Selling insurance is a challenging, dynamic career that demands drive and perseverance. The sales process may involve overcoming rejections and competition as potential leads or clients may opt for other agents’ offerings. Overall, selling insurance is hard but has many benefits too!
As a licensed insurance agent, I know firsthand how challenging it can be to sell insurance, but that doesn’t mean it’s impossible! A career in insurance sales requires focus, determination, and resilience.
This article addresses the challenges of the insurance sales industry and provides insight to help you decide if it’s the right fit for you. Explore key factors including the possibility of failure, pay, responsibilities, mindset, and the toll it may take on your personal life. Consider the numbers game, responsibilities, the need to embrace bad experiences, and self-control.
Table of contents
Insurance Failure Rate
The insurance sales industry has a high failure rate, with estimates ranging from 90-98% of agents failing in their first year. This is due to various reasons, and it’s important to understand them to avoid becoming a statistic.
I’ve seen it myself. One of my competitors (who started at the same time as me) was a Farmers insurance agent. After a year or two, I saw their sign being taken down in front of their building.
The high failure rate in insurance sales has been a long-standing issue in the industry. The statistics are stark, with estimates suggesting that as many as 90%+ of new insurance agents fail in their first year of selling insurance.
Why Is The Failure Rate So High In Insurance?
One of the main reasons for the high failure rate is the fact that insurance sales is a highly competitive industry, with many agents vying for a limited pool of clients. Many clients are skeptical of insurance products, and may take time to warm up to the idea of buying insurance from a salesperson.
Commission-Based Pay In Insurance Sales
Another factor contributing to the high failure rate is the commission-based nature of the job. Unlike other sales-based careers, insurance agents are not guaranteed a steady income, and their paychecks depend on their ability to sell policies to clients. This puts a significant amount of pressure on agents to perform, and many find it difficult to earn a steady income in this line of work.
When I started my agency I still held onto a regular job to maintain a certain level of income. I only made $17,000 during my first year as an insurance agent so selling insurance as a side job is a logical way to begin in sales.
In insurance sales, your income depends solely on your ability to sell policies. This pressure to perform can lead to stress and financial insecurity. For example, if you don’t make new sales, you may struggle to make mortgage payments or provide for your family. Over time, this stress can lead to burnout and loss of motivation.
Understanding The Industry
As an insurance broker, I think the insurance industry isn’t often well explained. Fun fact: the insurance industry can actually be traced back to ancient civilizations! Though it has certainly evolved since then, insurance still remains an important part of our lives. Insurance can be divided into several categories like health, auto, life, and property insurance.
Each type of insurance provides services within a specific market and offers different levels of coverage. Health insurance, provides coverage for medical expenses, while auto insurance covers damages or injuries caused by car accidents.
Life insurance, on the other hand, provides financial support to a person’s beneficiaries in case of their death. Property insurance, protects against damages to a person’s home or belongings.
Competitiveness Of Insurance
The insurance industry is also a highly regulated field, with state and federal laws governing the sale and use of insurance products. This ensures that consumers are protected and that insurance companies can operate fairly and efficiently.
The insurance market is a competitive one, with many companies vying for customers. This competition can result in lower prices for consumers and more options for coverage. It also means that insurance agents must work harder to stand out and build a successful career.
The insurance industry is also a large employer, providing jobs for agents, underwriters, claims adjusters, and many other roles. This means that there are many opportunities for those interested in a career in the industry.
It’s worth noting that the industry is also impacted by the economy and global events, as they can affect the demand for certain types of insurance. For instance, during an economic downturn, people may put off buying insurance as they focus on saving money, or during a pandemic, demand for health insurance could increase significantly.
The Role Of An Insurance Agent
As an independent insurance agent, it is my responsibility to help individuals and businesses find the right insurance coverage for their needs. This means working with clients to understand their insurance requirements, and then researching and presenting different options for coverage.
Insurance agents also handle the paperwork and process of purchasing insurance policies. The role of an insurance agent can be challenging and requires certain skills and qualifications.
First and foremost, they must have a good understanding of the different types of insurance and the markets they serve. This knowledge is key to being able to effectively advise clients on the best options for coverage.
