Full Answer
How much does it cost to start a Medicare supplement business?
For example, a hypothetical book of all Medicare Supplement business that produces $100,000 in income per year would cost between $150,000-$250,000. But it's not cut and dry at all.
Is the Medicare Supplement Book of business worth more than the annuity?
For example, a book of business that's all Medicare Supplement is worth a lot more than a book that's all annuity. The Medicare Supplement book of business has recurring income, while the annuity book of business doesn't. Does the annuity business still have value?
How can I increase the value of my Book of business?
However, there are six ways to increase the value of your book of business: 1 Sell more insurance 2 Have a product mix that pays more renewals 3 Have more new business 4 Have a CRM 5 Sell to your FMO 6 Have loyal customers
How much Commission do you get on your Medicare Advantage book?
One gal I was chatting with recently had a mostly Medicare Advantage book of business. One organization offered her 90% commission in the first year, 10% in the second year, and nothing after that. That was it. That's a really low valuation.
How do you value a health insurance book of business?
There are typically two primary methods to deriving the value of an agency / book of business; (1) a multiplier of revenue, or (2) a multiplier of profits (a.k.a. “EBITDA”)[1]. Similar to composite rating of various insurance products, both multipliers of Revenue and Profits can be converted to a function of the other.
How much should you pay for a book of business?
If a buyer would pay 2.5X cash flow, an average selling price for a business, the buyer should be willing to pay up to $500,000 for the book of business. In this sale, the selling price of the book of business should be between $250,000 and $500,000.
How is book of business calculated?
Book value simply looks at the assets and subtracts the liabilities of the business and then divides the number by the proportionate share of the departing owner's interest in the business. Book value calculation does not provide any value for goodwill or take into account future income of the business.
How do you determine the value of an insurance agency?
Insurance agency owners usually follow the industry rules of thumb when valuing their company. According to Live Oak Bank, insurance agencies are worth 2x-3x the revenue or 6x-9x EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
How do you value a financial advisor's book of business?
Valuing a Financial Advisor's Book of BusinessRevenue. The seller will have to assess the currently-generated revenue that they're receiving in their advisory practice or through their book of business. ... Profits. ... Transition. ... Other Factors. ... Multiples Methods. ... Discount Cash Flow (DCF) and Single-Period Capitalization.
How do you value a service based business?
Normally, valuation is based on several criteria, including: history of profitability, cash flow, overhead, intellectual property, company reputation, number of years in business, opportunities for further growth and added profits, stability of key employees/management team, and customer diversification.
How do I find out the value of a book?
To help find the value of your old books, there are many price comparison websites that can help. Bookscouter is a great option, as all the information that you need can be accessed easily. Using the search box on the website, add in the title and author of the book.
How many times revenue is a business worth?
Typically, valuing of business is determined by one-times sales, within a given range, and two times the sales revenue. What this means is that the valuing of the company can be between $1 million and $2 million, which depends on the selected multiple.
How do you calculate average book value?
Average book value is taken by the start and end of the period divided by 2 because it assumes the book value trends from the start value to the end value in a straight line.
What is a good Ebitda for an insurance agency?
The average insurance agency wants to make 20 to 25% EBITDA, which means that $1 in expense savings is worth many dollars of revenue. Many agency owners focus on the top line when they really need to focus on their expenses.
What is an insurance book of business?
book of business in Insurance A company's or agent's book of business is the total of all insurance accounts written by them. The fundamental objective of underwriting is to produce a safe and profitable book of business.
Is starting an insurance company profitable?
Opening an insurance agency is profitable, but the salary range varies. This depends on whether you work for an insurance agency or start your own. Working for an already existing agency brings in around $50,000 per year; however, extremely successful can earn up to $100,000 per year.
Production Goals
Whether you’re a full-time agent or you’re selling insurance as a side gig, there is a lot of money to be made in this business. With so many people in need of your expertise, you can take great pride in the work you do.
Provider Networking
Doctor’s offices, senior centers, and gyms are all great places to generate activity for your Medicare business. Find out who the gatekeeper is and introduce yourself as someone who can help their members with Medicare coverage.
Direct Mail Marketing
The price of a 1,000 piece mailer is normally $450 to $500. Let’s assume that out of 1,000 mailpieces you make 3 Medicare sales. That’s a 3X return on investment!
Community Involvement
Are you involved with a religious organization, chamber of commerce, school board? These groups give you the opportunity to market your business for little cost. This could include bulletin boards, business cards, flyers, and word-of-mouth.
Digital Marketing
We all know that technology is increasingly important in the Medicare industry.
Client Relationship Management
As your Medicare business grows, you can quickly lose track of your data. A client relationship management system (CRM) helps nurture your client relationships with ease through contact management, sales records, automated workflows, email marketing, and website integration.
Brokerage Bucks
At The Brokerage, our agents are family to us, and we support their on-going growth and success in everything we do.
Why is product mix important?
The product mix is also really important, because not all products produce residual income. For example, a book of business that's all Medicare Supplement is worth a lot more than a book that's all annuity. The Medicare Supplement book of business has recurring income, while the annuity book of business doesn't.
Why is selling to your FMO a good idea?
Selling to your FMO is a great option, because the FMO doesn't want to lose that override that they're currently making on the book. They have a stake in it! Another big piece is the culture of your business.
Is selling annuities valuable?
Selling more insurance is a given, and if you're selling products that keep on paying you through renewals, it's more valuable. Not to say that annuity business, for example, isn't valuable – it just doesn't offer residual income. Having more new business is naturally going to follow when you're growing.
