In this article I’m going to share with you everything that you need to know to sell life insurance. It’s going to be a complete beginner’s guide from getting license to selling your first policy. How much realistically can you make as a life insurance agent I’m going to be covering it all in this article.
If we haven’t met yet my name is Johnny Nan and I’ve made over $500,000 in life insurance commissions in just under 2 years. To be transparent I’m going to be answering all the questions that you haven’t even thought of asking your agency owner your upline the person who brought you into the business so you can avoid common pitfalls in this industry and I only share these things with you because I’ve been burned multiple times and I’ve been at multiple agencies in the life insurance space and I want to make sure you have the lessons without the scars.
How Much Can Life Insurance Agents Realistically Make?
So before I get into exactly how to get license and start selling I want to answer the very first question that you’re probably going to ask yourself is how much realistically can life insurance agents make. The reality is the average agent only makes $50,000 per year. Now there’s a huge wide range of people who do make it and also people who don’t make it in this space. The reality is 92% of life insurance agents fail so there is a lot of risk involved but just like any other industry there’s people who make it and the people who don’t and the people who actually do make and do succeed win big. Your potential is uncapped and you can make 20 to 40K a month relatively quickly within 1 to 2 years of starting from zero. There’s people that I’ve personally have met and been mentored by that make over seven even eight figures per year which is very few and far between but it is possible.
How to Get Licensed
So let me share with you exactly how you can get licensed. So the way I did it was I started with a pre-licensing course called America’s Professor. Now not all states have that I’m in Arizona so that was awesome that they did but if they don’t then I would use Excel Solutions. It doesn’t matter necessarily the pre-licensing course the thing that matters most is that you get through all the course content that you do really well in the quizzes and then you take as many practice tests as humanly possible. It’s just a standardized test that you have to pass and typically it’s a 70% or higher to pass and it’s just a pass fail. The nice thing about these questions is that they’re all multiple choice and it’s typically for the life and health license it’s only 150 questions.
Once you pass the exam which if you fail the first time I did too just take it again right after that. The best advice that I got was actually scheduling the test before I started studying. My mentor actually told me to schedule the test a week out and study up to the test so you actually set a deadline on yourself. So once you pass the state exam then it’s time to submit your application for licensing to the state.
What Product Should You Sell?
Now once you have your license then it’s really important to figure out what product you’re actually going to sell because in the life insurance space there’s so many different products that you can sell. You can sell whole life you can sell term you can sell mortgage protection you can sell final expense you can sell high cash value whole life plans there’s so many different products that you can sell but with each product there’s going to be complexities that go into them.
Now before I get into exactly what product I would recommend for you something you have to understand is that there’s two learning curves that you go through when you join the life insurance space. There’s the sales side but then there’s also the industry side so there’s two learning curves that you have to go through. The better that you are at sales you’re passing one learning curve but then you have to get the industry knowledge which will lead you to become a better agent overall and what’s nice is that there’s actually products out there that don’t require a ton of industry knowledge to be able to sell because you can sell it to a very broad audience.
Now the product that I highly recommend you starting with is final expense life insurance. Now not only because it’s a golden age right now I mean 10,000 people are turning age 65 and becoming seniors every single day and it’s a gold rush as far as that goes but also it’s a very simple sale because every single person is going to die at some point and these people don’t have a ton of money when they do pass to be able to cover their final expenses. So a final expense policy is a small whole life policy between 0 to 50,000 in face amount to be able to pay for the final expenses and maybe leave a little extra for their family.
A few more reasons why I would start here rather than annuities index universal lives even mortgage protection is because of the simplicity of the sale. It has great comp it cash flows really well so you get paid between 1 to 4 days as opposed to having to wait a month or even 2 months for the commissions to come through. Another reason why I decided to go down the final expense route is because I was able to work throughout the day. It’s really important for me to be able to work during the day so I can spend time with my wife and go to church and do the things that I actually want to. So working 8 to 5 or 8 to 6 was really important for me and these seniors aren’t up super late so it’s easier to actually get in front of them rather than with a mortgage protection or an active couple who’s both working that you have to work from 6:00 to 10 p.m.
And one last reason that I decided to start selling final expense was because of the quick sales cycle. I can call and I can close it’s a rinse and repeat process where I can sell one to three policies a day on average making $500 to $1,000 per sale as opposed to a higher ticket item but having to go through two to three different calls to close the deal.
Finding the Right Agency
So now you got your license you know exactly what product you’re going to sell now it’s time to find the right agency for you. It’s super important to find the right agency because transparently I was at five different agencies or IMOs which are insurance marketing organizations and I personally wouldn’t recommend that at all and honestly it was part of the immaturity that I had jumping from place to place to place and chasing the grass that I thought was greener on the other side.
So there’s two different sides that you can go towards. You can go towards a captive side where you’re selling one product or they pay you a base plus a small commission on what you’re doing because they actually feed you the leads and they feed you the support. Or on the other side the independent side you’re brokering right you can sell between 30 to 50 different carriers which is awesome because you can actually shop around to see which one is going to give the client the best rate.
So you have the captive side versus independent side and what you should actually look for in a good agency is what is their comp levels. A good comp level for the independent and broker side is going to be 90 to 100% starting out. What’s cool about the life insurance space is that the commissions and even though your agency won’t probably tell you this commission levels go towards the 150 to 170 range. Now you got to be doing a lot of production and a lot of volume to get to those spots but typically starting out with not much experience in the space is going to be 90 to 100.
