Let me start by saying this…most Insurance Agents work strictly off commissions, so their primary objective is to sell you on the best option that has the highest commission rates paid to them. I’m referencing those agents who work most commonly with for profit agencies. Some of the most prominently known agencies are for profit and their objectives are to assist clients, however, don’t expect many of them to work in a client’s best interests. You might not even realize they aren’t. In this post I hope to help clarify some of the processes so you can be better prepared both as a client and as a potential agent.
What you should know is the process to become a licensed insurance agent is relatively arduous. It’s not easy task. Initially, you purchase software either through the agency that ‘hired’ you or on your own. This software will provide you the study materials as prep to pass your licensed producer proctored exams. Before you even get to this step, you’ll go through multiple interviews before being ‘accepted’ into a particular group. Once you sign up, complete, and pass your exams (typically Health and Life Insurance Producer License Exams), you’ll go through the formal process of filling out what agencies call “contracts”. This step is essentially your new hire paperwork like W4’s, tax forms, etc.
Here’s where things get slippery. During the trigger phase you aren’t technically employed yet and won’t be earning any income. This particular phase requires you to produce your own leads, usually in the form of close family and friends in your direct network. Most agencies have both a time limit to ‘trigger’ and a dollar amount you must satisfy in order to “trigger”. The time limit can vary by agency, company, and group, but in my experience it was 3 months. Additionally, the dollar amount will also vary but in my case it was considered relatively low, roughly 2-3 term life policies would do it. As I mentioned earlier, the agency doesn’t provide you any leads and your success depends strictly on your ‘network’. Some agencies call this “Project 200”. This project consists of loading up their CSM (customer service manager) with 200 of your contacts.
Make It or Break It
The Trigger Phase is usually where the agencies filter out those who are serious agents vs casual agents. By serious agents, I mean one’s that have zero issue with all requirements set forth from the agency including ZERO pay during this time. These requirements weigh heavy on your time. From online training requirements to virtual meetings, to reaching out and scheduling calls with potential leads, and finally routine scheduled calls with your recruiting agent, it can be quite the effort and time applied for no income whatsoever. For larger scale agencies, this is considered the norm and what my experience was like. Mileage may vary here with regard to smaller agencies ran by independent agents and brokers as some of those offer base pay.
Here’s where my journey ended. I didn’t ‘trigger’, I’ll explain why in the next section. Once those agents satisfy the trigger requirements, training requirements, and other agency specific requirements, you become a fulltime agent and will begin earning an income through your commissions, online training, etc. Your incentive to become an agent earning an actual income is dependent on your ability to bug your primary network of friends and family as leads. Something I simply failed to do.
Why My Journey as an Agent Ended
For starters, I started the process of becoming an agent during a Pandemic. Some may argue this is a flourishing time, which if you lost someone close to you during this time could push you to invest in life insurance as a result. I also started the process of an agent after multiple discussions with my associate agent who ‘hired’ me stating on many instances that I “could build my practice in my own way”. Sadly, that statement couldn’t be further from the truth. They want you to practice with what aligns best for their practice. This simply created conflict for me that ultimately led me to resign from the insurance game. At least with this particular company. Here’s what this particular groups culture consisted of…Whole Life Insurance policies. To put it plainly, Whole Life policies benefit no one but the agency and the agent who wrote the policy.
Whole Life Policy Dilemmas
As I mentioned, Whole Life policies are sold to many individuals as a way to earn dividends (although they will tell you they can’t guarantee them), cash value, and cover you until death or age 100. But here’s what they don’t tell you. They are expensive, barely affordable to 80% of the population, earn a cash value of 4 or less % a year, often leave you underinsured, and the agent who sells you on this type of insurance receives greater than 50% in commissions. For comparison, Term Life pays roughly 20-25% in commissions. So you can see the agents incentive is to sell you a Whole Life policy. In fact, most of the scheduled meetings are essentially training on how to sell whole life products. In my 5 month stint as an Agent, not one training (outside of recording trainings) discussed other products like health, long term care, annuities, etc. Whole Life policies are targeted to those that agents know can afford. They will run an analysis on your current financial information including your income as well as retirement savings. Most agents will push Whole Life as an investment to protect your money by earning cash value conservatively and telling you about non-guaranteed dividends as an opportunity to lessen the burden of the expensive premium you’ll pay monthly or annually. If you are actually looking to maintain a solid return on your investments for retirement, an deferred annuity would be a much better option. Pairing it with a 20-30 year Term policy would work best.
I might sound bitter, but I actually believe in Life Insurance. I truly believe people should be protected in the event tragedy strikes. That being said, Whole Life shouldn’t be an option….for anyone. It isn’t a wise investment as you are investing in a company instead of YOU. Whole Life policies cost YOU money and the fees you pay go directly into the agent and company’s pockets as commission. They will use many tactics to make you believe they are working in your best interest. Some will even scare you leveraging your health, wealth, and family against you. Don’t buy Whole Life. Don’t work for an agency that strictly pushes Whole Life. It will cost you much more time and effort to get out of one once they have you sold on it.