurance MarketingRights Reserved

Agency Building Opportunity

Strong CompanyUnique ProductsGround floorAgency compensation

Rights Reserved

The Ultimate of Selling is

Agency Building

Recruit Train

Sell

Rights Reserved

Term – Insurance For A Specified Period

T1 T2

T age

CCOI

$

T

1 Flexible Premium2 Adjustable Death Benefit3 Current Interest Rate4 Guaranteed Interest Rate

UL

$Rights Reserved

Premiums

$

Tamra 88

Defra 85

Net Level

7 Pay Test

Guide

Target

Minimum

Premiums

Single

Level

eg. $5,000

eg. $25,000

eg. $2,000

YR 1— $5,000— $4,000 2—10,000 — 5,000-9,000

3—15,000 — 7,000-16,0004—20,000 — 5—25,000 — 6—30,000 —7—35,000 —

M.E.C

Annuity

Rights Reserved

TRA’ 86

PREM

INSURANCE

Interest Income

PREM

PREMPREM

InterestIncome

ANNUITY

59 ½ - 10% Penalty

FIFO LIFO

Rights Reserved

Life Insurance Tests

1.Guide Premium2.Corridor – Age 95

Rights Reserved

Options

t1 95T

$

$

T

Savings

Savings

OPT ALevel Face

Amount

OPT B Increasin

g Face Amt or

Face Amt +

Savings

100,000

100,000

t1

Rights Reserved

Amount At Risk

Amount At Risk

Policy Costs

CCOI+ Policy Fee+ PREM Charge+ Charge / $1,000

TCOI =

PREM – TCOI = Policy Fund

Rights Reserved

Cash Value

Cash Accumulation Value

Policy Fund – SURR Charge = Cash Surrender Value

Hierarchy of Life Plans

• Whole Life

• Universal Life

• Term

Rights Reserved

Parties To A Contract

•Owner

•Insured

•Beneficiary

Three - Gift Tax

One - Estate Tax

Two – Recommended

Disclaimer, if not taken

Rights Reserved

Waiver Of Premium

•In case of disability

•Always recommend

•Disclaimer, if not taken

Rights Reserved

Beneficiary(ies)

•Primary

•Contingent / Secondary

•Per Capita

•Per Stirpes

Rights Reserved

Product Spectrum

Life

DI LTC 10T

AFANICO Assurity Sagicor

LBL

15T

AF Assurity

LBL

20T

AFANICO

AssuritySagicor

LBL

AFANICOSagicor

LBL

30T T95

AF

UL

ANICOLBL

Assurity

Par

ANICOAssurity

Simplified Issue

Assurity

Non-Par

AF Sagicor

Big Cases LBL/ANICO

Small Cases ANICO/AF/Assurity/Sagicor

Preferred/Big Cases LBL/ANICO

Standard & Below ANICO/AF/Assurity/Sagicor

WL CI

Assurity

Rights Reserved

25T

AF

GTGT

Assurity SagicorAssurity

Annuity 1 or more premiums

(accumulation)

1 or more payments

(distribution)Tax-Deferred

59 ½ 10% Penalty

1 – Single premium

Immediate – SPIA Deferred - SPDA

1 or more - Flexible premium

FPA/FPDA

Ordinary income Capital gains

FIX – General Account VARIABLE – Separate Account

QUALIFIED

IRA (Front)-70 1/2

DEDUCTIBLE NON-DEDUCTIBLE

ROTH-IRA (Back) NON - QUALIFIED

TRADITIONAL IRA / ROTH-IRA / SEP-IRA / SIMPLE IRA

DIRECT TRANSFER / ROLLOVER /

CONVERSION

Rights Reserved

INDEX / TREASURY LINKED / MYG/MVA

1035 Exchange

Annuity Ideal Cases

•AFA (FPA $25/mo - $10,000/yr)

•Sagicor/Assurity (SPDA $2,000)

•ANICO (SPDA $4,000Q/$5,000NQ)

•LBL (SPDA $10,000)

•LBL (FPA $3,000Q/$10,000NQ)

Rights Reserved

Plan Distributions – When to?

