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Farmers Insurance Agent Subsidy

Posted by DanaJ 
Farmers Insurance Agent Subsidy
October 04, 2007 11:39AM
A friend tried to help a buddy get his inital recruit sales finished by refering me to him. Long story short I started reading and ended up here. I have a question about he 'salary/subsidy' paid to career Farmers agents.

Now I understand that in year 1 and year 2 you get a subsidy (about $3000+/month based on sales) from FIG. This debt (not a salary) is to be forgiven at a rate of 1/3rd per year starting in year 3. So, if you stay for five years it is all paid off. Leave early you pay them the remainder based on time-served.

My question(s): You start year 3, what happens? Do you get more subsidy that you repay over years 4,5,6? Does the sudsidy turn in to a salary? Does it just stop coming in and you're on your own?

Thank you for your help. I'm trying to derail this guy before he screws up his life (I don't think he, or his family, has it in him to suffer for five years).

-D



Edited 1 time(s). Last edit at 10/04/2007 01:16PM by administrator.

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Re: Farmers Insurance Agent Subsidy
October 04, 2007 01:19PM
Dana,

Prospective Farmers Insurance Agents should see these pages:
[www.farmers-online.com]

From Farmers Career Agent Program...
(http://www.farmers-online.com/farmers_career_agent_program.aspx)

"Subsidy = Debt

Max everything out and it can be incurred at a rate of $40,000 a year. What happens if you dont make your numbers and get your contract cancelled? You owe subsidy back to Farmers.

Can you honestly sell 24 overpriced Life policies to yourself for the next 24 months? Because it sure isnt easy to sell them to other people.
Can you afford the additional $1700 a month for 24 months?
Can you work 80 hours a week?
How do you feel about owing $80,000 if you fall just barely short of Run to Daylight numbers?
How do you feel about owing money if you dont make it through the program?
How many agents make it through the career program? 1 in 10? 1 in 5?

What makes that 1 person make it through? Do they have enough reserves? Did they get Lucky? Do they just work hard? Are you that agent? You have to be 100% sure, because you're financial future is on the line."



Edited 3 time(s). Last edit at 10/04/2007 01:32PM by administrator.

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I was in the reserve program for 6 months until I sold enough PC & life policies to go career. When I went career, all hell broke loss. Farmer’s underwriters that approved policies were told that their office was being moved from Illinois to Kansas. Of course, nothing was getting approved as quoted with all the dissatisfaction in the home office. With premium increases I could not sell and make the numbers that I agreed to upon signing the contract. So I was terminated 1 year after going Career with demands of payment $3,400 subsidy and threats of being sued for violating the Farmers competition clause. The District Manager was absolutely no help. He knew problems and turned a deaf ear. Please let me know if and when a class action suit is filed.

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OK J
Re: Farmers Insurance Agent Subsidy
February 24, 2014 08:19PM
My accountant brought it to my attention that Farmers incorrectly and illegally files their taxes by including subsidy payments on agent's 1099 statements. The 1099 is only to report business income and since the subsidy is supposedly a 0% interest loan, it should not be reported as income. When it's reported as income, Farmers writes it off as a business expense and the agents have to pay taxes on it. Instead of having a taxable income of 30,000, it should be listed as 20,000 and have the extra loan listed separately. After 2 years of employment with Farmers, I left to work for another insurance company. After leaving Farmers, I received a letter stating that I owed 20,000 in subsidy that I must pay back to avoid being sent to collections. So now, even though I've already reported that 20,000 on my taxes, Farmers can't now require me to pay it back. It's either a loan or it's taxable income. It can't be both. When you get a loan from a bank, you don't report this on your taxes as income. Farmers is trying to reduce their tax liability and also try to bully agents into paying them money back too because the agents don't know any better. 1099 should:

Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed or your trade or business by an individual who is not your employee

[www.irs.gov]

After consulting with my accountant, I was advised not to repay any subsidy. I advised Farmers that they illegally filed my 1099 and that if Farmers wants to pursue this further, I will be notifying the IRS of this practice. Since over reporting an agents actual income is a form of tax evasion, Farmers doesn't want this kind of attention. They only want to get as much money out of you as possible. Furthermore, if they trying to damage your credit or send anything to collections, they can be sued and brought to court. They could even be named in a class action lawsuit. Stand your ground and consult with your accountant or lawyer before paying Farmers anything.

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DanaJ Wrote:
-------------------------------------------------------
> A friend tried to help a buddy get his inital
> recruit sales finished by refering me to him. Long
> story short I started reading and ended up here. I
> have a question about he 'salary/subsidy' paid to
> career Farmers agents.
>
> Now I understand that in year 1 and year 2 you get
> a subsidy (about $3000+/month based on sales) from
> FIG. This debt (not a salary) is to be forgiven at
> a rate of 1/3rd per year starting in year 3. So,
> if you stay for five years it is all paid off.
> Leave early you pay them the remainder based on
> time-served.
>
> My question(s): You start year 3, what happens? Do
> you get more subsidy that you repay over years
> 4,5,6? Does the sudsidy turn in to a salary? Does
> it just stop coming in and you're on your own?
>
> Thank you for your help. I'm trying to derail this
> guy before he screws up his life (I don't think
> he, or his family, has it in him to suffer for
> five years).
>
> -D

I want to know if you can refuse the subsidy or immediately pay it back as soon as it is given to you. Does anyone know the answer to this?

