How Hard Is a Career Selling Life Insurance?

Selling life insurance is a tough way to make a living and an even tougher way to pursue a lucrative and sustainable career. However, some industry analysts, such as job site Monster.com, report that agents burn out within a year.

The challenges faced by new life insurance agents are many. The salary is usually direct commission. Finding qualified clients yourself is notoriously difficult, and the few leads your company gives you, if any, have usually been contacted by dozens of agents.

Key points to remember

  • Successful careers in life insurance sales take time and perseverance.
  • Life insurance agents are paid in commissions and must find potential clients themselves in a competitive market.
  • It can be relatively easy to find jobs selling life insurance.
  • Life insurance sales can be passive income because once you sell a policy, you continue to earn a commission on it, provided the policy owner pays their monthly premiums.

Advantages and disadvantages

On the bright side, selling life insurance offers a few perks that are hard to find in other careers. First, life insurance sales jobs are plentiful and easy to find. Second, the commission percentages are very high compared to other insurance sales, such as health insurance.

Even better, life insurance agents receive paid commission renewals for as long as a sold policy is in force. This creates a passive income flow.

However, even when you locate a good lead, the product itself is a tough sell. People are loath to discuss or even acknowledge their own mortality. Plus, unlike a new car or cell phone, life insurance doesn’t offer any of the instant gratifications that drive people to make impulse purchases.

Most companies even reimburse you for the cost of obtaining your license, but only after you have sold a certain amount of bonuses.

Difficulty no. 1: commission-based remuneration

The majority of life insurance companies classify their agents as independent contractors. They neither offer base salaries nor advantages. This means that an agent can work a full week, but if they don’t make any sales, they don’t pay.

The advantage of not being classified as an employee is that the company cannot force you to work fixed hours, you set your own schedule. That said, selling life insurance, especially in the early years, requires working a ton of hours if you want to have any chance of making a decent living.

A few companies offer employee status, which comes with a small base salary and benefits. Agents of these companies are held to rigid production quotas. To lack your monthly sales target more than once or twice and you might be shown the door.

Challenge #2: Customer Acquisition

Finding qualified life insurance prospects is fraught with challenges. Even harnessing the power of the internet, good leads are hard to come by. Lead sellers abound online, but most of their leads aren’t exclusive, meaning they’re sold to multiple agents.

Exclusive leads, when you can find them, are very expensive. Your close rate, i.e. the percentage of leads you actually sell, has to be phenomenal just to break even with exclusive leads. And employers who provide leads almost always charge you a lower commission in return.

For these reasons, many life insurance agents do business the old fashioned way: cold calling and door-to-door. These methods still work, even in the 21st century, but be a successful insurance agent requires a lot of perseverance and a very thick skin.

Challenge #3: The Sales Process

Even when presenting to the most qualified prospect, don’t assume you have an easy sale. Life insurance is a very difficult product to sell. Just getting your prospect to acknowledge and discuss the fact that they are going to die is a difficult first step. When and if you clear that hurdle, your next task is to create urgency so they buy right away.

It’s also difficult because the product offers no instant gratification and leaving the date without signed papers almost always means you’ve lost that prospect forever. The customer may be sincere when they say they’ll think about it, but chances are they won’t think about it five minutes after walking through the door.

On the other hand of all these difficulties, there are also advantages.

Advantage #1: Job prospects

Compared to most careers in finance, become a life insurance agent is easy. No educational requirements exist beyond a high school diploma at most. Some states require you to take a licensing course and pass an exam, but truth be told, it’s as easy as a fifth-grade spelling test.

Life insurance sales jobs are everywhere. Online job search sites are full of them. Since most companies offer commission-based compensation with no guaranteed income, they have no incentive to limit hiring. They offer jobs to anyone interested and hope that a small percentage of hires will become productive agents.

Benefit #2: High Salary Potential

By far, life insurance sales offer the most important commissions in the insurance industry, but it depends on the type of insurance sold. For example, most car insurance salespeople earn a percentage of the policy written. With life insurance, you earn a percentage of the policy when it is sold, and then you receive another commission each time it renews.

The United States Bureau of Labor Statistics reports that insurance sales agents earn a wide range of salaries. The bottom 10% only earn about $28,000 a year, but those in the top bracket (90%) earn $125,000. The median salary is nearly $51,000 per year.

In addition to high commissions, some life insurance companies advance their agents a specific amount of commission based on calculating the agent’s earning potential rather than having it considered earned, but others do not. not.So, for example, on a $100 per month policy, with a six month advance, you will receive a check for $600 on the day the policy is issued.

The downside occurs if the policy expires within the first six months; if this happens, your employer rebills you for the unearned portion of your advance.

Benefit #3: Renewal Commissions

The commission you earn on the sale of a life insurance policy is not limited to the first year. On the contrary, you continue to be paid as long as the policy is in force. Your commission percentage on a policy decreases after the first year, but you continue to earn 5% to 10% as long as the insured pays their monthly premium. It’s the passive income you receive every month without even having to get out of bed.

Most life insurance agents don’t last a year in the business, let alone five years. Those who persevere, however, are immensely rewarded with renewal commissions.

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