Becoming an Independent Insurance Agent

[Crabcake Johnny]

GETTING SET UP FOR BUSINESS - WHAT THE HECK DO I NEED?

1) E&O insurance. Most carriers mandate that you have this before you can get appointed.

2) Get E-fax or something similar. You'll be receiving a lot of faxes and this solves paper jams, running out of paper, running out of toner and poor line quality.

3) Use a professional email address - it should be your name or agency name. It shouldn't be [email protected]

4) Get a website. It establishes legitimacy and I'll take clients there to run quotes: http://healthsolutionsagency.com I also use it to generate leads.

5) Get a file cabinet. You should be keeping physical records of applications.

6) I'd recommend insurance software for client and lead tracking. http://www.yourinsuranceoffice.com/ This is offered by Frank, a valued member of our forum and designed specifically for insurance agents. Downlad the demo and you'll be hooked.

7) Get a system in place to back up all your data. You'll be getting a lot of leads. If you put them on spreadsheets or in software make sure it's backed up just in case your computer crashes. I personally use Google spreadsheets since I can access it anywhere in the world where I have computer access.

8) I personally use a dry erase board for appointments. I like seeing a nice snapshot of my week. And just in case the power goes out and I had three appointments that day it's no biggie.

9) I'm a fan of having a toll free number. While it's not a deal-breaker I think it's nice for long distance potential clients to call me free as well as my clients. On top of that, I can have my toll-free number ring any number I want. So in case I move in a few years I don't have to send out a new number to every client. I use Ring Central but there's a lot of services.

10) I send E-newletters to all of my clients using http://constantcontact.com If you have less than 50 contacts it's free.

11) Get business cards. There's too many sources on the net to even name but I use http://printsmadeeasy.com You can basically design any card you want. You can get free business cards at http://vistaprint.com No catch - free. You just have to click "no" to 20 questions offering upgrades.

12) If you don't have an unlimited long distance plan, get one.

 

[Crabcake Johnny]

Another piece of advice: Call forward your calls to your cell when you leave the house. Most potential clients are only gonna call one number - your main number. If they can't reach you they're not gonna hang up and dial your cell - they'll just leave a message. Actually, worse yet is they don't leave a message.

When you're dealing with small business owners it's a slow burn. It can take me 1 to 3 weeks to get them to commit and most are insanely busy. I cannot afford to miss that "Ok, let's get this going" call when they finally have 10 spare minutes. Mising that call means another 3 days of phone tag.

Call-fowarding to your cell also gets you the heck out of your office without any worries about missing a call.

 

[Crabcake Johnny]

UNDERWRITING BASICS

Almost every carrier has published agent underwriting guidelines. Read it cover to cover - I'll go over the possible underwriting decisions. Not all carriers use these decisions so check first. Also, some carriers like Golden Rule and Assurant have underwriting decisions that are unique and since I don't want to get into training I'm just going over the two most common decisions - riders and rate-ups. Just be aware to check with each company for all available guidelines.

1) Pre-existing conditions: Any condition for which someone has sought treatment or a reasonable person would seek treatment. The is basically anytime someone has seen a doctor, went to the ER or hospital. Also note the "reasonable person would seek treatment" statement. Just because someone has not seen a doctor doesn't mean it isn't pre-existing. If someone is complaining that they have a sudden shooting pain in their leg they will need to see a doctor for a diagnosis before an application can get submitted.

2) Rate-ups. The entire policy or just the individual can get a rate increase. A typical condition is being overweight. Policies can be rate increased from 15% to 200% depending on the conditions and carrier.

3) Rider (exclusion.) The would be a document issued stating that a certain condition is being excluded from the policy. Say someone has a recent back surgery - a rider might be issued blocking further treatment stemming from that condition. Riders can be temporary; 1, 3, 5 years or can be permanent.

Note: Riders and rate-ups are the most common underwriting decisions for pre-existing conditions.

It's important to always run your cases by pre-screen first anytime there's a pre-existing condition. Almost every company allows you to contact them regarding the possible underwriting decision.

Also remember that when you put many conditions together the insurance company will take into account the total liability. Overweight might be ok, high blood pressure might be ok and high cholesterol might be ok - but put all three together and you might have a decline.

Prescription medication will be a key factor in underwriting and it's imporant when anyone's on medication and you collect all the info:

1) When where they diagnosed with the condition
2) Name of medication
3) Dosage (50 mgs)
3) Frequency (taken once per day)

You'll also need to collect the proper information on the most common conditions:

High Blood Pressure

*What were the initial readings?
*What were the last readings?
*When was the last reading done?
*Any trips to the ER?
*When were you first diagnosed?