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Nancy
Re: Farmers Insurance Agent Subsidy
May 01, 2015 08:22AM
You can not refuse, you are required to take it. Can't pay it back early either. They push it down your throat

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3yr career
Re: Farmers Insurance Agent Subsidy
June 17, 2015 11:30AM
I am going through this right now. I would like to know more about what happened to you and the steps you took. I gave up my agency due to personal problems, becoming a new mom, and i had a horrible DM that like to use me as a 'whipping girl' . The stress level to continue was so high I was having panic attacks and anxiety. I currently work for a Farmers Agent who is very cautious of Farmers and it's contracts. He has told me and informed a lot of the backside of farmers. He knows his contracts through and through and says that it is not a company for new agents to start with. the commissions are too little and the overhead is too high. He has been and agent for over 20 years.

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Torey
Re: Farmers Insurance Agent Subsidy
July 02, 2015 09:06AM
Jim Snyder Wrote:
-------------------------------------------------------
> I was in the reserve program for 6 months until I
> sold enough PC & life policies to go career. When
> I went career, all hell broke loss. Farmer’s
> underwriters that approved policies were told that
> their office was being moved from Illinois to
> Kansas. Of course, nothing was getting approved
> as quoted with all the dissatisfaction in the home
> office. With premium increases I could not sell
> and make the numbers that I agreed to upon signing
> the contract. So I was terminated 1 year after
> going Career with demands of payment $3,400
> subsidy and threats of being sued for violating
> the Farmers competition clause. The District
> Manager was absolutely no help. He knew problems
> and turned a deaf ear. Please let me know if and
> when a class action suit is filed.


They're horrible, and someone needs to sue them BIG time in a class-action!

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Re: Farmers Insurance Agent Subsidy
November 01, 2015 10:06PM
Quote
OK J
OK J
Re: Farmers Insurance Agent Subsidy
February 24, 2014 08:19PM
My accountant brought it to my attention that Farmers incorrectly and illegally files their taxes by including subsidy payments on agent's 1099 statements. The 1099 is only to report business income and since the subsidy is supposedly a 0% interest loan, it should not be reported as income. When it's reported as income, Farmers writes it off as a business expense and the agents have to pay taxes on it. Instead of having a taxable income of 30,000, it should be listed as 20,000 and have the extra loan listed separately. After 2 years of employment with Farmers, I left to work for another insurance company. After leaving Farmers, I received a letter stating that I owed 20,000 in subsidy that I must pay back to avoid being sent to collections. So now, even though I've already reported that 20,000 on my taxes, Farmers can't now require me to pay it back. It's either a loan or it's taxable income. It can't be both. When you get a loan from a bank, you don't report this on your taxes as income. Farmers is trying to reduce their tax liability and also try to bully agents into paying them money back too because the agents don't know any better. 1099 should:

Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed or your trade or business by an individual who is not your employee

[www.irs.gov]

After consulting with my accountant, I was advised not to repay any subsidy. I advised Farmers that they illegally filed my 1099 and that if Farmers wants to pursue this further, I will be notifying the IRS of this practice. Since over reporting an agents actual income is a form of tax evasion, Farmers doesn't want this kind of attention. They only want to get as much money out of you as possible. Furthermore, if they trying to damage your credit or send anything to collections, they can be sued and brought to court. They could even be named in a class action lawsuit. Stand your ground and consult with your accountant or lawyer before paying Farmers anything.

I tried to leave Farmers earlier this year and they made me stay another 6mos saying it was part of my contract to give 90 days notice. I was not paid any more commission and they still wanted me to service my book of business.

OK J - my question is, did you end up paying any or all of your subsidy? are you currently disputing it? I apparently owe $41,000 in subsidy for about 2 years of being a career agent. Looking at my 1099s in previous years, the numbers just don't add up. They have sent me to a 3rd party collections company already and and is offering to pay a lump sum of 50% or pay monthly over 3yrs which comes up to $1150mo....both options are impossible for me. I was a good agent. I was #1 in the entire district of 45 agents in quotes and activity and this is what I get.

I would love more information or anything you can shave about your subsidy payback experience. After reading your post, and it being so recent....I'm going to see if I can avoid paying this back and or filing bankruptcy and ruining my life.

If anyone else has any experience, I would love to hear about it. Thank you in advance!

Marc in Washington

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3yr career
Re: Farmers Insurance Agent Subsidy
November 01, 2015 10:10PM
3yr career Wrote:
-------------------------------------------------------
> I am going through this right now. I would like to
> know more about what happened to you and the steps
> you took. I gave up my agency due to personal
> problems, becoming a new mom, and i had a horrible
> DM that like to use me as a 'whipping girl' . The
> stress level to continue was so high I was having
> panic attacks and anxiety. I currently work for a
> Farmers Agent who is very cautious of Farmers and
> it's contracts. He has told me and informed a lot
> of the backside of farmers. He knows his contracts
> through and through and says that it is not a
> company for new agents to start with. the
> commissions are too little and the overhead is too
> high. He has been and agent for over 20 years.


