MA Rule Number (1) One

The Company, LLC. (AAG)
Membership Agreement Rule No. 1

SUBJECT: Insurance Commissions

  1. Sales Position Designations Covered by this Agreement Rule. This Membership Agreement Rule (“Rule”) is issued pursuant to the Membership Agreement (“MA”) and applies to all associates of The Company, LLC. (“AAG”), including those who hold the Vice President (Level 20) sales position and higher-level sales position designations.
  2. Purpose. This Rule clarifies, expounds on and further defines the commission payment policies that are addressed in the MA and that have become effective in previous publications to the field.
  3. Commissions. Members are compensated for sales of the Products and Services. Such compensation takes the form of a commission. The commission rate for each one of the Products and Services varies and the rates are published from time to time by AAG. AAG is obligated to pay commissions to the Member only to the extent that AAG receives commissions from the Product Provider and the payment of commissions is allowed by law.

The Difference Between Earned Commissions and Advance Commissions

Upon the issue of an insurance policy, no commission is earned. Monies may be advanced as a loan to a Member upon the issue of an insurance policy (“Advance Commissions”) even though the full premium has not been paid by the applicant. The Company, in its sole discretion, may limit or discontinue advances without notice.

Only after the Product Provider accepts an application, receives premiums, and issues an insurance policy can a commission begin to become earned (“Earned Commissions”). Once a policy is in force, Advance Commissions begin to become earned as premiums are paid to the Product Provider by the customer and the policy remains in force. Commissions paid on policies which do not advance are earned when received (“as earned basis”). If, for any reason, an application for an insurance policy is rejected, then no commission is earned by the Member. Furthermore, if an issued policy lapses, is canceled or is rescinded within a specified period of time, then the amount of any Earned Commissions on that policy may be affected.

The total of all unearned Advance Commissions on policies currently in force at any point in time is known as a Member’s “Advance Balance”. The amount of the Advance Balance, the Chargeback Balance, and other amounts owed by a Member, directly or indirectly to AAG or an AAG Affiliate, which has not been recovered from Earned Commissions, is called a Member’s “Debit Balance”. (AAG Affiliates include SEPO Insurance Services, LLC. (“SIS”); and other companies affiliated with AAG.)

All commissions paid to Members, whether considered Advance Commissions or Earned Commissions, net of commission chargebacks, Roll Ups, reversals or other charges, are reported as required to the IRS on a cash basis for tax reporting purposes.

Commission Rate

The commission rate to which a Member shall be entitled is the rate published by AAG. AAG may, from time to time, in the exercise of their sole discretion, and without notice, increase or decrease the rates and amounts of commissions; provided, however, that any such changes will be applicable on a prospective basis to any new business and any commissions earned thereafter on new contributions to existing business. Similarly, AAG will not be responsible for clerical errors of commission rates in published commission tables.

Repayment of Advance Commissions

Advance Commissions with respect to an insurance policy will generally be repaid from the Member’s Earned Commissions derived from that policy. Thus, as Earned Commissions are generated with respect to an insurance contract, AAG will apply them against the Advance Balance on that policy. In the event an Advance Balance is not repaid from Earned Commissions generated with respect to the same insurance policy, then the amount not repaid becomes a chargeback. A chargeback may occur for a number of reasons. Reasons for a chargeback include but are not limited to (i) policies that are canceled or lapse or are reversed, (ii) policy premiums which are misappropriated, or (iii) policies that do not recover in a reasonable length of time. The total of the chargebacks is known as the “Chargeback Balance” and is part of the associate’s Debit Balance and may be recovered from an associate in any of the following ways: First, by applying any Earned Commissions otherwise payable to the Member. Second, by applying any Advance Commissions payable to the Member. Third, by applying all amounts payable to the Member by AAG, any AAG Affiliate or any of the Product Providers. Fourth, by exercising any other legal rights and remedies available to AAG.

Upon termination of a Member’s MA, the Member must immediately repay to AAG all of his/her Debit Balance. In the event a Member violates any of the Covenants in his/her MA, the Member must immediately repay to AAG all of his/her Debit Balance.