High Cholesterol:

*Initial readings
*Last readings
*Triglyceride level and HDL ratio
*Any trips to the ER

Anxiety/Depression

*When were you diagnosed
*Any loss of work
*Any therapy
*Is it situational? (Loss of loved one, job, etc...) or clinical? (obsessive/compulsive, bipolar)
*Do you have panic attacks? If so, when was last episode?

 

[Crabcake Johnny]

IS THERE ANYWAY WE CAN TIE THIS ALL TOGETHER?

Step 1: Research the commissions and plans available in your state. Make sure you can actually make a living in your state.

Step 2: Get E&O coverage then get appointed with all the available carriers in your state.

Step 3: Get your marketing plan together; telemarketing? Internet leads? Walk and talk (B to B)?

Step 4: Start doing intense studying on the plans.


OK, I HAVE MY FIRST LEAD - NOW WHAT?

1) Introduce yourself an an independent agent and explain that your job is to help people who are currently having a problem with their health insurance. Either the rates are do high, they don't like their current plan or they don't have coverage.

2) Find the problem. If the client doesn't have a problem you don't have a deal - "Yeah...I'm pretty happy with what I have now and the rate's fine but if you want to send some quotes that's ok." There's no deal there. Here's a deal: "Our rate just went up to $750 a month and we really need to do something." Or "I just had to drop coverage a little while ago and I really need to get something going again." Basically, your client needs to complain about something and be conversational. Dump off the people with no interest and work with the rest.

3) Qualify. The coverage you recommend is largely going to depend on their health history. You want to waste 45 minutes going over plans and they're 5.6 340 pounds? Diabetic? Explain to your client that the rates and coverage you recommend depend on their health. If there's any pre-existing conditions contact the pre-screen departments of your insurance companies so you can compare the underwriting decisions.

4) If you're a face to face person, they qualify and you can help them go ahead and set an appointment. Let them know a price range "From $320 to $550 I can offer you several plans. I can meet with you, go over all of your options and answer all your questions." If you're going to do this over the phone (not recommended for brand new agents) then ask for a specific time to call back when they'll have 15 minutes to go over all their options.

5) When you're going over the plans don't be a salesman. Be an advisor. Simply explain their options and always recommend the best coverage possible that fits into their budget. HSAs are almost always the correct plan to recommend they best protection. You will be doing a great disservice to your clients by not studying and becoming an expert on HSAs.

Important note: Health insurance is supposed to be there to protect people's assets in the case of an unforseen medical event. Anyone can handle small bills, not many can handle large ones. Avoid selling plans that place limits on prescriptions and outpatient procedures. Under no circumstances are agents supposed to pull clients off major medical plans and offer limited plans just to save money without explaining the potential liablity.

On a personal note, one of my best friends has been diagnosed with stage 4 non-hodgkins lymphoma. Forget all all the chemo - he's on shots to boost his immune system. Those shots are $3,000 a week and it's considered outpatient drugs. He's also 40 years old. You never know what will happen and health insurance should be designed to be there.

And for all those "My client's healthy so why does he need all that protection" agents just ask youself if it would be absurb for people to sign up for this:

Case 1: Your house burns down and you owe $200,000. Thank God you have homeowners. But the agent comes and hands you a check for $2,500 and says "I'm sorry but in your contract it states that for electrical fires you only get $2,500 maximum.

Case 2: You get into a horrible car accident on the way home from work. You car insurance agents hands you a check for $1,000 and says "in your contract it states that if an accident occurs during rush hour you only get $1,000 max."

Does this sound crazy? Ok...

Case 3: You have an bad accident working around your house. The total surgical bill is $80,000 and now you're on $3,000 a month of medication. But your insurance agent calls and say "I'm sorry, but you've exceeded your benefits."

So....is it more likely for your house to burn down or have a medical issue?

 

[natem2112]

UNDERWRITING BASIC
You'll also need to collect the proper information on the most common conditions:

Here are a few questionnaires that I've found over the years that I use for health conditions, they ask the same specifies questions that the underwriter is going to ask anyway.

These work great for pre-screening.

I saved them to a folder on my desk for quick access.

 

[Sam]

Thanks Nate, that is a great resource.

 

[Beth F]

IS THERE ANYWAY WE CAN TIE THIS ALL TOGETHER?

Step 1: Research the commissions and plans available in your state. Make sure you can actually make a living in your state.


Sorry if this sounds like a dumb question, but how do I find out the commissions?

 

[Crabcake Johnny]

You should be able to conctact all companies through their website and find out how to get contracted.

Before you sign up with anyone you should review a copy of the commission schedule - that way you know the range of commissions.

 

[senior-advisor-indiana]

It definetly sucks to get a contract and then a month later find out you are getting screwed on commissions.

 

[GoGetEm]

John P., I am considering starting my own insurance business and want to let you know that there is a reader out here in cyberspace that appreciates your informative posts. Thank you for sharing your knowledge and insights in this forum.