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The Mortgage Protection Scam

mlm final expense and mortgage protection

The Mortgage Protection Scam

Allow me to start with saying, yes, the mortgage protection sales scam is real, and yet, it’s kind of silly. Is the title click bait? Hmm, okay, maybe just a little bit! Mortgage protection insurance is a very real product, and it’s important to have. Insuring the bread winner of the family is important, especially when there is a mortgage in play. The way that insurance marketing organizations are marketing the sales of this product is pretty questionable though. Most of these insurance agencies are Multi Level Marketing companies that simply manipulate the truth as to how profitable this business is. They also tend to stage the perception of how easy this product is to sell, in order to recruit agents. This is just how the mortgage protection scam begins. In this post, we’re going to address the following!

Mortgage Protection Leads

The pros and cons of mortgage protection sales

Mortgage protection sales vs final expense sales

Why I left the Mortgage Protection Industry to get into Final Expense Sales

Is the Multi-Level-Marketing model ethical?

Captive vs Independent

How mortgage protection IMO’s hold you hostage

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The Importance Of Mortgage Protection Sales and Mortgage Protection Leads

Mortgage protection is a very important and strong product to both have, and to sell. The one thing I love about this type of sale is that the persistence and placement is very high. Most people that have a mortgage should insure it. In most cases this is the sensible thing to do.  From an insurance agent’s point of view, this is a relatively doable sale. There are a lot of life insurance mortgage protection products designed specifically to insure someone for their mortgage. The best thing about this type of sale is that you can actually purchase leads that target people with mortgages. These leads are not very cheap and are not affordable for most insurance agents. This is where the Multi Level Marketing insurance agency swoops in.

What a good insurance agency will do is figure out a way to make these leads affordable. You see, mortgage protection leads actually cost around $55 nationally to produce. Most insurance agents would not consider spending that kind of dough on leads. What the mortgage protection agencies do is buy all the leads they can get and recruit like crazy. They sell each brand new lead at a discounted price to the agents. Then they resell the leads that don’t get sold! This goes on and on. This is why mortgage protection agents end up having all of these options and this is why there are A leads, B leads, C Leads, D Leads, and so on. This all makes sense and is fair, so where in the world is the mortgage protection scam?

Are Mortgage Protection Commission Levels Fair?

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Nothing in life is fair, especially when dealing with mortgage protection multi level marketing companies. You can never have the same commission level that your manager has, even if you do everything better than him/her. It’s as simple as that. Most MLM’s start their agents at a specific commission level. Usually around 60% first year commission! Here’s the crazy part. The agents are often told that they are starting at the companies 100% level. Does this make sense to you? Well, this is the best way that the mortgage protection agency has of tricking you into thinking that all is equal. The last thing that the mortgage protection manager wants to hear is an agent complaining about his low 55% commission level when he heard he can get 100% somewhere else.

You see, you can get 100% anywhere, but not from someone who is selling you a discounted mortgage protection lead. This is where most agents try to figure out a way to get the best of both worlds. The great mortgage protection scam actually goes both ways. A lot of agents will find a 100% contract with one agency. They will then take the discounted lead that their manager sold them, and write that sale with the 100% contract, even though it’s unethical. We know this happens all the time and is very common in this industry. I think what happens is that the agent justifies stealing by thinking to himself, “well, they are selling me old leads that other agents have already worked”. This is why the MLM can justify starting agents at low commissions.

Final Expense Sales vs Mortgage Protection Sales

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When I was a mortgage protection agent working for The Hartford, my commission level was 60%. I paid $30 per lead and was always on the top 10 producers list. My annual income was around $55,000 per year. When our agency lost that product and lead program we were forced to look for something else. This is when I found final expense sales. It took several months to adjust to this senior low income market as it is totally the opposite of what we were used to. With mortgage protection sales we deal with responsible people with money and jobs.  Final expense sales are targeted to low income seniors that in most cases, are barely making ends meet. Mortgage protection clients are often professionals and very intelligent. Most final expense prospects were not professionals and definitely not very responsible.

