Being an insurance agent is actually at least three jobs. The first job is a sales position where you sit down with people and help them decide what insurance they need. the second job is a marketing job to find the people who will sit across from you. and the third job is to run a business, even if you don’t run the agency.
So, the truth about being an insurance agent is that it’s not for everyone. some people get one or even two parts of the job, that’s fine, but you’ll be in trouble if you can’t handle all three. But there are many common misconceptions and misunderstandings about selling insurance. Let’s set the record straight, once and for all, to make sure you can make a decision about your future career based on solid facts.
Is it worth being an insurance agent?
let’s say you’re ready to work hard learning the industry because that’s a good place to start. but hard work is not enough. Not many industries outside of financial services offer relatively inexperienced professionals the opportunity to earn a significant income, often within a year of starting. Even in financial services, few careers can offer you as a newcomer the potential to earn as much right away as becoming a life insurance agent. In reality, hard-working insurance agents regularly earn over $100,000 in their first year.
Life insurance agents enjoy a lucrative career, but it involves constant hustle and bustle, networking and sales at night and on weekends and general hard work. and there can be a lot of rejection before each sale. Rejection is standard in all sales careers, but insurance sales sets you up for significant rejection. If you have the ability to be objective, not take rejection personally, and keep coming back for more, you’ll do just fine!
Many agents start out with a small salary, but rely primarily on commissions from their sales to make a living.
Marketing or networking to find potential customers can be expensive or time consuming. then getting prospects to buy is an entirely different process. Going back to the three parts of the job, each agent finds some parts more manageable than others. You may love networking, but find it hard to close sales. another agent may hate networking so much that they rely almost exclusively on internet marketing to find prospects. and another agent could hire an office manager (or her partner) to handle all the paperwork.
Is sales experience required?
strong sales experience helps no matter the industry. You’re better off with consumer sales, but if you have experience selling to businesses, that’s better than nothing. once the agency hires you, you still must take a 25-50 hour class and then pass the state-administered licensing exam.
So success in the insurance industry comes with some sacrifice. it’s hard work, and many people who “try” (rather than “commit to”) the work tend to burn out sooner or later. you’ll hear “no” more often than “yes”, so you need a tough skin. many successful agents joke that there is nothing more exhilarating than making a lot of money!
Some people look down on insurance agents, and some even call them scammers. but consider rejection objectively. and don’t take it personally (even if they use your name). if you can do it, the paycheck and flexible lifestyle are well worth the effort.
Is it stressful to be an insurance agent?
Well, that depends on what’s causing you stress. carecast ranked an insurance agent 155th out of 200 on the worst jobs list. they classify stress as “average,” whatever that means. A good income offsets a lot of stress for many people, so it helps.
but if you find that one of the three basic aspects of the job is incredibly stressful, being an insurance agent gives you the flexibility to delegate those aspects of the job, except for the actual sales part. you have to do it yourself. and you’ll find that you need to do at least some networking, so if that causes you stress, rank “average” a little higher for yourself.
Gone are the days of sitting at your desk and telephoning thousands of people, right out of the phone book. that probably removes most of the perceived stress in the industry. With internet marketing, seo, websites, google ads, social media, and all the other ways the internet has to attract people to you, you won’t have to make cold calls.
That doesn’t mean I won’t make friendly calls. Once a prospect contacts you initially, you may be able to use email marketing to get them to schedule appointments with you. this automated process is even easier now that in-person appointments are not always expected. you can set up virtual appointments through a calendar system quickly, easily and cheaply.
Is it true that insurance agents make a lot of money?
Do lawyers make a lot of money? well, yes, some of them do. but some of them don’t. It is similar to insurance agents. The United States Bureau of Labor Statistics reports that an insurance agent earned $50,940 per year on average in 2019. The lowest 10% in the industry earned more than $28,000, and the highest 10% earned more than $125,000.
How you earn your income differs depending on the company you work for and the type of insurance you sell. You can work for salary, salary plus commission, salary plus bonuses or direct commission. the commissions are the variables. But being an insurance agent pays more for the best agents, period.
what determines the salary of an insurance agent?
then very few agents are likely to earn in that $50,000 range. Just like other sales jobs, they get better and higher payouts as time goes on and you gain more experience. Although you may have a $50,000 year, you’ll likely be on your way to a $75,000 year next year.
here are factors that can determine how much an insurance agent earns.
Your potential salary varies depending on whether you work as a captive agent or as an independent agent.
As a captive agent, you are tied exclusively to one company’s products. that only insurance company employs you.
- The company takes responsibility for generating leads for you, although you can also create your own. You settle into a formal office environment with other agents, but some companies now offer the option to work from your home office. however, you are limited to offering your clients policies only from that insurance company. that could make it difficult to close some sales.
- you will receive a base salary. sometimes the salary is pre-established, and other companies allow you to negotiate. check before accepting your first offer! commissions can be supplemented by quarterly bonuses added to annual earnings.
As an independent agent, you have your own company. sells policies from various insurance companies.
