What an IMO is, and what it costs you

What does an IMO actually hold?

An IMO holds one thing that matters, a distribution contract with one or more insurers, usually near the highest level that insurer releases, plus the right to build a hierarchy of agents under it.¹ Everything else it offers grows out of that contract. Training, quoting software, contracting help and sometimes leads are paid for by the room between its level and the level it hands down.

FMO, or field marketing organization, describes the same job. Ritter, itself an FMO, writes that an IMO is "basically the same as an FMO".³ One recruiting site calls an IMO a middleman between insurers and independent agents.² That is accurate, and it is the right frame. A middleman is paid by the deal, so the question is always how much of the deal it keeps.

There are a lot of them. The Marketing Alliance counts "well over 100 IMOs operating in the U.S." and notes that the number of independent owners is shrinking.⁴

Holds

Insurer contracts near the top level, with room to contract agents below

Earns

An override on every policy written beneath it

Provides

Contracting, training, quoting tools, sometimes leads

Does not

Issue policies, set premiums or pay claims

Controls

Your release, and often whether your renewals stay yours

How is the IMO paid out of your policy?

The insurer pays commission at the top level of the chain. Each layer keeps the gap between its own level and the level of the layer below, applied to the same premium. The writing agent is paid at the bottom level. Nothing is deducted from your statement, because the money never reaches you in the first place.

In many independent arrangements the insurer pays each party directly under its own contract, so the IMO is not holding your check and deciding what to pass on.⁵ The split is still fixed by the levels, and the levels are set by contract.

The levels above are invented. For industry data on real first-year ranges by product, see how life insurance agents get paid. To run your own chain, use the override spread calculator.

What do you get in return for the override?

You get whatever the IMO does with its share, which ranges from a great deal to almost nothing. Redbird says it plainly, "higher comp isn't everything as some IMOs offer generous rates but little to no support."² The reverse is also true. Heavy support can come with a level so low that the support is expensive.

Leads deserve a separate look. One lead vendor's analysis argues that when an upline supplies leads, the agent often pays for them by accepting a lower level, a cost that never appears as a line item.¹ Ask which mechanism is used before you call any lead free.

What can an IMO not do for you?

An IMO is not the insurer. It does not issue the policy, price it or carry the claim. The insurer holds the policy liability and files your appointment with the state, not your upline.¹ No law requires you to use an IMO either. In practice most new agents do, because insurers rarely open a direct contract to someone with no production record.¹

What an IMO can do is hold onto you. Your place in the hierarchy is set when the insurer processes your contract.¹ Leaving usually takes a release from that upline. Without one, David Duford, who runs an IMO himself, describes the exit as stopping production with those insurers for six months.⁷ He also writes that most IMOs do not allow releases at all.

Who owns the IMO you are signing with?

Often not the people you are talking to. The IMO market has spent several years consolidating. The Marketing Alliance lists Integrity as the largest consolidator, with completed deals "in the dozens", Simplicity as having "publicly claimed more than 65 acquisitions", and AmeriLife as describing itself as the largest IMO in the U.S. with "more than 20 acquisitions on record."⁴

Ownership matters because the owner of the contract sets the terms. The same source warns that after an acquisition, comp grids and release terms can change on the buyer's schedule, not the agent's.⁴ Ask who owns the firm today and what happens to your book if that changes.

What should you ask before you sign?

Ask for every answer in writing. Duford's advice is to "Ask to see any commission levels in writing, not just word-of-mouth."⁷ The Marketing Alliance adds, "Ask for the release policy before signing."⁴

• My contract level for each insurer and product, and what moves it up
• How many layers sit above you with each insurer
• Your standing release policy, as a document
• Whether vesting is immediate, graded or conditional on staying
• Advance or as-earned, at what percent, and who carries a chargeback
• How leads are paid for, and who owns the lead and consent records
• Who owns your firm, and whether a sale is pending

Duford puts the vesting goal simply, "Ideally, you want complete ownership from Day 1."⁷ The full scoring method is on how to choose an IMO, and the layer names are untangled in IMO, FMO, BGA and MGA compared.

Where does North Life Group sit in this?

North Life Group is an independent agency. In a typical chain an agency sits between a marketing organization and the writing agent, so we are one of the layers this page describes. When an agent contracts through us, the insurer pays that agent at the agent's level and pays the agency an override on top. Contracting terms are shared on a call. We do not print a level here that would change by insurer and product. How the agency earns money is set out on how we are paid.

Questions people ask