Lucrative Business Of Life Insurance: Selling Peace Of Mind

Life insurance is a challenging industry to break into, with fierce competition and a high burnout rate. However, it can be a lucrative career, offering strong earning potential and passive income. Those who succeed in selling life insurance are often those who can handle the grind of finding prospects, have excellent people skills, and are able to embrace rejection.

There are several ways to sell life insurance, including working remotely, selling to businesses, and cross-selling to existing customers. When selling life insurance, it's important to build relationships with clients, communicate the benefits of the policy, and create a sense of urgency to encourage immediate purchases.

Life insurance can be sold as an individual or group plan

On the other hand, individual life insurance is a policy that an individual buys for themselves. It is more flexible than group life insurance, as individuals can choose from various lengths of coverage, death benefit amounts, and riders that add extra coverage. However, it is typically more expensive than group life insurance.

When buying an individual policy, you choose the company, plan, and benefits that are right for you and your family. You can buy an individual policy from the same agent or company representative who sells you property and liability insurance for your home, auto, or business. Although there is no discount for buying multiple types of insurance from the same representative, working with a single advisor can simplify your financial life. Individual policies are typically sold through insurance agents or brokers, and you will pay a commission, also called a "load," that is built into the premium rate.

There are also two other ways to buy individual life insurance. In Connecticut, Massachusetts, and New York, you can buy it from a savings bank. Or you can buy a policy directly from an insurance company or from a fee-only financial advisor, known as a "no load" or "low load" policy. These policies do not have a sales commission, but the company will still have charges built into the premium to cover marketing and application processing expenses and subsequent services.

Compared to individual policies, group life insurance policies have lower death benefits. They are also not portable, meaning that if you leave your job, you will lose your coverage. However, some employers may allow you to continue buying group life insurance at your own cost after leaving, or you may be able to convert your group policy to an individual policy.

Life insurance agents can sell from home, but it requires dedication and hard work to be successful

Licensing and Education:

To sell life insurance, agents need to meet the licensing requirements of their state, which typically includes completing a pre-licensing insurance course and passing a state licensure exam. Some states also require a background check. This process ensures agents have a basic understanding of policy types, industry regulations, insurance principles, and ethics.

Choosing a Niche:

Life insurance policies come in various forms, such as term, whole, and universal life insurance. Agents can choose to offer different types of plans or specialize in specific areas. Developing expertise in a particular area can help build a brand and make it easier to sell life insurance from home.

Home Office Setup:

A dedicated home office space with essential equipment, such as a smartphone, a strong internet connection, and video conferencing software, is crucial for selling life insurance from home. It is also important to check for any business licenses or permits required by the local area.

Technology Proficiency:

Most insurance companies are moving towards digital applications and automated processes, so agents selling from home must be comfortable with technology. Familiarity with e-applications, quoting and underwriting systems, and customer relationship management (CRM) software is essential.

Lead Generation Strategy:

Finding good leads is crucial in the competitive life insurance market. Agents need to develop strategies to attract potential buyers before their competitors. This may include networking, cold calling, door-knocking, and utilizing online resources.

Customer Service and Relationship Building:

Success in life insurance sales heavily relies on building strong relationships with customers. Agents should focus on understanding their clients' unique needs and providing quality service. Establishing trust and patience are key to securing long-term customers who may refer them to others.

Professionalism:

Even when working from home, life insurance agents must maintain professionalism in their dress and communication. Staying updated with industry developments and continuously improving communication skills are essential for success.

Income Considerations:

Most life insurance agents are paid through commissions, which can be lucrative, especially with whole life insurance policies. However, the income can be unpredictable, and agents need to push themselves to meet targets and quotas.

Work Environment and Time Management:

Selling life insurance from home offers flexibility but can also be isolating. Agents need to manage their time effectively and stay motivated to succeed in this competitive industry.

Life insurance sales jobs are abundant but are straight commission with no base salary

Life insurance sales jobs are abundant but are often commission-based with a low base salary or none at all. This means that life insurance sales agents are primarily dependent on commissions for their income. The commission rates vary depending on the type of life insurance policies sold. For instance, agents receive the highest commission rates for whole life insurance plans, which can be over 100% of the total premiums for the first year. In contrast, term life insurance plans pay the lowest commissions, ranging from 30% to 80% of the annual premiums.

While some companies do offer a base salary, it is usually minimal, and agents are still heavily reliant on commissions. The base salary may be provided to help new agents get started or to compensate them for their training period. However, it is becoming more common for agents to be put on a "commission-only" basis after a short period of compensation during training.

The abundance of life insurance sales jobs can be attributed to the high turnover rate in the industry. The career of a life insurance agent is demanding and often involves constant hustling, networking, and rejection. As a result, many agents burn out and choose to leave the profession. This creates constant vacancies and makes it relatively easy for newcomers to enter the field.

To be successful in life insurance sales, one must possess resilience, strong people skills, and a fighting spirit. Building relationships with clients, effective communication, continuous learning, and adapting one's strategies are crucial for long-term success.

Life insurance can be sold as part of a buy-sell agreement for businesses

Buy-sell agreements can be funded with life insurance policies. In the event that a co-owner dies, the life insurance policy is triggered, and the death benefit is used to purchase their shares of the business. This ensures business continuity and a smooth transition of ownership.

There are two main types of buy-sell agreements: entity-purchase and cross-purchase. In an entity-purchase agreement, the business buys life insurance policies on each owner, with the business itself as the beneficiary. A cross-purchase agreement, on the other hand, is a financial arrangement between co-owners, where each owner holds a life insurance policy on the other owners and names themselves as the beneficiary.

Life insurance can be a valuable tool for business owners to implement the provisions of a buy-sell agreement, providing liquidity and ensuring a smooth transition in the event of a co-owner's death or departure.

Life insurance can be sold as an executive bonus arrangement for businesses

In this arrangement, the employer offers a permanent life insurance policy to certain key employees. The employee owns the policy and the cash value, and can select a beneficiary to receive the life insurance benefit upon their death. The employer pays the policy premiums as a bonus to the employee, which is taxable to the employee and income tax-deductible to the business if the compensation is reasonable. The employee can use the cash value for retirement, and the life insurance protection for their family.

There are two main types of executive bonus arrangements: the single-bonus and the double-bonus. In a single-bonus arrangement, the employer provides a total bonus equal to the amount of the life insurance premium. The employee then pays income tax on this amount out of their own pocket. In a double-bonus arrangement, the employer provides a bonus equal to the amount of the life insurance premium plus the taxes the employee would have to pay. This makes the arrangement income tax-neutral for the employee, and the entire bonus amount is also tax-deductible for the business.

Executive bonus plans offer several advantages for both the employer and the employee. For the employer, these plans can be used as a recruitment and retention tool, helping to attract and retain top talent. They also provide a flexible and tax-efficient way to reward executives based on their performance and contributions. For the employee, an executive bonus plan can provide them with a needed life insurance policy at a significantly reduced out-of-pocket cost. If structured as a double-bonus arrangement, the employee also gains the benefit of not having to pay income tax on the bonus out of their own pocket.

Frequently asked questions