Is It Standard to Be a Captive 1099 Agent?

[insurancecareer]

I am considering a career change, and all of the solicitations I have received have been insurance. I interviewed with a local agency which represents American National and its subsidiary Farm Family. Upon interviewing, I discovered that I would not be an American National employee or an employee of the agency, rather I will be a 1099 contractor. I would also be a captive agent. Is this practice standard in the insurance industry? Also, I am in the state of West Virginia. Do I need to register a business entity with the Secretary of State's Office? Any advice is appreciated.

 

[rousemark]

I am considering a career change, and all of the solicitations I have received have been insurance. I interviewed with a local agency which represents American National and its subsidiary Farm Family. Upon interviewing, I discovered that I would not be an American National employee or an employee of the agency, rather I will be a 1099 contractor. I would also be a captive agent. Is this practice standard in the insurance industry? Also, I am in the state of West Virginia. Do I need to register a business entity with the Secretary of State's Office? Any advice is appreciated.

personally I would never sign a 1099 captive contract. If a company wants me to be captive, they would have to make me a W2 employee with benefits.

 

[Cory]

Wow... sounds like a win/win for that agency. I agree with rouse...would think twice about that one.

 

[rousemark]

Wow... sounds like a win/win for that agency. I agree with rouse...would think twice about that one.

You know that by agreeing with me, you just destroyed your reputation on the forum

 

[Cory]

I literally laughed outloud...why didn't anybody warn me about you? Thanks for starting my day with a chuckle and hope you enjoy yours as well.

 

[GAHEALTH]

I am considering a career change, and all of the solicitations I have received have been insurance. I interviewed with a local agency which represents American National and its subsidiary Farm Family. Upon interviewing, I discovered that I would not be an American National employee or an employee of the agency, rather I will be a 1099 contractor. I would also be a captive agent. Is this practice standard in the insurance industry? Also, I am in the state of West Virginia. Do I need to register a business entity with the Secretary of State's Office? Any advice is appreciated.

ANICO is not a captive company. You can get broker contracts with them. I would stay away from any 1099 captive. If you are going to be a captive - they better be doing advertising, have brand recognition, and give you more benefits.

 

[insurancecareer]

GA HEALTH,

I may have been mistaken about being captive. Let me ask the following question. I would receive training from the agency and then receive training from American National at its Texas headquarters. Does this seem to blur the line between W-2 and 1099 or is it still standard? I forgot to mention in the original post that I know the local agency folks from church. I have no doubt of the initial training and support that I would receive from them, just that that initial investment seems to lend to an employer/employee relationship--not contractor.

 

[xrac]

Almost all of the major old line career agencies treat their captive agents as 1099 don't they. I think that that is true of most agents. I think very few companies treat captive agents as employees. Am I wrong?

 

[Larry Tew]

The best "captive" arrangement is as a "statutory employee". You get social security matching and other benefits but as a stat emp you are able to file a Schedule C and deduct all your business expenses versus using a Form 2106 to deduct employee expenses above a certain threshold.

 

[GAHEALTH]

GA HEALTH,

I may have been mistaken about being captive. Let me ask the following question. I would receive training from the agency and then receive training from American National at its Texas headquarters. Does this seem to blur the line between W-2 and 1099 or is it still standard? I forgot to mention in the original post that I know the local agency folks from church. I have no doubt of the initial training and support that I would receive from them, just that that initial investment seems to lend to an employer/employee relationship--not contractor.

Most agencies do it as 1099/contractor. It is the captive that bothers me. Usually I look at the likes of NYL, MassMu etc to be captive for life.

What else are you getting from the agency? What type of comp are they giving you? If it is like 50%, they are giving you leads, office space, they do the back end work, etc......then maybe I would consider that.

If all they are giving you is training, are charging you for office space etc. Walk away and get a true contract with ANICO where you are making like 90%, get a mentor and split the first cases with the mentor.