The Million Dollar Round Table has developed its Agent’s Contract Checklist to provide
life insurance agents with a number of important questions that should be asked about
their contracts. Additional information on this subject can be found under the Financial
Management section, beginning on page 21.
As recommended by the Business Valuation Task Force, the document was adopted by
LUAC and recommended to all life insurance agents. It is included as part of this report
and reproduced on the following pages:
Status and Authority of the Agent
Are you an independent contractor?
Does your contract determine whether you are an independent contractor?
Restrictions
Do you own your client files and records (including office files and records)?
How, when and under what circumstances can the Company assign your clients?
Can you have other contracts for other product lines with another Company?
Compensation
Is there any up front money for you to sign? (i.e. financing or
commissions).
Pertaining to lifetime renewals, in the event of death, are these renewals paid to
the estate of the agent and under what
circumstances?
Is there a service fee, and is it paid at the Company’s discretion?
Termination and Modification
What kind of notice is required and what type of reasons are required?
What compensation, fringe benefits, rights and duties continue after termination?
What must you do to lose vested and/or non-vested renewal commissions,
bonuses, service fees, allowances or other benefits under the contract? Can you be
terminated for violating any law (including traffic violations or domestic legal issues,
e.g., behind in
alimony)?
May changes to your contract be made unilaterally and
retroactively?
How and when may commissions and renewals/bonuses be changed and may
changes be retroactive?
What sort of notice is required for changes or amendments?
Vesting
When are you vested and what is the nature of the vesting schedule under your
contract?
What must you do, if anything, to lose vesting in all or any of your
compensation?
Disputes/Support & Services
What happens if the contract is breached by either party, or a
dispute arises? Is this specified in your contract?
What support and services are guaranteed by the contract and are computer
support services accessible (i.e. underwriting)?
