Ready for Retirement? Plan for the Future Today!

Every agent needs to decide the right time to move on from their business.
ready for retirement
1 Feb 2022

Ready for Retirement? Plan for the Future Today!

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As a senior health insurance agent, you know how much your work impacts your clients’ quality of life. This work is rewarding, but there comes a time in every professional’s life when you want to start focusing on yourself.

By the time you start dreaming more about traveling than meeting your annual business goals, hopefully, retirement is within reach. But what does retirement look like as an independent insurance agent and business owner?

If you’re feeling the retirement itch, here are a few questions you should ask.

Question #1: Should you sell your business?

This is an important question! The factors influencing this decision will depend on where you are financially, how large your business is, and what you want your transition into retirement to look like. The good news is that the Bureau of Labor Statistics projects a 7% growth from 2020 to 2030 in jobs for insurance agents, so you shouldn’t have difficulty finding a buyer if you do decide to sell.

Take a look at your numbers from the past few years. Has your business grown, declined or remained steady? If your sales are shrinking, you might want to put some thought into selling before losing any more value.

Selling is a great option, but the process can take time and effort. If you know retirement is still a few years off, you have time to focus on your numbers and start scouting out buyers.

Also, consider whether you want to sell as one lump sum, overtime or as-earned.

Question #2: Should you give away your business?

If your client base is smaller than it once was or your annual gross commissions are declining, selling may present some challenges. If this is the case for your business, giving your business away is an excellent alternative to selling.

Giving away your client list saves you the headache of negotiation and vetting an unknown buyer. You get to pass on your years of hard work to someone you know will provide the same level of service. Good candidates for gifting your business are a colleague you’ve grown to trust and respect, a business partner who wants more ownership, or even a relative interested in continuing the family legacy.

Question #3: What’s your business worth?

Before you decide to sell or gift your business, you need to know how much your asset is worth. A quick and easy method for determining the value is assessing your annual gross commission. Most agents will pay anywhere from 1x to 2.5x the annual gross commission for a book of insurance business.

The multiplier is determined by the amount of annual income your business produces and the products you sell. A buyer will consider those factors and how they’ve fluctuated over time before making an offer on your business.

While this is by no means a set formula, this type of estimate can give you a good idea of what a buyer might be willing to pay. Once you find the perfect buyer, they’ll either pay you a lump sum, overtime or as-earned.

Question #4: How can you increase the value of your business?

If you assess your value and don’t like the number you see, you’ll need to set your sights on growth before putting your book of business on the market.

Grow your business by focusing on renewal plans like Medigap or Advantage that will appeal to buyers. Also, focus on cross-selling plans like Part D or Long-Term Care insurance to maximize the value of each client.

Optimizing your product mix will also increase the value of your business. For example, do you offer a combination of annuities, Medicare Supplement and Advantage Plans? The more diverse your portfolio, the more appealing your business is to buyers. Diversify to include plans with recurring income and annuities to round out your portfolio.

If you’re ready to start thinking about retirement, we can help. Contact us today to learn more about selling your Medicare insurance business.


image credit: shutterstock/Gustavo Frazao