When I started selling final expense insurance, eventually, I ended up with first year commissions at 100-110%. My lead cost was $15 for Telemarketing leads and around $28 for final expense direct mail leads. It took me several months to cut through the learning curve while seeking out those 100 to 100% commission levels, along with good leads. My first calendar year, 2014, I wrote over $420,000 of Annualized Premium and made my first six figure income. The persistence and placement is not as good as it was with mortgage protection sales, but with the lead availability and much higher commission levels, it became easy to make over $100,000 a year. There is definitely more service work required for final expense sales so you need to be vigilant with your clients.

The Mortgage Protection and/or Final Expense MLM

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There are a lot of companies that recruit agents at very low commission levels. They will dangle the carrot stating “you can make hundreds of thousands of dollars per year” if you just do what we say. There are several problems with these type of multi-level-marketing companies. First off, you’re taking all the risk. If you do what they say, and recruit agents that write bad business, you become responsible for their debt. I’ve seen agents run out of the industry this way. Second, your commission levels will most likely never be where they promise you they can be. This is the second carrot. These companies love to tell you that you can work your way to the top, but it never happens. The people at the top are always people brought in that already have existing agents.

Does the multi level marketing scheme ever really make sense? Yes, for a very few. Some people do have the personality to recruit insurance agents and actually keep some of them writing enough business, so that they actually can build off of that. These few talented people can take the MLM system, and truly profit off of it, while growing a successful insurance agency. The problem, is that we are talking maybe a handful out of thousands that get brought into the industry. You see, with these MLM mortgage protection companies, the commission levels are so low that even if you can make 2 or 3 sales per week, you just don’t make enough money to keep going. Eventually, most agents will be forced to move on. If you’re building a team of agents, and decide to move on, the MLM takes your down line agents.

Hostage Negotiation/How to Get Released

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One of the biggest issues that most agents see, is that it’s hard to move contracts to another insurance agency. Let’s say Joe gets recruited by a mortgage protection agency. He starts working with them and realizes that it’s not quite what he thought it would be. Maybe he feels he has been lied to. He might even feel that he was manipulated into working with the company and now he realizes that they won’t release him. Joe has become a hostage and is now stuck with that company. He can not write those carriers for 6 months, if he decided to look for another insurance agency.  As far as I am concerned, this is something that every IMO should look at on a case by case basis. Unfortunately, the insurance companies all allow this as it protects the agencies selling their products.

This is just one of the reasons that United Final Expense Services has a lot of carriers to chose from. We know that most insurance agencies won’t release their agents. I speak with agents that want to move their contracts to us on a daily basis. Most of them have to wait out the 6 months because their IMO won’t allow them to be released. Thankfully, we have a system designed to help agents work through their first six months and still have really good, competitive carriers. Having a huge selection of carriers and products makes it easy for us to help agents leave their old agency and in most cases, make higher commissions. Yes, we actually do sign releases. For our independent agents, if they need to leave us for any reason, we have no problem releasing them.

The Multi Level Marketing Model and Being a Captive Agent

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One of the biggest controversy conversations in the mortgage protection and final expense industries, is whether the Multi Level Marketing model is ethical. I believe it can work. Very few people can make the MLM model work nationally. In other words, if you live in Florida and your learning from a manager in North Carolina, you can only get so much help from your up line or manager. Now on the other hand, if you have a local office to go to where you are getting training, the MLM model can be very productive. As a matter of fact, I tell new agents all the time that they are better off working with a local agency than trying to learn the business from me, thousands of miles away. Even if their commission level is half of what I can give them!

I also believe that most agents will fail without a local office to learn from. The training that I received as a new recruit was priceless. My commission level was 60%. We were required to buy 10 leads a week at $30 per lead. We were also required to be in the office 5 days a week for a few hours a day. Then there was the phone/office day. At one point, my phone day was on Sunday. Every Sunday, I went to the office around 3 PM and was required to make calls and book appointments until 9 PM at night. There was so much interaction at this office, that it was impossible not to learn the ins and outs of the mortgage protection business. I also had a manager that I spoke with either before or after just about every single appointment.