Communication skills are also important for insurance agents. They need to be able to clearly explain complex insurance concepts to clients, and also be able to listen to and understand the clients’ needs.
They also need to be able to negotiate with insurance companies to get the best coverage and prices for their clients. Insurance agents must also be able to handle rejection and be persistent in the face of setbacks. Sales is a numbers game, and agents must be prepared to face many rejections before closing a sale.
But with every rejection, they learn from it and use that to improve their approach and increase their chances of success. Networking is also a key aspect of an insurance agent’s role, as building relationships with clients and other industry professionals can lead to more business.
Insurance agents must also keep up with industry developments and regulations by continuing their education, attending conferences and seminars, and staying informed about new products and services.
The Sales Process
As an insurance professional, I can honestly tell you that having a good understanding of the sales process is essential for your success as an insurance agent. The sales process is a series of steps that an agent goes through to successfully sell a policy to a client.
It starts with prospecting, the process of identifying potential clients and building relationships with them. This can be done through a variety of methods such as cold calling, networking, or advertising.
Insurance Needs Analysis
Once a potential client is identified, the next step is to conduct a needs analysis. This is where the agent gathers information about the client’s insurance requirements and assesses their risk profile. This information is then used to determine which insurance products and coverage options would best suit the client’s needs.
Present The Options
After the needs analysis, the agent presents the options to the client and explains the benefits of each. This is where the agent’s knowledge of the different types of insurance and the markets they serve comes in handy. They must be able to clearly explain the coverage options and answer any questions the client may have.
Once the client has selected a coverage option, the agent must then handle the paperwork and process of purchasing the policy. This includes completing the application, submitting it to the insurance company, and following up to ensure that the policy is in force. Having a great CRM saves tons of time with things like paperwork!
Service The Policy
The next step is to service the policy, which means that the agent must regularly check in with the client to ensure that their coverage is still adequate and to address any issues or concerns that may arise. Also, they must inform their clients when their policy is up for renewal, and assist them in the renewal process if needed.
The agent must also follow up with the client after the sale to ensure that they are satisfied with the coverage they have purchased and to build a long-term relationship. This can lead to repeat business and referrals from satisfied clients.
Building A Successful Career
Building a successful career in the insurance industry isn’t as difficult as it seems, however, it does require a combination of hard work, dedication, and adaptability to change. It’s important to have a clear understanding of your goals and to set a plan to achieve them. To build a successful career, follow these steps:
Start by defining your short and long-term goals and make a plan to achieve them. Divide long-term goals into smaller, specific, and short-term goals to make progress more manageable.
Networking is crucial in building your career. Connect with professionals on social media platforms like LinkedIn and Facebook and join professional groups. This way you can learn about job opportunities, show off your skills, and even connect directly with CEOs or hiring managers.
Make sure your online presence, including your social media profiles, is professional and represents you in a positive light. Consider creating a personal website to showcase your qualifications, experience, and unique selling points.
The job market is constantly changing, so it’s important to stay flexible and continue learning job-related skills. Focus on acquiring relevant skills rather than high-status job titles.
Get Transferable Skills
Acquiring transferable skills can help you move up in your career. Focus on developing skills that are valuable across different industries and jobs, such as communication, problem-solving, and leadership.
Stay motivated and focused on your career goals. Surround yourself with supportive people and engage in activities that give you a sense of purpose and fulfillment.
Also, building a good relationship with your clients can lead to repeat business and positive word-of-mouth.
Setting specific and measurable goals for yourself is also important for building a successful career. This can include targets for sales, client acquisition, or revenue. Having clear goals will help you to stay focused and motivated, and also make it easier to track your progress and measure your success.
Another important aspect of building a successful career is to have a good work-life balance. Being an insurance agent can be demanding and stressful, and taking care of yourself is important to avoid burnout. This includes taking time off when you need it, and making sure you have a good support system in place.
As an insurance agent, I can tell you that insurance sales can be a rewarding career for those passionate about helping others and willing to invest effort. It requires knowledge of the industry, the role of an insurance agent, and the sales process, as well as strong communication skills and persistence. The earning potential can vary, and there can be some challenges that come from selling insurance, however, by following the tips in this article, you can set yourself up for success.
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