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What questions should I consider when joining an FMO?
Not always. The state can only recover what's left in the annuity after the owner dies — and only after certain beneficiaries are paid (like a spouse or disabled child).
If the annuity payments finish before the owner dies, there's nothing left to recover.
If the owner dies while the annuity is still paying out, then the remaining balance goes to the state (unless another primary beneficiary is listed first, like a spouse).
A Medicaid Compliant Annuity is a good option for:
- Seniors who need long-term care soon
- People who have too much money to qualify for Medicaid right away
- Married couples where one spouse needs care and the other wants to protect income
It's best used in crisis planning situations, where time is short and the family wants to preserve assets legally.
No, a true Medicaid Compliant Annuity cannot be canceled once it's set up. That's part of what makes it compliant. The contract is irrevocable and non-assignable, meaning:
- The owner can't cash it out
- The owner can't change the terms or transfer it to someone else
This ensures the annuity is used only for income, not as a savings or investment tool.
An annuity is Medicaid compliant if it follows strict rules set by federal law. These rules include:
- It must be irrevocable (can't be changed or canceled)
- It must pay out within the owner's life expectancy
- It must make equal monthly payments (no lump sums or balloon payments)
- It must name the state Medicaid agency as a beneficiary (after a spouse or child if applicable)
If the annuity doesn't meet these rules, it could be seen as a gift, and hurt the client's Medicaid eligibility.
A good fit in terms of culture and communication can make a big difference in your overall satisfaction. Consider:
- Communication frequency and methods: How often does the FMO communicate with its agents, and what methods do they use (e.g., email, phone, webinars)?
- Accessibility of leadership: How accessible is the FMO's leadership team?
- Supportive environment: Does the FMO foster a supportive and collaborative environment?
This is arguably the most important question. You need to understand how you'll be paid and what percentage of the commission you'll receive. Inquire about:
- Commission splits: How are commissions split between the FMO and the agent/broker?
- Override commissions: Are there opportunities to earn overrides on the production of agents you recruit?
- Renewal commissions: What happens with renewal commissions on policies you sell?
- Chargebacks: Under what circumstances are chargebacks applied, and how are they handled?
- Payment schedules: How frequently are commissions paid (e.g., weekly, monthly)?
- Bonus programs and incentives: Does the FMO offer any bonus programs, trips, or other incentives?
A wider range of products and carriers can provide you with more options to meet your clients' needs. Consider:
- Carrier relationships: Does the FMO have strong relationships with reputable carriers?
- Product portfolio: Do they offer the types of insurance products you want to sell (e.g., life, health, Medicare, annuities)?
- Exclusive products or programs: Does the FMO have access to any exclusive products or programs that could give you a competitive edge?
- Contracting process: How easy is it to get appointed with the carriers the FMO represents?
This can significantly impact your success. Ask about:
- Marketing support: Does the FMO provide marketing materials, leads, or marketing tools?
- Training and education: What kind of training and ongoing education do they offer (e.g., product training, sales training, compliance training)?
- Technology and tools: What technology platforms and tools do they provide (e.g., CRM, quoting software, online enrollment platforms)?
- Back-office support: What kind of administrative and back-office support do they offer (e.g., contracting, commission processing, customer service)?
- Compliance support: How does the FMO assist with compliance requirements and regulations?
It's important to partner with a reputable and stable organization. Research:
- Years in business: How long has the FMO been operating?
- Financial stability: Is the FMO financially stable?
- Agent/broker feedback: What are other agents' experiences with the FMO? You can look for online reviews or ask for referrals.
- Compliance record: Does the FMO have a clean compliance record?
By thoroughly investigating these five areas, you can make a more informed decision about whether an FMO is the right partner for your insurance business.