Repayment of a Member’s Debt

Included in the Member’s Debit Balance are additional items the Member is obligated to pay, such as insurance fees, licensing fees, etc. In addition, the cost, including the uninsured (deductible) portion of defending and/or settling actions against AAG, SIS and other AAG Affiliates (including complaints, claims, lawsuits, arbitrations and regulatory actions) incurred by AAG, SIS and other AAG Affiliates arising from acts or omissions of an Member, will become part of such Member’s Debit Balance.

Up to 100% of available Advance Commissions, Earned Commissions, renewals and trails may be used to recover a Member’s Debit Balance. Once a Member’s Debit Balance has been completely recovered, the Member will receive all remaining commissions.


Interest will be charged on the Member’s Debit Balance at the end of each month and will be added to the Debit Balance. AAG may allow a Member to repay his or her Debit Balance in installments based on the amount of the Member’s debt and a Member’s potential ability to repay the debt. The installment period, interest charged and basis for repayment may be changed at any time at AAG’s discretion.

Further Assurances

In the event AAG determines that the total amount of an associate’s Advance Commissions is excessive, then AAG may require such Member to immediately repay his or her Advance Commissions within five (5) days from being sent notice by AAG requiring such repayment. Examples of excessive commissions may include, but are not limited to, clerical errors, errors made in payment of commissions, and errors made in publishing of commission rates. Advance Commissions paid on any one case shall be subject to a maximum amount as determined by The Company from time to time. Thus, five (5) days after AAG mails such notice that a Member’s Advance Commissions are excessive, repayment is due. AAG’s determination that the amount of a Member’s Advance Commissions is excessive shall be final and conclusive.

Debts Other Than Advance Commissions

In General

AAG or an AAG Affiliate is entitled to satisfy any amount a Member owes AAG or a related party in the following ways: first, by applying any commissions payable to the Member by AAG, an AAG Affiliates or a Product Provider; and second, by enforcing any other legal rights and remedies available.

Grant of Security Interest

Each Member grants a continuing security interest to AAG, to each AAG Affiliate and to each entity to whom Debit Balances may have been assigned or otherwise transferred, and assigns to AAG, to each AAG Affiliate, and to each entity to whom Debit Balances may have been assigned or otherwise transferred, all commissions (including Advance Commissions) payable by AAG, a AAG Affiliate or the Product Providers to the extent necessary to satisfy the Member’s debts and obligations to AAG, AAG Affiliates, and to such other entities. Such assignment and grant of security interest are given in order to secure payment of each Member’s debts and obligations to AAG, AAG Affiliates, and to any entity to whom Debit Balances may have been assigned or otherwise transferred. Such debts and obligations include a Member’s Debit Balance and the Member’s indemnification obligation.

Downline Debt

Member acknowledges and understands that Member is compensated under this Agreement only from the sale or referral of the Products and Services offered through The Company by Member or Member’s Downline Members.  The Member further acknowledges ad understands the Member’s obligation to repay any outstanding Debit Balance, including but not limited to terminated and non-terminated Members Downline Debit Balances owed to The Company.  Member hereby assigns and grants to the appropriate The Company a continuing security interest in all Pending Commissions payable to Member from The Company to the extent necessary to satisfy any Indemnified Losses or Debit Balance obligation of Member or the Members downline. Member agrees to execute such additional instruments or documents as may be necessary from time to time to perfect such security interest. This assignment is given to The Company to secure the Member’s obligations as set forth in this Agreement. Member expressly authorizes The Company to withhold Pending Commissions in connection with any indemnity obligation of the Member owing to The Company. Member shall be responsible for any attorney’s fees and court cost incurred by The Company as a result of Member’s actions or misconduct.

Effect of Illegal or Prohibited Conduct

Notwithstanding any provision of this Rule to the contrary, if a member breaches any of the restrictive covenants he/she has entered into with AAG or an AAG Affiliate, then the Member cannot earn, and will not be credited with, further commissions. If an allegation is made about a Member that concerns such Member’s contract(s) with AAG or an AAG Affiliate, then AAG or an AAG Affiliate may withhold commissions otherwise payable to the Member until the allegation has been investigated and the Member’s entitlement to the commission is determined by AAG or the AAG Affiliate. Further, in order to receive commissions from AAG, the Member must have the legal right to receive such commissions.