Life Insurance, business end...


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Life Insurance Business End

Okay, say you just got license to sell Life Insurance, in most states that would include Life, LTC, DI, Annuities and even Health but you want to concentrate on Life Insurance as your main product. First thing you need to do is to appointed; if you are going to be independent youÂ’ll need various appointments, so whom does one look to? Does one go straight to the company if possible or go via Agency route?

Some Agencies will provide free leads, may they be telemarketer or DM. Some or better then others, IÂ’ve use Life Sales before and they were not too bad for FREE. Yet its been a while for me, so I expecting some with more experience to jump in and maybe offer suggestions for possible agencies to go thru, try to stay away from any agency that seems to be a MLM or pyramid structure they never turn out for the good via my experience. Many will offer up to 50 leads for 8 weeks if you sign up via XX amount of appointments thru them and will generally offer more upon production basis.

Okay, who do we look forward to do work with? Or what Insurance Companies are good to be appointed with on the life side of business. Now remember I generally donÂ’t sell on price, so my offerings may vary with others, yet here are my suggestions.

Ohio NationalÂ…Cheap Term with an A+ company

AIGÂ… Competitive Term, Competitive ULÂ’s and if you have a use, Supplemental and Voluntary Group Plans.

Mass MutualÂ… WL, UL and great for advice if they have an office near you and you actually place business at least they have for me.

Trans AmericaÂ…Final Expense and other products but they have a competitive FE offering.

Mutual TrustÂ…WL

Now there are many companies and many will have varying list, this is a short one and easily accomplished, youÂ’ll need to have E&O Insurance for most of these companies to even look at appointing you, get it about $55 monthly if you have an appointment with Assurant and go thru AON that is on the Assurant Agent site. You might as well get Assurant appointment; no E&O needed and get it once you get your Agent Number.

Now IÂ’m planning on this thread more about the business end of ones endeavor, not the sales or marketing end. Now IÂ’m a strong believe in not investing too much capital in anything till one can achieve funding via the business. Yet one needs to have some funding, such as living cost, and things such as E&O coverage. Then one has to set up a Tax Account, a lesson I learnt the hard way some years ago as a young person trying to make a living via business, donÂ’t put money up and at the end of the year the IRS will put you down! So figure you taxable % including SS withholdings or about 25% at least. If more then that is needed hopefully you kept up with operating cost to use as deductions to bring the total down. You have to be anal about this!

Fist thing is come up with a business plan! Then you have your Goal Planning, Daily to do list and of course another Account called your Reinvestment Account. I do my Reinvestment on a yearly basis; I generally do 10% of all earnings to go to next years plan. So basically I suggest to plan on living with about 60% or less of your earnings, if that is possible great if not then you do what you got to do, yet you have to set aside you tax money because that isnÂ’t debatable once you sit down with the IRS filling out a repayment plan, so better plan now, much cheaper!
Most new agents including myself struggle with budgeting (finishing my third year only now to realize a real and meaningful profit!), let's face it unless wealthy you'll have to cut corners or make adjustments. Living expenses plus business expense isn't easy to juggle to say the least. Yet if you are young I see no problem with the idea of working a second job if need be. I'm in my late 40's and can if needed work 60-70 hours a week without too much of a problem. Now I wouldn't want to do that for years and years but the first year or two if you are young and in good shape shouldn't be too much to ask if you really want to succeed as an independent agent. Now if you can do it without working so long or as a second job great but if you do, don't let it bother you. What is it that Dave Ramsey says? Work like no one today so you can live like no one later!

Now what amount one needs has to be figure by the person. Say I come up with the idea that I need $500 a month plus of course Health and other benefits that I have to supply myself. I sit down and figure how much I need for living. I pay myself the amount needed out of checking account 1, that money comes from Account 2 or where I have my commissions and other money to be deposited in, in other words I keep my business money seperate from my individual money. I then place expenses such as IRS and benefit money in Saving accounts. In other words if you want to succeed in any business not just the Insurance Business then think as if you are running a business!

If some one ask me about exact figures this is what I figure. Take the amount you need per week or month, say that is $500 dollars a week you have to have to survive, now double that and that is what you need to make it. Once you count in Taxes and Cost such as benefits for yourself that is easily double the $500 or $1,000 a week. Now this only gets more complicated as you figure in how you are paid, such as "As Earned" or "Advancements" but even with Advance Commissions you only usually recieve 70% of the yearly premium not 100% but if you can get a 100% great, this is going to depend upon what Agency or Company you are writing for. Myself, I like "As Earned", don't have to worry about Charge Backs which is a killer if it happens or at least till you know what your average charge backs are and they are funded or money set aside to cover charge backs.