What Chaps My Ass

When it comes to mortgage protection IMO’s there is nothing that chaps my ass more than telling new agents to recruit their friends and families. In most cases this only benefits the Up Line or insurance agency. As a new agent, you are most likely to struggle and give up. If you have recruits and end up wanting to leave, you leave your recruits. That means all you did was recruit for the agency and your up line manager. You helped them to build their agency and when you leave, you can’t even take your own recruit with you. This is some shady bull shit and it happens with most of the mortgage protection MLM agencies. As far as I am concerned, this is totally unethical and should not be allowed. If you leave, you should be able to take your down line agents with you, no questions asked.

Another thing to think about is this. Why would you want to recruit agents while you are still learning the business. Wouldn’t it be smarter to wait until you know what you’re doing before you start building your own agency? I didn’t even think about bringing in and training insurance agents until I was one of the highest producing agents in the country and had something special to offer. I’m not saying you should be a top producer to recruit but you should at least know the business. The last thing you want is for your recruit to need help while he is with a client, and for you to not be able to help. I want our agents to call me if they need help. It’s important that they learn from someone who has an answer. Always lead from the front.

Why We Specialize in Final Expense Sales Instead of Mortgage Protection

One of the main things I love about final expense sales is that it’s usually daytime activity. I teach our agents to set up the first appointments at 9 AM or even earlier. Then do some door knocking up to the next appointment. The idea is to get out there early and get that first sale in by late morning. Most of the presentations for final expense sales are made during the daytime. With mortgage protection, it’s the opposite. As I mentioned early, most of the mortgage protection sales are made in the evenings after the prospects get home from work. My typical final expense prospect is pretty laid back and usually easy to sell compared to the professionals we meet for MP sales. I love working with fixed income seniors because they usually don’t have enough, or any, burial/life insurance.

Final expense whole life insurance has easier underwriting than mortgage protection. With final expense, you can use a company like Transamerica for example. They run an MIB and Script check. They don’t require Para-med exams with blood and urine work or any doctors records like with mortgage protection. Some of my favorite final expense carriers like Mutual of Omaha, Royal Neighbors, and American Amicable will do a point of sale interview and give you the results while your still sitting down with your client. As I mentioned earlier, generating final expense leads is a lot easier than mortgage protection leads. I can get you more Fresh/New final expense leads than you can work. With mortgage protection, you will most likely end up working leads that are recycled!

Why I Love Being a Final Expense Agent

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When all is said and done, I truly enjoy selling final expense insurance. The prospects we meet really need our services and are often grateful for our time. I can’t tell you how many people start by not wanting me in their house only to end up hugging me after buying the insurance. Think about it! Has anyone ever hated on a life insurance agent at a funeral? Of course not. That’s because we’re the only ones there that’s “figuratively” bringing a check. I also love the fact that all I have to do is order some leads and within a day or 2, leads are coming in. That’s the beauty of final expense Facebook leads. Now that we’ve been doing it for years, we can take a day or week off at any moment. There is nothing like having the ability to control ones own income.

Speaking of income! With final expense sales, the renewals are higher than any other life insurance sale. I love seeing those big renewal checks come in each month. Now, don’t get me wrong, I know they’re not as big as medicare renewals, but they are still very nice. Being financially secure is still new to me. A few years ago, we had to work really hard each week, no matter what. Now, if something were to happen where I couldn’t work, we would be just fine. We could always switch to selling final expense or even medicare over the phone if we had to. I prefer the old “belly to belly” sales. It’s just my personality as I tend to feel like a hostage when stuck in an office. Having control over my schedule, the amount of money I make, and the people I work with is awesome.

Douglas Massi

Douglas Massi has written more than $400,000 of AP in a single year. Accolades include Top Agent 2014 5 Star, Top Producer 2015 Security National Life, Top Producer 2016 Security National Life, Top Producer 2017 Security National Life

2 Comments

  • Jimmie Moore

    November 17, 2018 8:59 pm
    Reply

    Hey! Doug

    Just wanna send a shout out to you to say thanks for your help in making sense of the final expense business for me. I’m, presently, transitioning from one of those mortgage protection MLM agencies –you referred to in your article–into the final expense business. And, I took your advice to contract at a 100% level or higher. Thanks for your eye opening tips.

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