Becoming a Life Insurance Agent

There are only a few industries outside of financial services that allow relatively inexperienced people to earn a considerable wage in their first year of employment. And there are few occupations in the financial services business that allow beginners to make as much as a life insurance agent straight away. In fact, a hardworking insurance agent can make more than $100,000 in their first year of sales.

However, success as an insurance agent comes at a cost. It's a tough field, and most people burn out sooner than later. Insurance salespeople hear "no" significantly more than "yes." And it is not uncommon for the word "no" to be delivered with a slew of insults and the metaphorical door in the face. Furthermore, many individuals hold insurance salespeople in poor regard; some even compare them to glorified con artists. However, for those who can deal with the possibility of rejection, the money and flexibility of working as a life insurance agent can be worthwhile.

Overview of the Insurance Field

While there are many different types of insurance (from auto insurance to health insurance), the most profitable vocation in the insurance industry is selling life insurance. Agents who specialize in this area of the insurance market assist families, corporations, employers, and other parties in protecting against financial loss in the event of someone's death.

Insurance agents who sell this form of coverage are classified as "captive" agents, meaning they exclusively sell insurance from one firm, or "non-captive" agents, which represent numerous insurance companies. In either case, the typical insurance agent will spend the majority of their time engaging in marketing activities to identify people who may require new or additional insurance coverage, providing them with quotes from the companies they represent, and convincing them to sign the new insurance contract.

A life insurance agent often receives 30% to 90% of the client's first-year policy payment (also known as the premium). In later years, the agent may collect between 3% and 10% of the annual premium, often termed as "renewals" or "trailing commissions."

Insurance Sales Commission Example

Uni, the insurance agent, sells Ryan a whole life insurance policy that covers him for the rest of his life (provided he continues to pay his premiums). Uni's insurance provider pays a 90%/5% commission on whole life plans, which means the selling agent earns 90% of the first year's premium and 5% of subsequent renewals.

Ryan's policy costs $100 per month, or $1,200 per year. Thus, in the first year, Uni will earn a $1,080 fee on the sale of this life insurance policy ($1,200 x 90%). Uni will receive $60 in renewals in coming years as long as Ryan continues to pay the premiums ($1,200 x 5%). An agent selling one or two policies per week at this commission level might earn $50,000 to $100,000 in their first year as an agent.

Life Insurance Agent Qualifications

As previously stated, working as a life insurance agent is not for the faint of heart or those with thin skin. Indeed, more than any other factor, including education and experience, life insurance salespeople must have a battling spirit. They must be folks who enjoy the thrill of the chase, the rush of a sale, and regard rejection as a necessary step toward success. A job in life insurance sales is not suitable for persons who consider themselves introverted, soft-spoken, or fearful of conflict.

The vast majority of life insurance firms require no formal schooling to become an agent. While many people prefer college grads, the general rule is frequently ignored in favor of the "right" individuals. Previous expertise in the insurance industry is not required because most medium and big insurance companies have internal programs to train their salespeople on the goods they will offer.

While it may be easy for a determined go-getter to land a job with a respected insurance business, there is one non-negotiable barrier between a potential insurance agent and their commissions: state licensing. Insurance agents are currently licensed by the state(s) in which they plan to sell insurance. This usually entails passing a state-administered licensing exam as well as attending a licensing class lasting 20-50 hours.

Getting Hired to Sell Insurance.

If you believe that a career in life insurance sales is right for you, there are a few steps you may take to get started. First and foremost, you will need to create a resume that demonstrates your business mentality. You'll want to include anything that demonstrates your effort in making things happen, whether it's starting your own business or expanding someone else's firm. Life insurance agents must be motivated and capable of working independently. Resumes that demonstrate a history of this type of activity can help you get your foot in the door.

Once you've refined your resume, start looking for jobs and applying. It is critical that you do not feel compelled to accept the first opportunity that comes your way, since working for the wrong firm might burn you out and haunt you for the rest of your insurance career. Ideally, you'd like to work for a well-known organization with a positive reputation among customers, other agents, and insurance rating agencies.

Perhaps the best place to start when determining where to apply is to go to the insurance company rating websites like AM Best, Moody's, or Standard & Poor's. From there, you can create a list of companies in your state with "A" or higher ratings. These companies often provide the most secure products at reasonable costs, with a focus on rewarding and retaining quality agents.

Be sure to follow up.

Once you've compiled this list, start researching each organization. Due to the high turnover rate of insurance agents, most organizations prominently publicize their job advertisements by geographic location, making them easily searchable for you. When you find a company in your neighborhood that appears to match your personality, apply for the position and be sure to follow the directions on the company's website.

Follow up with phone calls once a week until you receive a response. Many insurance company recruiters may refuse to interview a possible agent who does not make a follow-up contact; this is viewed as a strong signal of a potential agent's persistence. During your interview, emphasize your entrepreneurial and "never-say-quit" personality; most employers will hire someone based on these qualities over all others combined.

If you're lucky enough to get the job, you may expect to spend the first 12 months handing out business cards and making phone calls. Your sales manager will be the first to tell you that your sole "purpose" in life is to find prospective customers. In fact, they'll be far more concerned with the number of contacts you make each week than with your knowledge of their product range. 

You might anticipate suffering financially in the first several months until your first sales commissions arrive. While some organizations provide a pay to keep new employees from starving, this is becoming less common. Many agents today are fortunate to be reimbursed for one to two months of training before being placed on a "commission-only" basis.

A few warnings.

While the life insurance industry promises huge benefits for individuals who are ready to work hard and endure a lot of rejection, there are two traps to be aware of. First, you will most likely be required to market to your relatives and family. While this may be appealing and appear to be a fantastic way to get started, it can also lead to the loss of many relationships with those you care about.

Second, go to your state insurance commissioner's website and look up the complaint history of companies you're thinking about working for. Insurance firms with less than an "A" rating, as well as those who sell insurance through a multilevel marketing scheme, are more likely to get complaints than larger, more established organizations.

Accepting a job with the incorrect insurance business might lead to burnout and jeopardize your future prospects. If you truly want a career in life insurance sales, take your time and look for the appropriate opportunity at the right organization. Doing so will increase your prospects of long-term success.