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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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