Lucrative Life Insurance Sales: How Much Can You Earn?

Life insurance agents are mostly paid by commission and must find their own customer leads. This means that the amount of money they make depends on their ability to convert leads into customers, as well as the area in which they live. The average annual salary for life insurance agents ranges from $62,000 to $76,000, but this can be as low as $28,000 or as high as $125,000 per year. Commission structures vary by policy and company, but typically, life insurance agents receive 60% to 80% of the premiums paid in the first year as commission, with smaller commissions in subsequent years. Agents who sell whole life insurance plans receive the highest commission rates, often more than 100% of the total premiums for the first year.

Life insurance agents' salaries

Life insurance agents are generally paid via commissions and must find customer leads on their own. The average salary for a life insurance agent is $88,968 per year, but this can vary depending on location, experience, certifications, types of policies sold, and how many policies are sold. The income potential for life insurance agents is uncapped, with some of the highest earners making over six figures annually. The lowest salary reported for a life insurance agent is $18,000 per year, while the highest is $191,283 per year.

Life insurance agents typically earn a large upfront commission for every policy sold, ranging from 40% to 100% of the first-year premium. After the first year, agents receive additional commissions for each year the policy is renewed, usually under 5% of the annual premium. Agents who work for a specific insurance company may be paid a base salary, commissions, and benefits, but their commission percentage is typically lower.

Life insurance sales can be a tough and competitive way to make a living, with a high rejection rate and difficult sales prospects. However, it can also offer a high salary and passive income over time.

Commission-based pay

Commission rates depend on the type of life insurance policies sold. Agents typically receive the highest commission rates for whole life insurance plans—often more than 100% of the total premiums for the first year. The exact percentage depends on the age of the policyholder.

Universal life insurance plans usually earn agents a commission equivalent to at least 100% of the premiums the policyholder pays in the first year, up to the amount of the target premium. However, the rate decreases if the insured pays above the target level in the first year.

Term life insurance plans generally pay the lowest commissions, often a percentage of the annual premiums ranging from 30% to 80%.

While commissions can be high, it's important to note that life insurance is a challenging product to sell. People are often reluctant to discuss their mortality, and the product offers no instant gratification, making impulse purchases unlikely. As a result, successful careers in selling life insurance take time, perseverance, and strong people skills.

Life insurance agents who are employed by an insurance company rather than working independently may receive a base salary and benefits in addition to commissions. However, they are often required to meet strict monthly sales quotas.

Customer acquisition

Acquiring customers in the insurance industry is challenging, especially for newcomers. Here are some tips to help you succeed in customer acquisition for life insurance sales:

Embrace the Role of an Advisor

Building rapport and establishing credibility, authority, and expertise are crucial when selling life insurance. Position yourself as an advocate for your clients and prospects. Let them know that you are a trustworthy expert who can guide them through the complexities of underwriting and insurance. This will not only help you build rapport but also increase your chances of getting referrals from satisfied clients.

Avoid Asking "Did I Catch You at a Bad Time?"

When making cold calls, avoid opening with "Did I catch you at a bad time?" as it makes you 40% less likely to book a meeting. Instead, try asking, "How have you been?" This simple question has been found to increase the success rate of cold calls by 11.2 times. It is a pattern interrupt that gets prospects to focus on you and the conversation at hand.

Give the Reason for Your Call

Another effective strategy is to provide the reason for your call. Gong, a company that analyzed 90,380 cold calls, found that opening your call with the reason for calling increases your success rate by 2.1 times. For example, you could say, "The reason for my call is..." and then provide a brief explanation.

Embrace Multi-Channel Marketing

Combining multiple marketing strategies can significantly enhance your customer acquisition efforts. This approach, known as "combo prospecting," involves using different channels such as phone calls, emails, social media connections, direct mail, and handwritten notes to reach your prospects. By diversifying your outreach methods, you increase your chances of making contact and building relationships.

Handle Objections Effectively

When selling life insurance over the phone, listen carefully to your prospects' concerns and objections. Objections are buying signals, indicating that the person is considering your offer. Prepare in advance to handle common objections related to cost, the need to think about it, the need to discuss with a spouse, and lack of interest. Address their concerns by offering alternative solutions, such as adjusting the term length or coverage amount to fit their budget or explaining the benefits of having adequate life insurance protection.

Follow Up Consistently

Don't give up after the first contact. Most sales require some form of follow-up, and consistent follow-up is key to building relationships and converting prospects into clients. Set reminders in your CRM to contact prospects at a later time, as they may need more time to consider their options and build trust with you.

Develop Your Sales Pitch

Craft a compelling sales pitch that focuses on the benefits and solutions your life insurance products offer rather than just listing features. Put yourself in your prospects' shoes and understand their concerns and challenges. Ask questions like, "If you passed away, how long would your family be able to live on your savings?" or "What would happen if you were permanently injured?" Then, explain how your insurance solutions can safeguard them in these situations.

Partner with Other Insurance Professionals

Collaborate with other insurance professionals, such as lawyers and accountants, to expand your network and cross-referrals. Offer to answer insurance-related questions for their clients, and they can do the same for you. This mutually beneficial partnership can help you reach a wider audience and establish yourself in the industry.

Difficult sales process

Selling life insurance is notoriously difficult, and many agents burn out within a year. The product itself is hard to sell because people are reluctant to discuss their mortality and the prospect of dying. Life insurance also does not offer instant gratification, which often leads to impulse purchases.

Life insurance agents must find customer leads on their own, which is challenging. Leads provided by the company have usually been contacted by many other agents, and exclusive leads are very expensive. As a result, many agents resort to cold-calling and door-knocking.

Even with a qualified prospect, life insurance is a difficult product to sell. It can be hard to get your prospect to acknowledge and discuss their mortality. If you do manage to clear that hurdle, you then need to create a sense of urgency so that they buy right away. It is also crucial to get signed paperwork at the appointment, as you will likely lose that prospect forever if you leave without it.

Pros and cons of selling life insurance

Selling life insurance has its pros and cons. Here is a detailed overview of the advantages and disadvantages of a career in life insurance sales:

Pros

• Potential for a high salary: Life insurance sales offer some of the largest commissions in the insurance industry. Agents earn a percentage of the policy when it is sold and then receive another commission each time it is renewed.
• Abundant job opportunities: Life insurance sales jobs are easy to find and offer high commission percentages compared to other insurance sales jobs, such as health insurance.
• Passive income: Life insurance agents get paid commission renewals for as long as a sold policy is in force, creating a passive income stream.
• Fewer entry barriers: The role doesn't require a college degree, and most insurance companies and brokerage firms provide training and mentorship programs for new hires.
• Flexible work arrangements: Many life insurance sales professionals can set their own work schedules and work from home.

Cons

• Commission-based pay: Most life insurance companies classify their agents as independent contractors, meaning they offer neither base salaries nor benefits. As a result, agents' income depends on their sales performance.
• Difficult sales process: Life insurance is a challenging product to sell as it requires getting prospects to discuss their mortality and creating a sense of urgency to buy.
• Effort of customer acquisition: Finding qualified life insurance prospects is difficult, and exclusive leads, which are more likely to result in sales, are very expensive.
• High-pressure work environment: Selling insurance can be stressful due to long work hours and constant pressure to meet quotas and targets.
• Unpredictable income: As income depends on sales commissions, it can be challenging to predict earnings, and a lack of drive can result in low income.

Frequently asked questions