Insurance Agent Glossary: IMO, FMO, BGA, Override and More

These words are trade terms, not legal ones. Organizations use them loosely, and the contract you sign matters more than the label. Ask what an organization actually does for you. Our guide on choosing an IMO lists the questions to ask.

IMO (independent marketing organization): a company that sits between insurance carriers and independent agents and offers contracting, training, marketing and back-office support. LFG is an IMO.

FMO (field marketing organization): much the same job as an IMO. Many people use the two words as one, and the exact meaning can change from one company to the next.

BGA (brokerage general agency): a larger distribution firm that holds contracts with many carriers and gives agents and IMOs access to them. LFG gets carrier access through back-office partners.

MGA (managing general agent): an agency a carrier has given authority to handle tasks such as appointing agents or underwriting. The exact powers are set by contract.

GA (general agent): an agency that represents one or more carriers and recruits and supports agents. In daily talk it overlaps with MGA and BGA, so ask what the person means.

NPN (National Producer Number): a unique nationwide ID for a licensed producer, assigned during licensing. It is separate from your state license numbers, and you can look yours up through NIPR.

Appointment: a carrier's record that you may sell its products. A license says you may sell insurance in a state. An appointment says you may sell for that carrier. It is not the same as your contract with your IMO.

Non-resident license: a license in a state where you do not live. You hold a resident license in your home state and add non-resident licenses for other states, usually through NIPR.

E&O (errors and omissions) insurance: coverage for claims that you made a professional mistake, such as a wrong answer on an application. Ask whether a carrier or organization requires it and who pays.

Captive: an agent who sells for one company and usually cannot sell competitors' products. Contracts vary, and some give the company rights to the client list, so ask who keeps the client if you leave.

Independent: an agent who can sell for more than one carrier. Independent does not mean alone or free of contracts. Ask in writing who keeps the client and what you owe if you leave.

Release: written permission, from your IMO, upline or carrier, to move your contract. Rules and waiting periods vary. Get the release terms in writing before you sign.

Non-solicit: a clause that limits whether you may contact clients or agents after you leave. What it covers and whether it holds up vary by state and contract, so have a lawyer read it.

Street level: the commission level a carrier pays an agent who is contracted directly with it. Anyone above you in the chain is usually paid from the gap between their level and yours. Ask what level you would hold and who above you is paid from it.

Contract level: the commission level on your contract for a given carrier and product. Levels differ by person, carrier and product. Ask for the full schedule in writing, not one line of it.

Override: the share of commission an upline earns on business written below them, usually the difference between their contract level and yours. Ask how it works on your own contract, and whether you could earn one.

Vesting: when you earn the right to keep renewal commissions after you leave. Some contracts vest renewals after a set time or amount of production, and some never do. Ask what vests, when, and what happens to renewals if you leave early.

Advance: commission paid up front, before the carrier has fully earned the premium. Not every carrier advances. Some pay as earned.

Chargeback: the carrier takes back the unearned part of an advance because the policy lapsed or was cancelled early. The contract sets the window.

Debit balance: the amount you owe when chargebacks or other charges are larger than your new commission. Ask how it is collected and whether it can be reported or sent to collections.

Roll-up: an unpaid debit balance that passes up to the upline or organization above the agent. Some contracts include it. Read how it works in both directions.

Book of business: the clients and policies you wrote and service. Who owns it, who keeps renewals and who services the client if you leave depend on your contract. For business you write at LFG, the writing agent keeps the client.

CRM (customer relationship management system): software where you track contacts, follow-ups and notes. At LFG a CRM is optional when you start.

Warm market: the people you already know, such as family, friends and former coworkers. Selling to them means offering coverage, not asking them to join a team. Recruiting is a different thing, and it is not required at LFG.

Final expense: a small whole life policy, usually for older buyers, meant to pay funeral and end-of-life costs.

Mortgage protection: a name for life coverage sold to help a family pay the mortgage if the owner dies. It is often a marketing name for term or whole life. Lenders may sell separate mortgage life or credit life products, so read what you are buying. The policy underneath is usually term life or whole life.

Annuity: a contract that provides income for a set period or for life, according to the NAIC. Guarantees depend on the claims-paying ability of the issuing insurer.

IUL (indexed universal life): permanent life insurance with a cash value account whose interest is linked to a market index, usually with a cap and a floor. The policy is not invested directly in the index, and illustrations are not guarantees.

Term life: life insurance that pays a death benefit only if the insured dies within a set period, such as 10 or 20 years.

Whole life: life insurance that stays in force for the insured's entire life, as long as premiums are paid, and pays a benefit at death.