Life insurance sales can be a challenging profession, but it can also be financially and personally rewarding. Diverse individuals from a wide range of backgrounds can be successful in the field. If you’ve been seeking a career where you can set your own hours and interact with many people, life insurance sales will allow you to do both of those things.
Still, it’s not a career for everyone, and it’s good to be informed before you jump in. In this article, we’ll cover what it takes to succeed at selling life insurance. You’ll learn some of the positives of life insurance sales, as well as the challenges that are part of the profession.
How Much Money Can You Make Selling Life Insurance?
The median wage for life insurance agents in 2020 was $52,180, while the top 10 percent of agents earned over $127,840 during that time.
With such high potential earnings, it makes sense that so many people gravitate toward this career path. However, it’s imperative to understand that those earnings are directly dependent on individual performance.
Is Selling Life Insurance a Good Career?
Before getting started in selling life insurance, it’s a good idea to consider the type of work you’ll be doing. Selling life insurance can be an amazing career, but you should consider how comfortable you are with some of the unique aspects of the profession first.
Benefits of selling life insurance
There are many of positives about a career in life insurance sales. Here are just a few.
Low barrier to entry
Life insurance salespeople come from a wide range of backgrounds, and there are no specific educational requirements beyond a high school diploma. You can get certified and licensed to sell life insurance without completing a degree program. Requirements vary by state, but attaining licensure and certification usually only takes a few weeks or months at most.
Life insurance sales isn’t a typical nine-to-five job. You need to be available when your clients and prospects are available. Often, that means you’re free to take off during the day and meet with a client in the evening or on a weekend.
Life insurance has been around since Roman times, and the first life insurance companies in the U.S. started during the 1700s. As the population grows, so does the field of life insurance. According to the U.S. Bureau of Labor Statistics, the number of insurance sales agents will grow by 7% per year between 2020 and 2030.
Because purchasing a life insurance policy is typically a long-term commitment, the commission for life insurance agents is much higher than for other types of insurance. Agents might earn as much as 100% of the first-year premiums for a life insurance policy, before dropping to more standard rates of around 5%
Because life insurance policyholders tend to favor annual renewals, ongoing commissions can become a form of passive income for agents. You still need to work to maintain relationships and encourage ongoing renewals, but these ongoing commissions can add up to steady income.
Challenges of selling life insurance
Before you start a career in life insurance, it’s important to consider a few downsides, too.
A commission-based career
Life insurance agents earn their living on commission. That means that starting pay isn’t as high as some other jobs, and your primary earnings are based on commissions for the policies that you sell. Life insurance sales earnings build over time, but it can take a while to get going.
Not a back-office job
Successful agents are able to communicate effectively with potential customers, in person, over the phone, or online. If you have trouble asking others to complete financial transactions or make a commitment, life insurance sales could be challenging for you.
Hunting for leads
When selling life insurance, you’re responsible for finding prospects and converting them to sales. Because your compensation relies upon commissions, the more prospects you can locate and convert, the more money you will earn. The opposite is true, as well.
Life insurance benefits are paid when the subscriber dies, so you’ll need to be able to ask customers questions like “If you died tomorrow, would your family be able to pay their bills and continue their lifestyle?” Not everyone finds it easy to be that direct with others when talking about a difficult and emotional subject.
Communication skills are critical
You’ll work with diverse people in presenting life insurance policies. If you don’t have good communication skills — or you aren’t at least willing to develop them — life insurance sales may not be a fruitful career for you.
Types of Life Insurance Products to Sell
When you’re considering a career selling life insurance, it’s helpful to know the products you’ll be selling. Here are some of the most common types of life insurance products.
Term life insurance
This is the most common type of life insurance, and it’s popular due to its simplicity and low premiums. Term policies pay out only if the policyholder dies during the policy period (usually 20 or 30 years) and offer no cash value otherwise. These policies are ideal for young, healthy buyers who can secure affordable rates and use the savings to invest in other financial securities.
Whole life insurance
Also known as permanent life insurance, whole life policies never expire. They pay out whenever the policyholder dies, regardless of how old, and they build cash value over time. They come in several forms, such as universal life or variable universal life, but they all work in essentially the same way. The insurance company invests a portion of the annual premiums, and this investment produces a cash value that the policyholder can tap into when they need it.
These policies are ideal for clients who don’t like the idea of only receiving a benefit if they die, but they’re much more expensive than term policies.
Final expense life insurance
Final expense life insurance is a type of whole life policy that’s designed to cover the costs of funeral and burial expenses when you die. It’s less expensive than other whole life insurance policies because it covers a much smaller amount. It’s a great option for policyholders that want to supplement their existing coverage to ensure these final expenses don’t eat into their beneficiaries’ payments.
Mortgage protection life insurance
This type of coverage is designed to protect the policyholder’s family from the burden of paying off a mortgage if they die prematurely. Unlike other types of life insurance, the beneficiary is actually the lienholder, not the family members. If the policyholder dies, the policy would pay off the remaining mortgage balance, freeing the family from any future monthly payments or liability. This coverage is ideal for someone who is underinsured and unable to afford more life insurance due to poor health qualifications.
Indexed universal life insurance
Another form of permanent life insurance, indexed universal life offers the greatest flexibility as an investment product. Returns are based on the chosen stock index and can be higher than in other whole life policies. However, that potential return also comes with a higher risk. These products are best suited for policyholders who want to be actively involved and treat their life insurance as a major part of their investment portfolio.
Other types of life insurance
These are just a few of the primary types of life insurance you can sell. Within the broad categories of term and whole life insurance, there are many different policy types to consider. Group life insurance policies are also a great way to boost your sales success. There’s a policy to fit any type of prospect you work with during your career as an agent.
How To Get Started Selling Life Insurance
If you want to sell life insurance, the first thing to do is get familiar with the rules and regulations. Study and learn the licensing information in your state or other states where you want to sell, and pass the licensing exam. The life insurance licensing exam can be challenging, but with study and effort, you can be successful. Not all states publish the results of insurance exams, but you can see the pass rates for different exams and states by visiting the National Association of Insurance Commissioners (NAIC) website.
Another starting step is to apply for and receive an NPN (National Producer Number) through the National Insurance Producer Registry. An NPN number is essential to selling life insurance. Fortunately, companies that hire people to sell life insurance are experienced in helping prospective salespeople through the process of passing exams, licensing, and registration.
Other steps in getting started in selling life insurance are less formal. For instance:
- Prepare for rejection — possibly a lot of it. Prospective customers might be contacted many times a day with sales opportunities, and discussing the reasons why people need life insurance can be uncomfortable.
- Work on your relationship skills. When someone decides to buy life insurance, part of their decision will be based upon the product, but much of their decision will be based on their confidence and trust in you as the salesperson. Get the strongest start you can by building up your relationship and communication skills.
- Find a mentor. Working with a successful mentor in the industry can help a lot when you’re getting started. A mentor can give you a good idea of how to initiate conversations with prospects and how to close sales.
Article By: Amy Sterling Casil
Source: Nectar Marketplace