Full-time life insurance salespeople solicit life insurance or annuity contracts, or both, primarily for one life insurance company, on a full-time basis. The company or general agent usually provides their salespeople with office space, telephone facilities, forms, rate books, and advertising materials.

A full-time life insurance salesperson is an employee when he or she meets the definition above and

• •

  does not have a substantial investment (RS 02101.300E) in the equipment and property they use to perform the services (other than an investment in transportation equipment, i.e., to carry documents or contracts);

• •

  the service contract states or implies they are to perform substantially all of the services personally;

• •

  performs the services on a continuing basis for the same payer. In this instance, the payer is the life insurance company.

A full-time life insurance salesperson is one whose “entire business activity” or “principal business activity” is the solicitation of life insurance or annuity contracts, primarily for one life insurance company. Generally, the employment contract shows whether the salesperson meets these requirements. The intention of the salesperson and the company, as shown in the employment contract, and as shown by their mutual performance of the contract, rather than the amount of time the salesperson devotes to the work, determines whether the salesperson qualifies as a full-time salesperson. We deem the entire or principal business activity of an insurance salesperson to be the solicitation of life insurance or annuity contracts where the arrangement with a life insurance company also allows for the solicitation of only incidental accident and health insurance.

Where the employment contract clearly shows that full-time services are intended, the salesperson meets the full-time requirement. If the contract terms provide for part-time services, the salesperson is not a statutory employee (for more information on statutory employees see RS 02101.300) regardless of the amount of time the salesperson devotes to the work. Either party to the contract may question the intent of the contract.

When someone questions whether the salesperson’s performance is consistent with the written contract terms, determine if the parties came to a mutual understanding regarding the deviation. If the parties agreed to the change in their original contract, or the company acquiesces (complies silently) in it, the salesperson's status must be modified effective with the date the change took place. The terms of the original contract govern the salesperson’s status prior to that date.

When the company knows that the salesperson’s performance is not consistent with the contract terms but refuses to change the original agreement or to agree with the deviation, determine whether there is a reasonable basis for the company's position.

Where there is no written contract, or the contract does not clearly reveal the mutual intent of the parties, determine the salesperson's full time or part time status based on their answers to questions 22 and 23 on Form SSA-7160 (Employment Relationship Questionnaire).

Where the contract does not reveal the intent of full-time or part-time services and the parties disagree, determine the salesperson's status by evaluating all of the facts. Give considerable weight to the company’s classification of their salespeople, provided there is a reasonable basis for such classification.

An entire business activity may or may not be full-time. Salespeople do not have to spend 8 hours a day, 5 days a week, in their sole business activity to meet the full-time requirement. They may work regularly a few hours a day and qualify as full-time insurance salespeople if their employment contract intends that they engage in full-time work.

Many salespeople work for one company only, but spend an hour or two a day, or a day or two a week making occasional sales. Generally, in such situations, even though the services are the salesperson's only work effort, they are not substantial enough to be an “entire business activity.” The salesperson whose efforts are so irregular, intermittent, or sporadic that he or she is not engaging in any business activity is not a statutory employee.

A principal business activity takes the major part of the salesperson's working time and attention. It is necessary to determine the principal business activity when the salesperson engages in several business activities. Consider these factors:

• •

  Insurance companies usually treat part-time and full-time salespeople differently where commission rates, renewal schedules, pension plans, etc., are concerned. In what category did the company place the salesperson (full-time or part-time)?

• •

  What are the opinions of the parties involved? Give considerable weight to a statement by the company that the salesperson was or was not required to devote his or her work efforts principally to selling its policies. Give weight to a similar statement by the salesperson only if other evidence supports it.

• •

  The salesperson's total working time (the amount of time spent by the salesperson in connection with all business activities). What portion of that time does the salesperson spend soliciting for the company in question?

• •

  What is the ratio of the salesperson's earnings from the services in question to the total earnings? Does the ratio indicate that the major part of the salesperson's income comes from the company in question?

The salesperson must devote his or her efforts principally to soliciting life insurance or annuity contracts. Occasional or incidental sales of other types of insurance, such as accident and health, or the occasional placing of surplus-line insurance will not affect this requirement. However, the salesperson who is required to devote a substantial effort to selling applications for insurance contracts other than life insurance or annuity contracts (e.g., accident, health, fire, automobile), does not meet the requirement.

It may sometimes be necessary or desirable to determine if life insurance subagents are employees of the general agent or of the insurance company. Generally, subagents hired by the general agent are employees of the insurance company if the insurance company countersigns or approves the employment contracts. Where this is not the case, fully explore the contract arrangements to determine whether the general agent or the insurance company is the employer.

If you find that the subagents are employees of the general agent, this fact will usually preclude the general agent from meeting the personal service requirement since the agent has the option to delegate a substantial part of the sales services to subagents. In addition, most general agents cannot meet the full-time requirement.

• •

  IRS Publication 15-A Employer’s Supplemental Tax Guide

• •

  Social Security Handbook Chapter 828 Full-time Life insurance Salespersons