Now once we look closely at commissions, and the amount of sales one needs to make the required amount to cover cost it becomes quite complicated and hard for many to come up with a concept to handle and juggle the living side of the business. This is where a "Business Plan", Budget Plan plus Goals come needed only then to we proceed to our Daily List of Activities. Now I find the time from sale to check is about 2 months on simple term, esp. if you choose as you earned in commissions. Yet if you choose "As Earned" the lag time of being able to survive off your commissions only lengthens due to the fact you'll get a lot of little checks, so I would suggest on at least 6-9 months before you can expect a suitable amount of checks coming in, of course depending upon your needs and abilities.
Expected Earnings

Let us go ahead and talk about the expected earnings, let us assume the average client will be around 40 in general, and standard health rating. We will also take the amount of 750 grand to be the average sale on a ten year term policy. Your can expect the average commission to be 100%, if you sell any amount you should be able to achieve a higher commission, more in line of about 115% but let us just assume a 100% for this practice.

Average cost for a male 40, standard rating will have a cost of about $750 dollars annually. So our first year agent would like to make 500 dollars a week to survive. We now know for that you'll need to bring in about a grand a week or 50 grand per year to make ends meet. So we take that 50 grand and divide it by our average sale which is 70 sales a year of ten year term contracts in the amount of 750 grand DB.

So now we now know 70 sales is our goal (I would add 10%), so our goals and budgeting has to take into account 70-77 sales. Now if we sell one sale from the free leads of 50 aweek from our agency that is handed to us freely for production (1 out of 50 will suffice for most production requirements) we only need to make up 20 to 27 additional sales, I'm not even counting on spouses that will need insurance out of our sales which should add 10% easily! Now what makes up our sales so far is basically a product that cost in and around $65 dollars a month for someone that is in the prime earning age, and if we are smart we will be advising yearly premiums greatly reducing our lapse or charge back concerns. Yet we have not even talk about add-ns, such as Final Expense from Trans America or whomever.

So where to we go from here? We still need 20 to 27 sales! That is where you should now employ the COI, you have friends, family and associates that should give you an idea where to go to prospect! I think the idea of Birds of a Feather Flock together, in other words what businesses and fields of endeavor is most commoningly found in your COI? This is where I would begin, businesses I have personal knowledge in, and attacking those businesses as some common ground should be found between you and those that you are prospecting to. Now for me at least it is easier to perform B2B with businesses I have some comfort in, such as Medical, Photography and Home Builders (individual spec builders) plus Nurseries and Garden Centers. Now if that isn't a issue for you great, go hit all small businesses and the self employed.

Now I would advise doing some sort of mailing on a very limited basis. If your COI consist of 200 people send out a newsletter, a simple one pager will do at a cost of about 100 dollars figuring on a cost of 50 cents a piece including postage. Now after you send out your initial offering call them and ask them if they recieved the newsletter and tell them you are now in the Insurance Field and you are just wanting to know what they thought of your Newsletter. Now these people are people you know to one extent or another and creating a dialogue shouldn't be difficult.

My experience is that doing 75 life sales of term policies is basically simple, yet most can not! While it all seems straight forward most fail, yet if you remain active and work your free leads plus attack your warm markets one should be able to make a it in their first year if budget problems are correctly addressed. Most of these activities are not all that time consuming, if you need to work a second job in the first 6-9 months go ahead and do it. My personal experience says that Budget concerns is a major reason why most don't make it.
Earnings and Profits

This has always serve me well, I figure how much I need to make per month then calculate what that translates per hour. All my earning go into one account, now at the end of the month I pay myself per hour from the general ledger for that business, rest of the money is then transfer to my tax account and other accounts as calculated ahead of time needed to cover those expenses. What ever is left in the general ledger is what I consider profit. That profit is what goes into my savings, which is what I consider my true payment not my salary for all my hard work. So don't be a hard headed ***, remember to pay yourself, that would be money above your salary, the salary should only cover living cost which really isn't paying yourself!

Like Salary or working people I offer advice, if you are not saving then you are not paying yourself, your paying the mortgage people, the credit card people etc etc. yet when are you paying yourself?

Now the great thing about this, is that since you are paying yourself per hour when someone catches you down at the Office Depot shopping you can smile and say "I'm on the Clock!"
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