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We have earned our money during the last
23+ years on providing the RIGHT names of insurance agents to
insurance recruiters to sell their products. A substantial
amount of these names are of agents who are currently or began
their induction with a career life insurance agency. In fact the
career life agency is the major entry point for an agent to
begin selling life and health insurance products.
In this report the emphasis will be on (1) why the agent starts
with a career life insurance agency in the first place. (2)
rookie agents lasting long enough to survive, (3) why the career
life insurance agency succeeds and the agent does not. (4)
the brokerage effects on a career life insurance agency,
and (5) how some career life insurance agents break away, and go
on their own.
Why potential agents
choose to sell insurance with a career life insurance agency
Examine the characteristics of a career
life insurance agency that help lure a potential agent in their
direction. (1) Name enticement. When an agent
decides to sell life insurance, the name of the company often
has a lot to do with the decision. The prospective agent often
interviews with a company they have see in magazine or
television ads. It's a good chance they have already heard about
the "Big Rock" or the "Quiet Company".
(2) Location A career life insurance agency is likely
to be located in the metropolitan area of a major city. The
actual location is usually a more affluent suburb, with an
impressive looking office. Although rookie agents often start
out in a shared space, or small cubicle, they can very easily
see the much more swank offices reserved for managers and
outstanding producers. It is from this location where a steady
diet of a training program will take place, along with meetings,
and occasionally working with the assistance of a manager. The
manager usually becomes a manager not because of his managerial
skills, but because he is a better producer (who would not mind
a private office).
(3) Promise of "big money" fast
It is not uncommon for a career life insurance agency to
have 20 to 150 agents headquartered in the same office
location. It is not uncommon for an agency to occupy an entire
floor of an office building. This gives an immediate positive
reaction to the agent. The agent is truthfully told that
he will be trained to acquire insurance policies with fat
premiums from rather wealthy local individuals, and small
business owners. The hiring manager also points out the
most successful agents in the career life agency, and roughly
what they earn. Unfortunately the prospective agent is Never
told the median income of the average income, or that of agents
in their first couple years.
(4) Subsidy Often the agent upon being considered to
being hired is required to produce a 100 name list. A name,
address, and telephone number, along with other data is often
required. This essential is going to be their starting point,
put pressure on those to buy from you that want to see you
succeed. They in turn are suppose to supply the agent with a
dozen referrals, not on the 100 list. In theory the agent would
never run out of good prospects. The career life insurance
agency director and home office know darn well that with the
commission level the agent is placed on, they would have a hard
time making ends meet. In turn the agent, if he looks to the
recruit to be prime, is given a contract with a subsidy. The
subsidy requires an agent to sell a set minimum amount of
insurance, then the agent will qualify for a set amount of
income. The amount of insurance required to be sold is usually
high enough, to often make the agent work "double time" during
the last week of qualification for that check.
(5) Others It is not unusual for a recruiting
manager to try to recruit from colleges, or from other sales
occupations (like real estate), again often using the bribe of
subsidies or a fast rising income to lure the potential agent.
Can rookie career life
agents last lone enough to to succeed: The turnover
rate of new life agents (from all sources) is 85%For agents in a
career life insurance agency situation, it is even higher. Our
figures show only 5% of them making it to 4.3 years, which is
the national experience average for all life agents. We have
some pretty analysis on why these figures are so high.
(1) Prospects The rookie agent has
four main sources of prospects to sell insurance to. First is
the 100 person list of people he knows or does business with.
Unfortunately not all are sympathetic about budgeting extra
money for insurance, or do not really know the agent all that
well. This results in many "we will think about it" situations.
The second source, referrals, are often few and far between.
Unless the new client has really prepped the referral to
granting an appointment, the sales rate, and appointment rate
both suffer drastically. "Old established orphans", longtime
policyholders without a current agent make up the third choice.
After the sales manager picks through, a group of his rookies
divvy up the policyholder cards. The sales manager emphasizes
the great potential, the agent experiences that 10 other
previous rookies have seen this person also unsuccessfully
making a change to the premium amount. The last source of
prospects are cold calls. These are usually set up by
phone calls to new businesses or new homeowners, or by mailing
random residents in a select neighborhood. These are total
strangers, and not the easiest to conquer. We will back up this
statement of ours 100% as factual:
99% of Life Agents with under
3 years experience do have enough quality leads.
This means set appointments with prospective
clients willing to talk to them about their insurance needs.
Train the agent to prospect or have appointments already made.