•Die, Disabled, or severance from employment

•Plan terminates, no successor plan

•59 ½

•Financial hardship*

Rights Reserved

*Cannot rollover to IRA

Early Distribution Penalty(Plan, IRA, Annuity)

•10% additional tax on distributions under age 59 ½

•In addition to any regular income tax on the amount

Rights Reserved

Penalty Free Plan Early Distributions

•Death or Disability

•Distributions over life expectancy on termination of employment

•Service separation after age 55

•Qualified domestic relations order

•Medical expenses over 7 ½ % of AGI

•Distribution election by March 1, 1986

•Dividends on employer securities

•IRS levy of plan

•Qualified reservist distributions

Rights Reserved

IRA Rollover

•Distribution from one qualified plan

•Contribution to IRA within 60 days

Rights Reserved

Types of IRA Rollover

•Direct - qualified plan to IRA, no 20% tax withholding

•Indirect - qualified plan to individual to IRA, with 20% tax withholding

Rights Reserved

IRA Rollover Exceptions

•Series of substantial equal payments based on life expectancy, or 10 or more years period certain

•Required minimum distribution (RMD)

•Corrective distribution

•Loan treated as distribution

•Hardship distribution

•Dividends on employer securities

•Cost of life insurance coverage

•Distribution to beneficiaries

Rights Reserved

Penalty Free IRA Early Distributions

•Unreimbursed medical expenses over 7 ½ % of AGI

•Not more than cost of medical insurance

•Disabled

•Beneficiary of deceased IRA owner

•Distribution in form of annuity

•Not more than qualified higher education expenses

•Used to build, rebuild first home $10,000 or less

•IRS levy of qualified plan

•Qualified reservist distributions

Rights Reserved

Required Minimum Distributions(RMDs)

•Minimum amount to withdraw annually starting with year at age 70 ½ , or if later, year retires (except 5% business owners)

•Amount not withdrawn taxed at 50%

Rights Reserved

Placement Ratio

Issued over submitted apps Pre-qualify prospect Concept selling Trial app / no initial premium

for borderline cases Initial payment w/ app More apps, e.g., Juvenile plans Case follow-up

Rights Reserved

Persistency Ratio

Active over issued policies Modal payment hierarchy

1. Annual, 7 Pay, or Single2. Monthly bank draft3. Semi-annual4. Quarterly5. Monthly direct billing

Client contact/review Improve placement ratio

Rights Reserved

Goal Setting

4. $$$$

5. Sale/Network

6. Appointment

1. Calls ——————— 3 min

NO$

TimeNeed

NameCompanyPurposeAppt.

T1

T2

Rights Reserved

$_______ A.P. Goal÷$_______ A.P./Sale

Sales/Year x_______ Appt/Sale

Appts/Year÷52 Wks

Appts/Wk

x_______ Calls/Appt

Calls/Wkx 3(min/call)/60(min/hr)

Hrs/Appt

Appt Hrs/Wk Call Hrs/Wk

+Hrs/Wk Total

x

___ min/call

___ calls/appt

___ hrs/appt

___ appt/sale

$_____ Annual Prem (A.P.)/Sale

$250,000 – ESD/SGA$100,000 – MDRT $50,000 – Convention

Goal Setting

20

2

2

1,000

100,0001,000

1002

200

20

80

4

12

2

8

4

Rights Reserved

3

ESD ASM DM UM How?1) Recruit One (1) Agent Per Month 3 Agents/QTR 12 Agents/YR

Maintain 10 Producing

Agents

Maintain 6 Producing

Agents

Maintain 2 Producing

Agents

1) Mergers / Acquisitions2) Advertising3) Agency Office4) Seminars5) Business phone/ pager / 800# / Fax6) Laptop Computer7) Partnering8) Recruiting presentation9) Annuity / high premium selling10) Weekly reports11) Monitor agents 12) Awards / Incentives13) Referrals / Phone Book / Associations14) Education (CLU, CFP, LUTCF, ChFC)15) Concentration16) Delegation17) Mailers / Leads18) Convention19) Goal Setting