We are in the same boat. Are you able to share anything more about your experience? How much subsidy debt are you? I owe almost $42k and already in collections, because there is no way I can afford their terms. Hello Farmers.... I no longer have a job.

Any input that anyone can provide is appreciated. I would really love the support. Thank you.

Marc in Seattle, WA.

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3yearcareer
Re: Farmers Insurance Agent Subsidy
November 05, 2015 11:24AM
I owe almost 26k. I do start my own topic post her on this website. It is under My subsidy payback story. It is my whole story thus far. I will try to post the letter that i used to stop the collections calls and farmers harassment mail. Look at your contract through and through. Find the spot (which i have looked over mine and i haven't seen it) where it says you have to payback subsidy once you leave. I also faxed to agency services for my contract. They sent me one that was signed a few months AFTER i signed my original. I was smart enough to have a copy of my ORIGINAL contract.

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Re: Farmers Insurance Agent Subsidy
November 21, 2015 07:44AM
3yearcareer Wrote:
-------------------------------------------------------
> I owe almost 26k. I do start my own topic post
> her on this website. It is under My subsidy
> payback story. It is my whole story thus far. I
> will try to post the letter that i used to stop
> the collections calls and farmers harassment mail.
> Look at your contract through and through. Find
> the spot (which i have looked over mine and i
> haven't seen it) where it says you have to payback
> subsidy once you leave. I also faxed to agency
> services for my contract. They sent me one that
> was signed a few months AFTER i signed my
> original. I was smart enough to have a copy of my
> ORIGINAL contract.

3yearcareer - Thank you so much for replying to me. This is all a horrible nightmare. I'll be reviewing all my documents. I have reviewed my 1099s from my 3yrs and my subsidy is included in my income each time. The collect that calls me keeps threatening that I will be in trouble with the IRS if I don't pay and my debt will be recorded as taxable income. (when they have already done that) So I just don't pick up or return their phone calls anymore. I faxed farmers about copies of my subsidy/commission statements and they have yet to reply. To date, I have not heard anyone's story about how they actually paid their subsidy. So I will follow your story and I hope yours (and mine) ends soon and on a positive note. Thank you for sharing your experience.

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Re: Farmers Insurance Agent Subsidy
January 16, 2016 12:38PM
I am in the same boat as you after 2 years with Farmers I owe $39,000 in subsidy the only option I am going with that me and my attorney thinks is best is claiming bankruptcy. It hasnt happen yet but a few of my colleagues got stuck with a large tax bill once Farmers decides to show it as taxable income to you and write it off I am not taking that chance. Farmers is a joke

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I spent seven years as a district recruiter and reserve DM for farmers. I always tried to make sure new agents understood how the subsidy worked, but the reality was that there was tremendous pressure from upper management to sugar coat and gloss over these details in the interest of bringing on new agents. Because of this pressure, most of the DMs in Farmers are at least a little bit crooked. Many of the DMs don't make it known that subsidy is a LOAN until your about to sign the paperwork. Other DMs make it sound easy to make enough money to pay it back without any trouble, or to get it waived entirely. Most agents who make it to career don't survive, so they all leave with some amount of debt to farmers.

Once you make it past year three you are off the subsidy and even if you are still around you have to pay it back unless you hit the run to daylight numbers which are pretty much impossible. I had five agents make it through the career stage in my seven years and they are all still making payments to farmers. All five of those agents who survived also came during my first three years with the company. More recently, less competitive pricing and reduced commissions have made it even tougher to survive.

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Re: Farmers Insurance Agent Subsidy
January 29, 2016 11:33PM
Hi dkman,

I'm sorry to hear you are also in this mess. It's the most ridiculous thing I've ever experienced.

I'm wondering why your attorney is recommending you file bk... didn't Farmers already report your subsidy/commissions to the IRS when they paid you? Doesn't your 1099 include earned commission AND subsidy? and isn't that what you used to file/pay your taxes? So doesn't that mean that the IRS already knows about this money? And can it be made taxable income AGAIN? Ask your attorney about that angle and see what they say...

I'm torn. The information does not seem to add up. Again...does anyone know any former agent...(that left Farmers) that has paid for their subsidy? I'm sure if you say with Farmers, they will get it from you. but what about in our situations?

And what if THEY DO submit it to the IRS as taxable income??? then you owe the IRS taxes which are only a fraction of the subsidy amount...let's say 25%.... I'd rather let them do it and pay the $10k to the IRS... and $10k is nothing to file bk over...

I'm just trying to find some logic here... anyone have any ideas or thoughts on my angle here? I would love to hear it..... Thanks!

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Re: Farmers Insurance Agent Subsidy
January 29, 2016 11:37PM
FARMERS IS A BIG JOKE!

I watched my crooked, unethical DM give all the orphan policies to families agencies... what a coincidence that his wife and 2 son in laws all have flourishing agencies... What a crock... and Farmers allows this....

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