(2) Agents Recruited Not everyone is cut out
to be a life insurance salesperson. This is second main reason
many career life agents opt out for a different career. We give
one thumbs up and one thumbs down for life insurance career
agency recruiters to attempt recruiting on college campuses or
college graduates. First, the thumbs up reasoning. More educated
agents want to earn a higher standard of living quicker and have
the study ability and sometimes perseverance to achieve a high
level of success. Second, the thumbs down reasoning, Too many of
the more educated agents do not have the patience to endure 4
years of study and building selling skills to achieve a high
income. These agents have friends already at higher incomes in
other professions who also have had to put in less hours to do
so. Now look at another style recruit, who is not a
college graduate. This agent is likely to be from a middle class
family, and may have the traits of a successful producer when
interviewed. To him an income of $50,000 would be nice, and
$100,000 would be a dream. Remember all the agents are being
trained to be "financial advisors". The career life insurance
agency managers want to see the agents making appointments with
clients making $80,000 to $800,00 a year. This agent is
completely out of his comfort zone, therefore sells very few big
premium cases and is given little recognition by the sales
manager. Sales managers can make a lot of recruiting mistakes.
Agents either fail because
they never could sell, or don't have enough ready prospects to
sell to.
Why the career life
insurance agency succeeds and the agent does not
Many of the career life insurance agency companies
have been around for over 100 years. They have done a great job
of remaining profitable despite a high agent turnover rate. A
Brokerage or Independent based Life Insurance Company usually
offers its agents, brokers, and general agents contracts that
provide lifetime renewals, or until renewals fall below a
certain level. The producer is considered an independent
contractor. It is not uncommon for an agent that has sold
business using a brokerage or independent organization or
company, to receive renewals for 20 years after his contract has
been terminated. Sometimes the original company has been bought
out several times, which each succeeding company honoring the
contract terms. A career life insurance agency does not offer
rookie agents any renewals. Many times an agent with a career
life insurance agency can receive vesting after 10 years, based
on varying conditions. If a career agent leaves, everything goes
back to the company. This includes family and friends who may
still be paying first year premiums, and anyone keeping their
policy in force after 12 months. These all become orphan
policyholders, some of who become leads for the next group of
rookies. Career companies traditional pay their agents must
lower commissions and renewals. A rookie agent might receive
first year commissions of 50% to 55% on a whole life
policy, where as other agencies or companies may pay from 65% to
90% first year commissions on that same type of insurance sold.
As far as renewals, if the agent starts receiving renewals on
insurance he sold, the career life agent will receive about one
half the amount that other sources would pay. The pier pressure,
the subsidy required pressure, and the commission and renewal
deductions all hurt the career life insurance agency agents from
making it. The well established career life insurance company,
through its massive recruiting, has enough successful producers
and profitable orphan policyholders to stay in great financial
shape.
The brokerage effects on
a career life insurance agency To examine the
effects, you must first separate the rookies from the
experienced producers. Recruiters such a brokerage general
agents, and insurance marketing organizations waste thousands of
dollars if they spend money on attempting to recruit career life
insurance agency rookies. You would end up with some responding
to all and writing for none.
Leave the rookies alone.
These agents have a hard enough time trying to make their
subsidy requirements, and should be giving the agency their full
efforts. We have numerous times seen a career life insurance
agency with one company trying to steal (mail and recruit) the
agents of another nearby different insurance company. Bad
ethics. If career agents are left alone until they have reached
4 or more years experience you will see a little over half start
brokering business. They still give their career company the
bulk of their cases, but realize that brokerage companies can
provide different products and higher commissions. Some career
insurance companies have a tighter hold on their agents
brokering business. For example Prudential and Metropolitan
would be on the low end, New York Life in the middle, and
MassMutual, and New England on the higher side.
Some career life
insurance agents break away, and go on their own
Not every agent starts and ends his career with the
agency that first introduced him to life insurance. This is true
with all the six major types of agencies, which of course
includes the career life insurance agency.
There are many quality career changes that occur between the
4th and 14th year for the agent. The agent may decide
to take an opportunity with a different style agency. With a
career agent, they might also make the switch to another career
life insurance agency. The biggest risk step taken however is
when an agent decides to become independent. At this point he
usually finds a PPGA, personal producing general agent contract
with a life company often will to pay him around 90% on whole
life type insurance, and substantial increases on other products
in their portfolio. Next, since the agent is an independent
producer, he will pick up a couple brokerage companies to fill
annuity, life, or health needs. It is common for the independent
producer to end up with six or seven total companies
represented. From there, some agent take the highest risk step.
They either elect to become a Brokerage General Agent, or a
Life/Health General Agents that recruits agents, and receives
overrides on the business they produce.
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600,000
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