6 Agents Per YR

4 Agents Per YR

2 Agents Per YR

2) Participate in Regional Seminars

Yes Yes Yes

3) Conduct Agency Seminars

Yes for ESD-Aspirants Participate Participate

Participate

4) Provide Agency Sales and Training Support

Yes Yes Yes

5) $250,000 Paid Target Premiums/YR

$100,000 Paid Target

Premiums/YR

$60,000 Paid Target

Premiums/YR

$36,000 Paid Target

Premiums/YR

6) $500,000 Total Premiums

$250,000 Total

Premiums

$100,000 Total

Premiums

$60,000 Total Premiums

7) Quarterly Progress Review With RD

With Immediate Manager

With Immediate Manager

With Immediate Manager

8) Annual Review with RD

With Immediate Manager

With Immediate Manager

With Immediate Manager

Aalliance Management Expectation/Commitment(Calendar Year)

Rights Reserved Rights Reserved

Agency Building Blocks1) Recruit - Producer, Recruiter2) LEG3) Magnificent “Seven”4) Rule of “Three”5) Principle of the understudy6) Bottom/Top Approach7) Recruit-Train-Sale Cycle8) Teamwork/Involvement9) Lead from the front10) Quality vs. Quantity –

Collect/Select11) Generalization-Specialization

Cycle12) Simplify - KISS 13) Sowing/Reaping - Stout-

Hearted14) Set the example15) Go forth and multiply16) Numbers game - +/-, Attrition,

Prime, Progression17) Curves- Straight line, Pulse,

Supply, Ravine / Death-defying, Crash-landing, Sine, Square, Cubic

18) Anarchya) Absence of Rulesb) Rules are impossible to implementc) Nobody is implementing the rulesd) Rules are being violated with impunity

19) Five Pillars - Professionalism, Persistency, Perseverance, Production, Proficiency

20) Management Cycle - Planning, Organizing, Staffing, Directing, Controlling

21) Goal Setting22) 7 C’s of Success -

Commitment, Competence, Concentration, Consistency, Creativity, Control, Conduct

23) Maximin = Minimax

Rights Reserved

Recruit

A recruit is not a recruit without a recruitA recruit is both a producer and a recruiter

Rights Reserved

LEG

A leg is not an effective leg without another leg

Rights Reserved

Magnificent “Seven”

Tested to be the most efficientSeven members of a squadSeven days in a weekLess-not enough, inefficientMore-Too much to handle

Rights Reserved

Rule of Three

Out of the seven, select your best

three

Rights Reserved

Principle of the Understudy

Out of your best three, select your

understudy that can duplicate or replace

youRights Reserved

Bottom/Top Approach

Service the bottomInform all at the top

Rights Reserved

Cycle of SuccessRights Reserved

RECRUIT

Marketing Structure

Professional Development

Financial Independence

TRAIN

SELL

Teamwork/Involvement

No man is an islandThe whole is more than the sum of its partsCongregation

Rights Reserved

Set The Example

Lead from the front in sales,

recruiting, and training

Rights Reserved

Quality vs. Quantity

Collect and collect; and then select

Rights Reserved

Generalization/Specialization Cycle

Rights Reserved

Simplify

K I S SKeep It Simple and Sincere

Rights Reserved

Sowing/Reaping

What you sow you reap a thousand timesStout hearted men

Rights Reserved

Go Forth and Multiply

The ultimate of selling is in agency buildingIf you don’t talk about recruiting, it will never happen

Rights Reserved

Numbers Game

+/-AttritionPrimeProgression

ArithmeticGeometric

Rights Reserved

Curves

Straight Line

$

y

Supply

$

y

Ravine/Death Defying

$

y

Crash Landing

$

y

Square

$

y

Sine

$

y

Rights Reserved

Cubic

$

y

$

y

Pulse

$

y

Why Anarchy?

Absence of RulesRules are impossible to implementNobody is implementing the rulesRules are being violated with impunity

Rights Reserved

Five Pillars

ProfessionalismPersistency

PerseveranceProductionProficiency

Rights Reserved

Management Cycle

Planning Organizing

StaffingDirecting

ControllingAlways go back to planning every time there is a hitch

Rights Reserved

Book of Success

Front Cover: Goal SettingBody: 7 C’s of Success

Commitment CreativityCompetence ControlConcentration ConductConsistency

Back Cover: Maximin=Minimax Maximize profit, subject to minimum utilization of your

own resources Minimize cost, subject to maximum utilization of other

people’s resources Should be balanced

Rights Reserved