Selling life insurance sounds like an exciting gig. Get top-dollar clients, make sales, earn fat life insurance premiums, rinse, repeat, and get richer.
But this is a textbook illustration that might exist only in theory.
With over 90% of insurance agents quitting in their first 12 months, you may wonder if life insurance sales are really that hard or unprofitable.
The hard truth is that it’s difficult to sell life insurance packages, but it can be a profitable venture if you learn the ropes.
To better prepare you for this world, we’ll show you a strategy with five steps for how to sell life insurance like a pro, even amidst the 2023 layoffs in the industry.
- Why You Should Consider Selling Life Insurance
- Problems with Selling Life Insurance
- What You’ll Need to Sell Life Insurance
- Where to Sell Life Insurance
- How to Sell Life Insurance: Step-By-Step Guide
- Things to Consider When Selling Life Insurance
- Frequently Asked Questions
- Similar Tutorials to Check Out
- Wrapping Up
Why You Should Consider Selling Life Insurance
Forget the numbers on top news sites and forums about how insurance sales are dying.
Here are four reasons you should become an insurance sales agent.
- Opportunity for financial success: Selling life insurance can be a lucrative career with the potential to earn high commissions and bonuses. It can provide stability and security for you and your family.
- Flexibility and independence: You enjoy the flexibility to create your schedule and work independently. You can work from home or meet clients in person; hence, you have the freedom to design a work-life balance.
- Helping others: Life insurance provides a safety net for individuals and families in the event of unexpected circumstances. By selling life insurance, you can help others protect their loved ones and provide peace of mind.
- Personal growth and development: Selling life insurance requires strong communication and interpersonal skills. You can develop and refine these skills through your work, leading to growth and development.
Problems with Selling Life Insurance
While selling life insurance can be a lucrative career, it may not be suitable for everyone.
Here’s why we think so.
- Difficulty in building a client base: Building a client base in the life insurance industry can be challenging, particularly for novices. Without a robust network or established referral system, it may take time to build a sustainable income.
- Requires licensing and ongoing education: Selling life insurance requires obtaining a life insurance license and training upgrades to maintain it. The process can be time-consuming and may require a significant financial investment.
- High-pressure sales environment: Life insurance sales can involve a high-pressure sales environment, focusing on meeting quotas and targets. This pressure can be stressful and may not be suitable if you prefer a more relaxed work environment.
- Emotional toll: Selling life insurance involves discussing sensitive topics like death and financial planning. This can take an emotional toll on you, particularly if you’re empathetic and have difficulty separating work from personal life.
What You’ll Need to Sell Life Insurance
These are a few things you’ll need to become a life insurance sales agent.
- License: You’ll need an insurance license to sell life insurance. You can get one by sitting for a state-administered exam that covers various topics in insurance laws and regulations, policies, and ethical practices.
- Training: Insurance laws and trends are constantly changing. Training can help you stay in the loop. Many insurance companies offer training programs that cover product knowledge, sales techniques, and compliance requirements.
- Client base: Building a client base is crucial to success in the life insurance industry. You can use networking, referrals, and marketing strategies to find potential clients.
- Products: You’ll need a comprehensive understanding of the life insurance products you’re selling. This includes different types of policies, such as term life, whole life, and universal life, as well as policy features and benefits.
- Technology: Utilizing technology is essential for staying organized and communicating with clients. This may include using a customer relationship management (CRM) system, email marketing software, and other communication tools.
- Support system: Having a support system in place can be valuable for sellers, especially if you’re new to the industry. This support can come from mentors, managers, or colleagues who can offer guidance and advice.
Related: Do I need a business license to sell online? Find out more.
Where to Sell Life Insurance
As an independent agent, various channels are available for selling life insurance.
Let’s explore each and discuss why these options can be good for selling life insurance.
1. Insurance Brokerage Firms
Insurance brokerage firms act as intermediaries between insurance providers and customers.
You can partner with them to sell your life insurance packages.
What Makes This Option Great?
Insurance brokerage firms provide access to multiple policies and expert advice.
They can simplify insurance sales by evaluating customers’ needs and financial situations and recommending policies that best fit their unique requirements.
- Fees/Commission: Insurance brokers charge 30% to 50% for life insurance sales.
- Payment Methods: Payments are made through checks or wire transfers.
D2C sales are among the most common ways you can sell any business, including life insurance.
It refers to contacting your direct customer audience and convincing them to buy.
You can do this through cold calls, social media, cold emailing, or in-person meetings with potential customers.
What Makes this Option Great?
Direct-to-consumer sales allow you to reach a wider audience and sell policies without intermediaries.
Direct sales can also reduce costs and increase your profit margins by eliminating the need for intermediaries
- Fees/Commission: Selling through D2C might not cost a dime, like when you meet people in person. But you’ll need to pay to get numbers for cold calling or running social media ads.
- Payment Methods: This depends on the transaction mode. For offline transactions, you can receive payments through checks or bank deposits. Wire transfers and PayPal are also possible.
3. Banks and Credit Unions
Many banks and credit unions offer life insurance products to their customers.
Partnering with them can be an excellent way to expand your reach and increase sales.
What Makes this Option Great?
Banks have an established customer base.
They can leverage their existing relationships to sell insurance products.
Selling life insurance policies through banks can help you get quality ready-to-buy leads.
- Fees/Commission: Banks might charge 10% to 20% commission on each sale, depending on your negotiation with them.
- Payment Methods: Usually, customers buying through this method pay to the bank. So you might receive your funds through checks.
4. Employer Groups
Some employers offer life insurance as part of their employee benefits package.