Overview of Medicare Supplements (Medigap)
Medicare is the public health insurance program created in 1965 allowing retirees to have health insurance even after leaving their employer’s group plan. Anyone aged 65 and older, people diagnosed with ALS or ESRD, and people who’ve received SSDI benefits for at least 25 months are eligible to enroll in Medicare coverage.
Is Selling Medicare Lucrative?
Selling Medicare supplements is a great opportunity to serve the underserved senior population and to make money. The Medigap market is two-thirds bigger than the Medicare Advantage market, and the plans are best-suited for people who travel and are financially stable.
The Best Way to Sell Medicare Supplements
Just like with selling any health insurance, Medicare comes with rules and regulations. The first step to selling Medicare supplements is obtaining a license to sell Medicare in your state. The second step is to get AHIP certification. While you don’t need AHIP certification to sell Medigap plans, it’s a great idea to obtain certification.
Medicare Basics
In order to effectively sell Medicare supplements, you should understand how the plans tie into Medicare as a whole. Here’s a general breakdown of Medicare:
Medicare Supplements Leads for Agents
Use more than one approach to reach potential leads. Email and social media are effective ways to reach your audience if you use the right tactics. Direct mail is still a great way to raise awareness even with the senior population using smartphones now more than ever before.
Start Making Money Selling Medicare Supplements
At Senior Market Advisors, our mission is to serve the underserved. The baby boomer market is all-too-often overlooked, and we want to help seniors live their best lives. When you partner with Senior Market Advisors, not only do you get to make a difference, you get an experienced marketing team, a sales support team and a free CRM to track sales.
Start Earning 6-Figures
Connect with a dedicated specialist in your market to learn how you can become a TRUE Senior Market Advisor.
Option 1: Cash Out Over Time
When somebody is ready to retire, this is the way to go. This is the perfect fit for someone who knows they're done and don't plan to get back into the business.
Option 2: Cash Out Immediately
Rather than getting a payment over 4-5 years, this option is one lump sum upfront.
Selling Without Retiring: Q&As
We got a lot of questions in this webinar! Here's a sampling of the questions asked along with our answers.
Conclusion
We've started something called a Discovery Call where it's so easy to schedule a phone call on my calendar. It's a 15-minute call, and it goes right on my calendar.
What is book of business?
A book of business is the customer base of a business that sells to other businesses. These are the customers who buy from the business on an ongoing basis. In the sale of a book of business, it is typical for the buyer to merge the purchased business into their business. They are likely to keep key employees, particularly those with ...
What is a business sale?
The typical business sale is one in which a buyer continues to operate the business as a standalone business. But, there can be other situations where a business sale will generate more value to the seller and the buyer when it is sold as a book of business.
What are the factors that affect the selling price?
There are two factors that affect the eventual selling price: the desirability of the customer base and how much competition there is for the business . Some factors that affect the desirability of the customer base are: How profitable the sales are – leaving out the fixed expenses of the selling business. How desirable the customers are, which ...
What is the valuation method for an insurance book of business?
2. The Price/Earning Method of valuation uses profits to determine value.
Is it a good idea to roll a book of business into a standalone firm?
According to Insurance Journal, it’s not a good idea to roll a book of business into a standalone firm. And according to experienced agents who’ve bought an insurance book of business in the past, you can’t expect that all the customers will stay.
Can you buy an independent broker's business?
Obviously, do not buy an independent broker's business if you are a captive insurance agent and vice versa. You must be able to service each client based on their carrier. No one said shopping for an insurance book of business would be easy, but it may be worth it if you find the right business with the right agreement.
Can you buy an independent broker's business if you are a captive insurance agent?
Obviously, do not buy an independent broker's business if you are a captive insurance agent and vice versa.
Production Goals
Provider Networking
- Doctor’s offices, senior centers, and gyms are all great places to generate activity for your Medicare business. Find out who the gatekeeper is and introduce yourself as someone who can help their members with Medicare coverage. If you want to improve your grassroots marketing skills, we highly recommend you read How to Win Friends and Influence Peopleby Dale Carnegie…
Direct Mail Marketing
- The price of a 1,000 piece mailer is normally $450 to $500. Let’s assume that out of 1,000 mailpieces you make 3 Medicare sales. That’s a 3X return on investment! Even if you sell just one new-to-Medicare policy, you add a new client to your book of business and get your cash back! There are several options when it comes to direct mail marketing. T...
Community Involvement
- Are you involved with a religious organization, chamber of commerce, school board? These groups give you the opportunity to market your business for little cost. This could include bulletin boards, business cards, flyers, and word-of-mouth. Another unique opportunity is participating in local health fairs! For a low fee, you could sponsor a small booth and present your products to th…
Digital Marketing
- We all know that technology is increasingly important in the Medicare industry. Make sure you have a website where people can learn more about you. Set up a free Facebook business page where you regularly share helpful content. Consider launching a YouTube channel where you explain the basics of Medicare and introduce your company. There is no magic formula for usin…
Client Relationship Management
- As your Medicare business grows, you can quickly lose track of your data. A client relationship management system (CRM) helps nurture your client relationships with ease through contact management, sales records, automated workflows, email marketing, and website integration. This will enable you to track your leads from the first contact to close, make smart business decision…
Brokerage Bucks
- At The Brokerage, our agents are family to us, and we support their on-going growth and success in everything we do. One of the ways we help agents grow their book of business is through our exclusive Brokerage Bucks program, where you could earn up to $5,400 annually in marketing dollars! Whether you are selling Medicare Advantage, Medicare Supplements, or Final Expense, y…
Conclusion
- The topics discussed above are based on real-life agents who have successfully grown their businesses. Now it’s your turn to choose which strategies best fit into your Medicare business plan and take action. If you have questions about how to grow your business, you can learn about partnering with our FMO.