A career selling insurance can offer great independence to the agent. It’s a job where you know exactly how well you are doing at all times because your success level is reflected in your paycheck. A single sale can earn the agent thousands of dollars. If selling insurance is loaded with independence and high profit, what’s the downside?
A job with a 90% failure rate
Most new agents fail out of the business within their first year. Agents fail for several reasons. They may not have the aptitude for sales. They may not be financially prepared to enter the career. They may not engage in smart, profitable activities. Several of the most common pitfalls can be avoided if you know about them ahead of time. Sadly, most agents have no idea what awaits them in this business.
Mistake #1: Working for the wrong company
There are many insurance companies to work for. There are also independent agencies. Some are better places to work than others. Before accepting an offer from an employer you should investigate them. Research them online. A good tip is to use a search engine to look up the company name and the keywords “lawsuit” or “scam.” Most companies have had some minor issues in their history. Some have had some serious problems. Finding a slew of articles about your potential employer failing to pay claims, failing to pay agents, or engaging in shady business practices should be a red flag about working for that company.
It’s important to realize that insurance carriers make money by having agents sell their products, and most independent agencies make money by splitting commissions with the agents they employ. The key point is that your work is making money for them. You should be receiving something of value in return. For example, when working for an independent agency you’d typically be splitting commissions 50-50 with the company. Ask them what you’re getting in exchange for giving them half of the commission you earn. It’s a fair question and the company should be able to detail the benefits of working for them. They may pay fees, licensing cost, training expenses or a host of other things. Make sure you’re getting something of value from any employer.
Mistake #2: Being financially unprepared
Selling insurance is a commission-compensated field. Many new agents jump in, heady with dreams of Selling the Big Contract, only to discover they don’t accomplish that feat immediately. They have no cash reserves to sustain their lives. When bills come due they find themselves short of cash. They either leave the business to find steady income or start defaulting on bills.
To avoid that pitfall start by deciding exactly how long you are willing to spend building an insurance career. Commit to the idea that when you reach that point you need to either be successful or pull the ejection handle and punch out back to the salaried world. Calculate how much money you need to cover all your expenses for that time period, plus your operating and marketing expenses for your insurance work (detailed a bit further down.) Overestimate – it’s safer than trying to calculate to the penny.
If your household has enough income that all your bills will be paid even if you’re making no money selling insurance, you’re past the first hurdle. If not, stockpile enough cash to pay all your bills for your entire “trial period.”
On top of that you need to pay for your marketing plan. Potential clients, called “prospects” in the insurance world, don’t just line up at the new agent’s office door. The agent has to find his own prospects. That takes a well considered marketing plan which may include mailings, phone calls, office space, newspaper advertisement, radio, a web site and anything else the agent can use to attract prospects. All those things cost money.
Mistake #3: Marketing Incorrectly
Most agents market themselves poorly. They market scattershot fashion instead of targeting their best prospects. They are inconsistent. They stop their marketing plans if they’re not immediately successful. They stop marketing because they didn’t plan for the expense of it. Worst of all, many fail to market themselves at all.
A marketing plan should be well-considered and consistent. Hire a company that specializes in marketing insurance salespeople if you can. If that’s not possible, buy a desk calendar and write out a year-long marketing plan on it. It should contain everything you plan to use as a marketing tool on a regular, recurring schedule. Create your plan to maximize its ability to reach a specific target audience with a consistent message of value at frequent, regular intervals. Stick to this plan wholeheartedly. Understand that it will not magically make the world beat a path to your door overnight.
Research the cost of your entire plan and budget for it in your financial preparations for entering the insurance field. Remember the old saw:
He who has a thing to sell
And goes and whispers in a well
Is not so apt to get the dollars
As he who climbs a tree and hollers.
Mistake #4: Learning the wrong lessons
When you start work as an agent, remember that better than 9 out of 10 of the agents starting in the same year you do won’t be around to see their first anniversary as an agent. You’ll also notice a lot of them hanging around water coolers trying to teach each other how to be a good agent. You’ll see them listening to war stories from the second and third year agent who is just scraping by. They are learning how to fail.
You need a mentor to learn how to succeed. A good mentor will be a successful agent netting at least six figures a year after taxes and expenses, and will know how he became successful. He’ll have a system he uses that’s explainable and reproducible, not accidental success. He’ll have a particular marketing method that consists of methods that work on today’s world. He’s not reliant entirely on cold calls and other outdated methods with low probabilities of success. Find an agent like that and engage him as a mentor. Learn from someone successful.
Mistake #5: Not committing to the job
Selling insurance is a tough job, particularly at the outset. It involves long hours, irregular pay, frequent time in the car and mountains of paperwork. It’s also a sales job. New agents often forget that and don’t realize what comes with it. It’s important to remember that as a salesperson your job is to get people to sign on the dotted line. If you’ve ever seen the movie “Glengarry Glen Ross” you may remember the scene with Alec Baldwin chewing out the salespeople. Some sales meetings are pretty similar to that scene.
Insurance agents are unpopular people as well. Rejection is a way of life when selling insurance. It’s a product people either don’t want to talk about, don’t think they need, or don’t understand as well as they believe they do. People are nervous around insurance agents because they always worry the agent will try to sell them something – and they’re right to worry, as agents live and die by their sales numbers. Next time you’re at a party and someone asks you what you do for a living, tell them you sell insurance and watch the conversation stop.
If you’re not prepared for a large time commitment, stacks of paperwork, rejection by your prospects, pressure from your employer and the stress that comes from working to meet your sales goals you may want to consider another career.
Even if you take everything written here to heart there’s no guarantee you’ll succeed. You can avoid all the most common mistakes and still fail out of the business. You may find you are uncomfortable with the sales environment, for example, in which case no amount of preparation or marketing will make you successful.
If you make it past the pitfalls, though, you’ll find yourself in a career where your level of effort determines your level of success, and you can earn more money than most people ever do on salary. You know how to avoid the most common mistakes. Only you can decide if you’re prepared to seek the reward that comes with the risk.