Why Independent Agents Should Create a Perpetuation Plan
July 6, 2021

What's your perpetuation plan?

If you just drew a blank, you're not alone. According to our 2021 Agent Report, over half of independent insurance agents in the senior market have no thought-out perpetuation plan.

Your insurance agency or book of business doesn't have to stop when you do. Here's how to plan for a legacy that lasts far beyond your years.

Sell Your Book of Business to New Horizons

What Is a Perpetuation Plan?

A perpetuation plan is the roadmap of who will take over your book of business when you retire or are no longer able to work.

There are several options when it comes to perpetuation planning:

  1. Internal perpetuation: your plan could be more of a succession plan, where you pass your book of business on to a child or family member. This is often called internal perpetuation.
  2. Sell: You could sell your book of business to another organization.
  3. Hybrid model: You could partner or merge with another organization or agency, allowing you to phase out your retirement and eventually sell the whole book of business. (We call this the hybrid model.)

Internal Perpetuation

Selling your book of business to a child or family member sounds good in theory, but there are a few things to think about.


First, do you have a family member who wants to take over your book of business? You may have the perfect opportunity where your child or grandchild just graduated and is ready to take over, but they just don't any passion for this business.

The second obstacle is the buying part – a lot of internal perpetuation plans fail because the family member can't afford to buy you out.

If you've valued your book of business at $75,000, but your child doesn't have $75,000, you need to come up with some kind of model that looks like a pension.

Perhaps they pay you monthly for a number of years, but that can be risky – your retirement is basically in the hands of your family member.

According to Family Business Magazine, "only 13% of successful family businesses last through three generations. Less than two-thirds survive the second generation."

It's definitely a perpetuation option, but I'd say less than 10% of agents end up going this route.

Selling Your Book of Business

Selling your book of business to an outside organization is one of the more popular perpetuation planning methods.

You typically have a discovery call with the interested party, you'll meet to nail down more of the specifics, agree on a valuation, and enter into an official agreement.

In our opinion, selling to your FMO is one of the best options. Your FMO doesn't want to lose the override they're getting on your business, and you probably already have a relationship with them. I'd start there.

Schedule your succession planning discovery call

You don't need to be ready to sell right now to start a conversation and do some planning. We often talk to agents who are 10 years out from even thinking about retiring. So don't put it off!

Partnering – the Hybrid Model

The third perpetuation planning option is what we call the hybrid model, or partnering with another organization or agency.

This is ideal if you want to start phasing out, but you're not ready to fully retire just yet.

We'd come together and put a fair, solid valuation on your business that we both agree with. We'd then give you a big check upfront – say it's 80% of the value. Then, we'd begin servicing the book, but we're partnering with you in that service. You're staying in the game.

We'd continue to pay you an income until you know you're ready to be done. When the time period is over, we settle up with you on the 20% you left on the table, plus any new business you accumulated during that time period.


You can read more about this partnership model here: How to Sell Your Insurance Book of Business Without Retiring

Why Do I Need a Perpetuation Plan?

If you have no perpetuation plan in place, your clients and the value of your book of business are at risk.

There are two main reasons to develop a perpetuation plan:

  1. To take care of your clients
  2. To take care of yourself

What happens to your clients when you stop servicing them? They're left in this state of limbo where they can't get the support they need, and no one is looking out for them.

Without a perpetuation plan, other agents often swoop in and pick off your clients until there's none left.

Your book of business has value – why not come up with a perpetuation plan that allows you to get paid for it?

When Should You Develop a Perpetuation Plan?

You should develop a perpetuation plan long before you're ready to retire. It takes years to iron out all of the details and to prepare mentally for the transition.

Even if you don't want to retire, sometimes life can force you to come up with a perpetuation plan. 

A couple of years ago, I asked a friend of mine who was nearly 70, "When are you gonna quit?" And his response was, "I don't think I ever will."

It wasn't but 6 months later that his mom passed away, and that major life event went off in his head like a lightbulb. He wanted out. Once he made that decision, he really couldn't make it happen fast enough.

It could be anything. Maybe you lose a buddy, and you think, "Gosh, life is short. I'm 72 – why am I still doing this?"

Your health could also be a component. If your health took a turn, you'd be forced to come up with a plan. Don't wait until that happens to make a plan.

You're adding stress, and you don't have as much leverage if you want to sell your business. It's like selling your house because you can't make the payments anymore – you're forced to do it, and the buyer knows it.

How to Start Your Perpetuation Planning

If you don't know where to begin but you want to start planning for the future, I'd suggest just giving me a ring. You can book a time directly on my calendar:

Schedule your succession planning discovery call

You don't have to know all the answers, but I've helped a lot of agents understand their options. It's absolutely no pressure – we're just chatting about your current business, what it looks like, and what your potential perpetuation options are.

If you have a child or family member who is a natural fit for this, and the timing could line up, start a conversation with them! You don't have to have a complete game plan today, but starting the planning process will give you so much peace of mind.


A lot of agents overlook their perpetuation plan – they say they're never going to retire, or they'll just ride out their book of business until the renewals die. But that's just not the right thing to do for your clients, and you're selling yourself short! Your book of business has value, and when you stop servicing it, it starts losing value immediately.

The best time to start planning for your business' perpetuation is now. I'd encourage you to schedule a call with me if you want to get into some of the details.

You can also ask any questions you have in the comments section below, and I'll be sure to help as best I can!

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