- you do all your own marketing, work wherever you want and present the solution you think is best for each client, no matter which provider offers the policy.
- the more experience you have in the field, you are more likely to want to be an independent agent. there is more risk, but there is also much more reward.
type of insurance
The type of insurance you sell also determines how much you earn.
- home and auto insurance pay a percentage of the premium and renewals. an ever-expanding book increases your passive earnings.
- Life and medical insurance policies give the agent a large percentage of the sale when the customer first signs up. there is ongoing revenue from policy renewals, but much less. after three years, many policies stop paying renewal fees altogether.
why do insurance agents fail?
The truth is that insurance agents fail for the same reasons other people fail in business. As we look back at all three aspects of the business, sales, marketing (lead generation), and business management, it becomes easier to see where potential failure lies.
Probably the most common reason insurance agents fail is because they expected too much too soon. these unrealistic expectations result from the need to succeed quickly. successful agents have a base of renewals. the new agents don’t. it is this lack of renewals that is a significant difference in revenue streams. therefore, a new agent, even if he sells a similar amount to an experienced agent, will earn much less.
expecting that it takes time to create a book of business big enough to support it is probably the most important element to being successful. after that, we can see the three aspects of the business.
You will have to work very hard to make the number of sales presentations necessary to be successful as an insurance agent. And new insurance agents rarely have the same closing rates as more experienced agents. In the beginning, it may take double or even triple the number of visits with a potential client to underwrite a policy. that takes time and more work.
In addition, many new agents lack specific sales training. no industry training. generic “how to sell” information. While your personality may open the door for you, you’ll need to know how to present benefits, answer objections, and ask final questions to win new clients. read books. take courses. consider this an important priority.
To be successful, someone has to generate leads for you. As a captive agent, most of the work is done by your organization. But don’t leave everything to them! ask for references. the net. find your own potential customers, too. the leads you find are more likely to close.
As an independent agent, internet marketing can be expensive. don’t give up insurance is a competitive industry and you won’t get immediate and overwhelming results. SEO marketing is like networking. you have to be in both for the long haul.
run the business
If you don’t return your calls, can’t handle your paperwork, or forget to pay your lease, you’ll find that failure is just around the corner. If these aren’t your strengths, consider remaining a captive agent or hiring an exceptional office manager to handle this for you. your business depends on it.
focus on your commissions instead of customer needs
The entire foundation for being a successful agent is having positive and ongoing relationships with clients. if you are too focused on your commissions or fees, your customers can see right through you. they will most likely offer policies that don’t cover what they need and end up selling nothing.
It is much more effective to offer real solutions to the needs of your clients and accept the commissions as a reward for having done a good job. commissions are important but remember that it is the renewals that are most important. Outstanding service is the secret ingredient to success as an insurance agent.
what are the benefits of being an insurance agent?
Ask 100 insurance agents what the benefits are and you’ll get 100 answers, most likely more. In essence, the most successful agents truly love insurance. the idea of creating security for people when they need it most is ultimately incredibly satisfying.
Consumers don’t know about all the different insurance policies, so many agents feel responsible for educating people about their options. As unfortunate as it is when something goes wrong in a customer’s life, it can be exceptionally rewarding to let someone know they’re covered.
many agents love dealing with a constant stream of new people every day. they enjoy discovering their insurance needs and the process of putting together insurance programs to meet those needs. Organizing the partnership between clients and vendors is something that many agents really enjoy.
The insurance industry is a constant learning experience. things are constantly changing and the most successful agents love to learn. they learn directly about insurance-related topics, but they also learn about sales, marketing, and business management. the details of new available policies may sound boring to others, but insurance agents love to learn about it too! as they learn about the new policies, they imagine how customers can benefit and how they will explain the new offers.
Is it better to work as a captive or as an independent insurance agent?
This is a critical decision that every insurance agent must make for themselves. while there is more security as a captive agent, there are more opportunities as an independent agent.
- A captive agent works for a company and sells only that company’s policies. An independent agent works for himself and represents many insurance companies.
- A captive agent is provided leads through the company he represents, though he is free to find some on his own. an independent agent must find their own potential clients through internet marketing, networking, or asking for referrals.
- a captive agent receives a salary plus commissions and/or bonuses and employee benefits such as insurance medical. an independent agent receives only commissions on policies sold or renewed.
- a captive agent has access to administrative help, other agents, and a manager/mentor. an independent agent should hire help if needed.
- A captive agent may be required to sell specific policies and meet sales quotas, creating a conflict of interest. independent agents can offer whatever product they feel is right for the customer, without anyone looking over their shoulder.
- a captive agent can focus their knowledge on the company’s offerings, offering a deeper understanding of the clients. an independent agent may not have studied the specific policy in such depth.