But if they’re giving you free leads if they’re saying hey this is a free leads program or this is an LOA program and you’re not actually a broker then the commission levels are going to be 40 to 50%. The upside to that is that you’re not having any fixed costs right away all you’re doing is just closing deals. The broker side is going to be more so for the entrepreneurial minded people who see a ton of upside and are willing to stomach and take the risk. It’s not for everybody but those are the pros and cons between the free leads and the broker side.
Now inside the agency there’s a lot of different agencies out there and you’re going to have recruiting based companies and there’s also going to be sales based companies. The way that you can tell the difference and distinguish the difference between them is asking how do I actually move up my commissions. So if they start you at a 50% start you at a 60% you have to get your own leads and the only way to move up is recruiting five people or 10 people a month then you’re in a recruiting based company. On the other side if you can sell 20K a month 3 months in a row or sell 30k a month or 50k a month 3 months in a row and then you can move up that’s more of a sales based company.
So you want to ask your recruiter hey is the only way that I can move up by recruiting people or can I do it just on my own personal production. So I recommend agents starting out making sales right away and then recruiting people 6 to 12 months once they have sales experience under their belt. Because there’s a huge mistake that I made when I just started out I started recruiting people right away and my personal production and my sales actually went down. And when you’re just starting out before you actually have a full-fledged agency and have a lot of agents coming in that’s your primary source of income so if you’re spending time training and helping people which most are going to fall out then you’re just wasting a lot of time. So really get good on your personal production make start making six figures per year and scaling that and then help and teach other people along the way.
How to Find Clients and Get Leads
So the next thing you’re going to have to solve is how do I actually find clients how do I get leads. And what’s nice is that the life insurance space is a leads working business. Leads are the lifeblood of the business and so there’s different ways that you can actually go about generating leads.
The number one thing is friends and family right warm market. Now these are people that are going to be in your contact list that you can hit up and let them know that you got licensed and see if anybody needs a policy and doing policy reviews right when you get started.
Now if you don’t want to do that which I personally didn’t want to do when I first started was buying leads. So you can buy leads from lead vendors. Now this is what most people do to start off. The only problem with that is that you’re paying a lot and they’re pretty expensive for what you actually are getting because the lead vendor has to make their margin when they’re generating your leads.
Now on the other side there’s marketing which is hiring a marketing company or a marketing agency which typically you’d pay them a retainer 500 to $1,000 or $2,000 a month to run your campaigns and then you pay for ad spend on top of that. Now I see people that are successful with that the only problem is that you don’t actually have full control of your lead source. So typically what I’ve seen is people actually owning their leads in house so that they can fully control the marketing side which feeds the sales side. Because you can be the greatest salesman ever but if you don’t have people to talk to you’re not going to make money but the person who’s average at sales but has really good marketing is going to make a ton of money.
How to Actually Sell: The Presentation
So now you’re contracted now you’re licensed now you have carriers to work with now it’s a matter of time if you’re just writing your first policy. So I want to give you a very quick synopsis of how you actually sell of a presentation and how you actually sell the client.
There’s different ways to go about it you can set appointments or you can call close. I highly recommend if you’re selling final expense term mortgage protection that you sell over the phone because here’s an interesting statistic 71% of people who buy life insurance buy from a person over the phone. And the crazier thing is now with the way the world is evolving people actually prefer ever since COVID happened people actually prefer buying over the phone now.
So all you have to do is help them actually find a plan that’s going to be affordable for them. Especially when you’re generating your own leads and having good marketing coming in all you have to do is determine if this is going to be the best policy for them help them enroll in a policy help them get an actual approval of the plan and then you get paid 1 to 4 days later.
There’s five points in the script that you want to go towards:
- The first thing is really discovering okay what exactly are they looking for what’s the purpose that they’re on the call in the first place.
- The second thing is really explaining the process explaining exactly step by step what’s going to happen on that call that you’re going to shop around all the carriers and that you have to do a little discovery on where they’re at and what they’re looking to leave for their loved ones when that time does come.
- Then you go into your underwriting stage which this is where you ask the medical questions to the client and really see what policy this client will get approved for.
- Now once you have the plan that they’re going to get approved for then you really go into a deep discovery of why they’re looking for coverage in the first place who they’re going to leave it towards who’s going to be their beneficiary when that time does come can they afford it if they do pass if not how would that make you feel like as a parent as a mom knowing that your kids are going to have to pay for that do you want to leave that no okay why not.
- And then from there you pivot into the three option close so you choose a good better best option you present three plans and you simply enroll them into a policy.
What Your Recruiter Won’t Tell You: Chargebacks
Now I want to end on what your recruiter won’t tell you about is chargebacks. The reality is the beauty of the life insurance space is that when you make a sale the carrier will actually advance you 9 months of your 12 month commission that you make. So if a client pays 100 bucks a month and you’re at 100% commission level they’ll actually advance 75% of that which actually comes out to $1,080 they’re going to advance you this right away.
Now if the client cancels in the first 9 months then you have what’s called a chargeback and all the commissions that you weren’t due or weren’t paid or that you didn’t actually earn you actually owe back to the carrier. So it’s super important that you save money in a chargeback account 20 to 30% of the commissions that you get so when these chargebacks do come which all top producers and all agents in general are going to get these so when that time does come you’re able to pay it back right away.
Final Thoughts
Now the very last thing is that this is a business this is hard this is going to be tough. You might have the person trying to bring you in might be recruiting you with oh you can buy a Rolex you can buy this Rolls-Royce you can buy these nice cars which is definitely possible but it’s going to be way harder than they’re probably telling you. It’s going to take work it’s going to take sacrifice it’s going to take working 10 12 hours a day. The first year is going to be extremely hard but there’s light at the end of the tunnel if you endure it. So stay true to it invest into it just like you would a true business that you’re starting up and have a business owner mindset thinking long term.