Working with these employers to provide group life insurance policies to their employees can be an effective sales strategy.
What Makes this Option Great?
Group life insurance policies often come with sizeable discounts, making them attractive to most employers and creating opportunities for you to make fast sales.
It can also increase your visibility and credibility among potential customers, potentially leading to more sales outside the employer group.
- Fees/Commission: There’s usually no commission for this, but you might have to offer discounts, say 10% to 20% off each policy.
- Payment Methods: You can receive payments through bank transfers, checks, PayPal, or any other means suitable for the transaction.
How to Sell Life Insurance: Step-By-Step Guide
An effective sales strategy for selling life insurance is to provide value and education to potential clients.
Providing free but quality value inspires confidence and trust with potential buyers (Sales 101).
This strategy can create a long-lasting relationship with prospects and improve sales in the long run.
We’ll explain five steps in this strategy to help you become a successful life insurance agent.
Step 1: Identify Potential Clients
There are three primary methods for identifying your target market – needs, demographics, and financial goals.
Start by identifying individuals who’ll likely need different types of life insurance coverage.
For example, new parents may need life insurance to ensure their children get financial protection in the event of their death.
Employers are also among the top individuals with a high demand for life insurance.
You can make a list for this category and then research the demographics.
Demographics, such as age and marital status, can also play a role in identifying potential clients.
Older individuals may have more assets and interests in using life insurance as an estate planning tool compared to younger individuals.
In addition to demographics, financial goals also help you identify potential clients.
While some clients may intend to maximize their coverage and minimize their premiums, others may have more interest in using life insurance as an investment tool.
Understanding your client’s financial goals can help you tailor your advice and recommendations to meet their needs.
Step 2: Provide Educational Resources
Offering resources that help clients understand the benefits of life insurance and how it can protect their loved ones helps you build trust and establish yourself as a knowledgeable advisor.
One way to do this is through blog posts, videos, and webinars that explain life insurance concepts in simple terms.
For example, you might create a blog post explaining the difference between whole and universal life insurance or a video that walks clients through choosing a beneficiary.
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This way, you can help them feel more confident in their decision.
You can also offer calculators and tools that help clients estimate their coverage needs and premiums.
For instance, you might offer a life insurance calculator that helps clients estimate how much coverage they need based on their income and expenses.
It’s most likely that the insurance agency you work with has these tools on its website, so you don’t have to build one.
Step 3: Offer Personalized Advice
From your first appointment with a prospect, analyze their financial situation and understand their needs and budget.
This can help you provide tailored recommendations and ensure that the insurance policy you recommend is suitable for their unique circumstances.
To do this, listen to your needs and concerns.
Ask questions to understand their financial situation and goals, then use this information to make informed recommendations.
For example, if a client has a young family and a limited budget, you might recommend a term life insurance policy that provides affordable coverage for a set period.
When making recommendations, explain which policy features and benefits would be most suitable for the client.
For instance, you can explain how a policy’s death benefit can help provide financial support to their loved ones if they pass away unexpectedly.
You can also highlight how additional policy riders, such as a disability rider or a long-term care rider, can help provide additional protection in the event of a disability or illness.
Above all, be transparent and answer any questions the client may have.
Clarify any doubts and explain any terms or concepts that may be unfamiliar to the client.
If you play your cards well, your prospects will feel more confident purchasing from you.
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Step 4: Present Your Products
After building rapport with your prospects, it’s time to present your life insurance products.
Start by explaining the benefits of life insurance, such as financial protection for loved ones, tax benefits, and estate planning.
Use simple language and avoid industry jargon. Then, present the products that best fit their needs and budget.
Step 5: Follow Up Regularly
After providing educational resources and personalized advice, follow up with potential clients regularly to maintain the relationship and offer additional support.
This can include checking in on their coverage needs, offering policy reviews, or sharing relevant industry news.
Things to Consider When Selling Life Insurance
Here are a few extra things to consider when selling life insurance.
1. Legal and Regulatory Requirements
There are legal and regulatory requirements to meet when selling life insurance, including obtaining a license, complying with state and federal regulations, and adhering to ethical standards.
Try understanding what laws govern your area so you don’t break them.
Must Read: What license do I need to sell online?
2. Financial Considerations
Starting your own life insurance business may require a significant upfront investment.
You might need to pay for licensing, training, technology, and marketing expenses.
The life insurance industry is highly competitive.
You’ll be competing against other sellers and established insurance companies.
Try to find ways to differentiate yourself and your products to succeed.
4. Continuing Education
The life insurance industry is constantly evolving, and as a seller, you’ll need to stay up-to-date with changes in laws, regulations, and product offerings.
Continuing education is essential to remaining competitive and providing the best possible service to clients.
Frequently Asked Questions
We’ll answer two frequently asked questions we didn’t discuss in the sections above.
Who buys life insurance?
Individuals who want to offer financial security and support for their loved ones purchase life insurance in case of death.
This can include parents, spouses, and other dependents who rely on the individual’s income to cover living expenses.
Some individuals may also purchase life insurance as an investment or estate planning tool.
How do you pitch customers for life insurance?
When pitching life insurance to customers, it’s vital to emphasize the policy benefits, such as financial security and peace of mind.
Also, try to personalize the pitch by discussing the specific needs and concerns of the customer and providing examples of how the policy can address those needs.
You can also highlight the reputation and reliability of the insurance company to help build trust in the product.
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Selling life insurance isn’t a day’s task. It takes consistent effort from the start.
But after a while, you’ll build strong relationships, trust, and a network of people willing to recommend you for a job.
Tell us about your challenges as a life insurance agent in the comment section below, and we’ll try to provide a suitable solution.