Ever feel as though you've hit a wall and can't come up with afresh new idea to generate more sales and revenue? Who hasn't?

Occasionally, finding a creative sales idea is not to thinkabout what's new at all, but rather something old: Dust it off andre-launch it as a new selling tool your competitors haven't eventhought about.

Well, there is such an idea. It's called the “Stand-By” — or, inlegal terms, the “Stand-By Agreement.”

Understanding the potential uses of this tool can provide agencyowners, brokers and producers with opportunities to:

• Help clients who have no succession plans to protect andperpetuate their businesses.

• Gain new qualified prospects.

• Acquire other agencies on a contingency basis funded withinsurance dollars.

• Earn substantial commissions resulting from all of the aboveactivities.

The “Stand-By Agreement,” also known as a “Wait-and-See”agreement, is simply a buy-sell contractual agreement between twounrelated parties that kicks in when a specific event occurs, suchas death, disability or other contingency, to provide for theorderly transfer of business assets. Sole proprietors, especiallysmall competitors in the same line of work (almost any business orprofessional, including insurance agents and brokers) with nopossible succession plans in place might find that this arrangementcould give them peace of mind about their family's future financialsecurity.

Naturally, the parties of any proposed agreement should alwaysconsult with their attorneys and tax advisors before anything isfinalized.

Here's a hypothetical example: Using life insurance to fund allor a portion of the business valuation, a typical $500,000 wholelife policy on a preferred male age 50, nonsmoker, in New Yorkshould cost about $12,000 annually. The approximate projection ofcash value on a guaranteed basis in 15 years would be more than$140,000 and could be substantially greater on a nonguaranteedbasis with dividends used to purchase paid-up additionalinsurance.

The producer's first-year commission could be in the 55% range,or higher with overrides. Assuming two individuals of the same age,the commissions in the first year could be well over $12,000. Themany valuablebenefits permanent life insurance can provide isbeyond the scope of this column, but the more you look at what thisplanning can achieve, the more comfortable and convinced you willbecome. With appropriate legal and tax advice, proceeds paid outfrom a life insurance policy can often provide very favorable taxadvantages.

Related: Go outside to grow your agency'sbusiness

With some creativity, the contingencies for other events such asdisability, retirement, early withdrawal and an emergency fund canalso be incorporated into the agreement.

The potential new sales and revenue opportunity using the old“Stand-By” are almost unlimited. You:

• Helped your client protect his or her future financial securitywith contractual guarantees.

• Met a new qualified prospect (your client's other end of the“Stand-By” who potentially can become your client); after all, hisor her insurance broker did not come up with this idea — youdid.

• Can use the “Stand-By” yourself with other agency owners, oftenthose you know well, who may not have the possibility forestablishing a buy-sell succession plan internally or withfamily.

In previous articles I talked about multi-line and cross-sellingopportunities, and that 80% of your new sales will come fromexisting clients. This is a clear example of what you can do tocreate more sales and revenue opportunities.

Start right now. Go through your client base and pick out six orso to start with. Over the years we did this in our agency withtrade contractors, dentists, machine shops and others. Thepossibilities are endless. If you are life-licensed, your generalagent will be glad to help design the right plan. If you are notlicensed, partner with someone who is—and then get your license.Remember: You are in the insurance business. You sell insurance toprotect assets. Don't limit yourself to selling only P&C oronly life insurance.

Barry Seigerman is an independent broker/producer. Contacthim at [email protected].

Related: Take an 'inside' look at your salesprocess