Sales Commission Versus Product Performance in Financial Services

This book reports a study of universal life
insurance as a case study for analyzing the tradeoff
of selling commission against product performance,
using policies that have the feature of varying
sales commission by using a noncommissionable term
rider in the policy. This study first looks at
whether the use of the term rider has a
statistically significant effect on the policy''s
performance over the long term. The study reveals
no statistcal significance, when measured against
other independent variables. The study then
performs a discounted cash flow analysis of four
different case profiles to determine what
improvements in performance a policyholder could
expect given various degrees of commission
reduction. The results indicate that there is a
tradeoff, but predictability is problemmatic. The
study is a cautionary tale to agents and clients who
assume any predictable result from commission
reductions in these products, and leaves the reader
with the question: Who then is getting the better
part of the negotiation over commissions in these
products? The agent, the client, or the insurance
carrier itself?

Autorentext
Academic literature yields little study in life insurance product. This study attempts to de-mystify the inner workings of life insurance as a financial asset. It is not an actuarial study, but an analysis of the trsdeoff between product performance and agent compensation when the flexibility of that compensation is inrtroduced.

Klappentext
This book reports a study of universal life insurance as a case study for analyzing the tradeoff of selling commission against product performance, using policies that have the feature of varying sales commission by using a noncommissionable term rider in the policy. This study first looks at whether the use of the term rider has a statistically significant effect on the policy's performance over the long term. The study reveals no statistcal significance, when measured against other independent variables. The study then performs a discounted cash flow analysis of four different case profiles to determine what improvements in performance a policyholder could expect given various degrees of commission reduction. The results indicate that there is a tradeoff, but predictability is problemmatic. The study is a cautionary tale to agents and clients who assume any predictable result from commission reductions in these products, and leaves the reader with the question: Who then is getting the better part of the negotiation over commissions in these products? The agent, the client, or the insurance carrier itself?