Selling Life Insurance: An Uphill Battle?

Selling life insurance is a challenging career path. It is often a commission-based role, which can lead to financial instability, especially at the beginning. Life insurance agents are also faced with negative public perception and pressure to sell high-commission policies. The product itself is also hard to sell as people are reluctant to discuss their own mortality. However, there are some benefits to the role, including the potential for high earnings and flexible working conditions.

High competition for leads

Selling life insurance is notoriously difficult, and the high competition for leads is a major factor in this.

Life insurance agents are typically paid on a commission basis, meaning that they only make money when they make a sale. This can lead to financial instability, especially when starting out, as it can be challenging to find qualified customers and leads. The few leads that companies may provide have often already been contacted by numerous other agents, making it harder to close the sale.

The competition for leads is fierce, with many agents resorting to cold-calling and door-knocking to drum up business. Even with the power of the internet, good leads can be hard to come by. Lead vendors are plentiful, but their leads are usually non-exclusive, meaning they are sold to multiple agents, leading to increased competition. Exclusive leads, on the other hand, are very expensive and require a high close rate to break even.

The high competition for leads in the life insurance industry can make it challenging for agents to succeed. It requires perseverance, a strong work ethic, and excellent sales skills to thrive in this competitive environment.

Commission-based pay

The majority of life insurance companies classify their agents as independent contractors, meaning they are paid on a commission-only basis and do not receive a base salary or benefits. This means that if an agent doesn't make any sales, they don't get paid for that week. However, the upside of this arrangement is that agents have the freedom to set their own schedules and work hours that suit them.

A few companies do offer employee status to their agents, which comes with a small base salary and benefits. However, these employees are typically held to strict production quotas and may be let go if they don't meet their monthly sales targets.

Life insurance agents are typically responsible for finding their own customer leads, which can be challenging and time-consuming. The companies may provide some leads, but these have usually been contacted by multiple agents already, making it difficult to make a sale. As a result, many agents resort to cold-calling and door-knocking to find potential customers.

The commission percentages for life insurance sales are very high compared to other types of insurance sales, and agents continue to earn a commission on a policy as long as it remains in force. This can create a passive income stream for successful agents. However, it's important to note that most life insurance agents don't last long in the business due to the challenges of finding leads and making sales.

While it can be relatively easy to find jobs selling life insurance, the high turnover rate in the industry is a testament to the difficulties faced by agents. The job often requires working long hours, especially during the first few years, to have any chance of earning a decent living.

Exploitative practices

Selling life insurance is a challenging career path, and some of the practices within the industry can be exploitative. One of the main issues is the pressure on agents to sell high-commission policies. As most life insurance companies classify their agents as independent contractors, they are often paid purely on a commission basis without any base salary or benefits. This means that agents only get paid when they make a sale, and there is no guaranteed income. This can lead to financial instability, especially when starting, as it takes time and perseverance to build a client base.

The leadership within these companies often employs aggressive and unethical sales tactics, pushing agents to meet strict sales quotas and using high-pressure sales methods. This can lead to agents feeling demoralized and exploited, as they are pressured to sell products that may not be in the best interests of the client.

The training programs provided by these companies are also often exploitative, focusing more on sales and pushy tactics rather than genuinely educating new agents about the products and the needs of the clients. The result is that life insurance agents often face negative perceptions and are viewed in the same light as used car salespeople or timeshare pushers.

Additionally, there is a limited number of companies that sell life insurance leads, and even when leads are provided, they have often already been contacted by numerous other agents. This makes it challenging for agents to find qualified prospects and can lead to a lot of cold-calling and door-knocking, which can be time-consuming and demoralizing.

The combination of these factors creates a challenging and exploitative environment for life insurance agents, who often face an uphill battle to succeed in the industry.

Negative public perception

The negative perception of life insurance salespeople is partly due to the high-pressure sales tactics and aggressive quotas employed by some companies and leaders in the industry. Agents may feel pressured to sell high-commission policies, even if they are not in the best interests of the customer. This can create a conflict between the agent's desire to make sales and their responsibility to provide honest and ethical advice.

Additionally, life insurance is a difficult product to sell due to its intangible nature and lack of instant gratification. People are often reluctant to discuss their own mortality and may put off purchasing life insurance, even if they recognize its importance. This can make it challenging for agents to create a sense of urgency and convince prospects to buy right away.

Furthermore, the commission-based pay structure common in the industry can lead to financial instability, especially for new agents. This can contribute to a negative public perception of life insurance agents as being motivated solely by money rather than the best interests of their clients.

The challenges of negative public perception, high-pressure sales tactics, a difficult sales product, and financial instability can contribute to a high burnout rate among life insurance agents, with some industry analysts reporting agents burning out within the first year.

High pressure to sell

Life insurance sales agents face significant pressure to sell high-commission policies, driven by the substantial financial gains in the industry. This pressure is heightened by the fact that most life insurance companies classify their agents as independent contractors, meaning they only get paid when they make a sale. The lack of a base salary and benefits can lead to financial instability, especially when starting in the role.

The pressure to sell is further intensified by the challenge of finding qualified leads. Life insurance agents must source their own leads, which is notoriously difficult. The few leads that companies may provide have often been contacted by numerous agents already, making it harder to close the sale. This challenge is compounded by the nature of the product itself, as people are reluctant to discuss their mortality and the intangible benefits of life insurance do not provide instant gratification, making impulse purchases unlikely.

Additionally, life insurance agents often face aggressive quotas and are expected to meet these targets within a short timeframe. Failure to meet these sales targets can result in termination. The leadership within these organizations is often criticized for employing high-pressure sales tactics and pushing agents to use archaic and pushy methods. This creates a high-pressure environment where agents are driven to sell high-commission policies, regardless of the client's best interests.

The combination of financial instability, challenging lead generation, product resistance, and aggressive quotas contributes to the high-pressure environment faced by life insurance sales agents.

Frequently asked questions