Captive agents often offer exceptional service levels because their salary gives them the freedom to focus on building relationships. Being an independent agent means starting a business, as well as finding insurance companies to represent.
should i start as a producer and then transition to insurance agent?
many agents begin a career as captive agents. some are happy to stay. others end up frustrated by the inability to build an insurance portfolio to provide clients with exactly what they need. Knowing that there are cheaper options and policies that might better align with clients’ priorities elsewhere makes some agents feel their hands are tied. there’s a reason it’s called a “captive” agent, and to some, it feels like being captive.
The core of the insurance industry is about helping people improve their finances and manage risk. therefore, for many agents, transitioning to becoming an independent agent often makes the most sense. Giving customers exactly what they need and never worrying about what the company you work for wants from you gives many the freedom they want.
Independent agents can offer their clients many options at different prices, so they can choose what is best for themselves. And ultimately, an independent agent knows that whatever the client chooses means a comfortable life. many former captive insurance agents encourage others to regain their freedom when they become independent insurance agents.
is it smarter to start an insurance agency from scratch or buy an existing agency?
See also: How Age Affects Car Insurance Costs
When you think of starting an insurance agency, you may have thought of starting from scratch. but there are some clear drawbacks to starting that way.
- build a customer base
- create a marketing plan
- hire employees
- establish initial cash flow
and you have to do all of that without a reputation or history to begin with.
Buying from an insurance agency presents unique risks that do not apply to other industries. There are many important due diligence and regulatory issues to consider if you are considering purchasing an insurance agency.
For those worried about the difficulties of starting from scratch, buying an existing agency may be a better option. you take charge of the operation that is currently generating cash flow, with an established client renewal base and reputation. plus, you can choose to hire any current employee who is already familiar with the business.
Some jurisdictions expect to be notified of any acquisition of an insurance agency. Texas requires pre-closing notice and will exercise approval authority or allow “considered” approval without notice of disapproval. Even indirect changes of control in insurance agencies may be subject to regulatory requirements, especially if the agency is licensed to do business in every state. any change in director or officers generally requires a specific enhanced regulatory disclosure.
so, when deciding whether to take over an existing agency or start your own, know that there is work involved in both. There is no easy road to the freedom and flexibility of being an independent agent.
how do you stand out as an insurance agent with so many competitors?
the competition is fierce. So how do you distinguish yourself?
Let’s go back to the three basic elements of business. sales, generate leads and manage the business.
stand out with your sales presentations
To stand out with your sales presentations, start by focusing on your customers’ needs. don’t sit down at the table with your launch pad and just list all the available products to show how much you know. let them know that you want to make sure they can choose from the best possible options, so you need to know about them. and then ask them about themselves!
Stay relevant to your insurance needs, but feel free to go a little further to build the relationship. and listen. Present only what they need to know based on what they told you. come back another time if you need to, but don’t throw everything at them and expect them to choose. you are the expert!
network! spend time with people. not just time designed to get leads, either. volunteer. live in the community. let people see you.
ask for references. be nice about it, but ask. Ask for references in your email signature. ask after each sale. even ask after you are rejected. each. unique. time.
Spend the time, energy, and money it takes to build a web presence. get a website hire an seo team. uses social networks. your potential customers are on the internet. go find them!
run the business
offer superior customer service in your office. answer phones immediately. respond to emails promptly. get your paperwork right. offer value-added services.
Is the market saturated with insurance agents?
Let’s see the situation from the other side.
- The latest available data tells us that about 13% of drivers have no auto insurance coverage, and that number is as high as 20% in 5 states. these rates are rising.
- Census statistics report that in 2018, 5 million Americans did not have health insurance, and that rate is rising.
- In 2020, only 54% (up from 59% in 2019) of Americans had some life insurance. in 2019, 37% of these policyholders said their life insurance was designed to replace income, but 30% said the policies were designed only to cover final or burial expenses. half of those with some life insurance are considered underinsured. Usually the reason is that they only have group life insurance through an employer, which is usually not enough.
So if the market is saturated with insurance agents, how come Americans are so drastically uninsured? maybe it’s the economy, or the government, or even individuals who are to blame. but there is still huge potential!
how to succeed as an insurance agent
Insurance agents enjoy a rewarding career with nearly unlimited earning potential. To be successful, you need specific skills throughout your career. Focus on the three elements of success: sales, lead generation, and running your business. create a balance with these three areas in mind, and you will succeed. and if you have an area of weakness, take some training or delegate it to someone who will happily complete it for you!
Being an insurance agent is like olives. some people love them. some people hate them. but very few people are ambivalent. an insurance agent who prospers selling insurance, as a captive agent or as an independent agent, will tell you the truth of it as “there is no better career!” someone who decides to try being an agent for a while to see if she likes him may tell a different story. they may have a list of complaints that makes it hard to imagine anyone would choose that job, even if the pay is good.
If you have a strong work ethic, superior sales skills, a willingness to generate leads (especially through networking), you could be in it for the long haul. the freedom and flexibility to attend family events and meet a constant stream of new people could fuel you. but it may be time to learn more about internet marketing, as that is the future of lead generation in most industries, but especially in the insurance sector.
perhaps the truth is that you are already an insurance agent, even if you don’t work as one yet!