Selling Insurance – An Ultimate Guide to Starting Out

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How to Build a Profitable Business Selling Insurance

Selling insurance affords a great career. Success in insurance usually equates to good to great pay, a challenging and rewarding experience, and the satisfaction of helping both people and businesses. So, how do you start selling insurance? Let’s get started at the beginning – the “why.”

Why Sales?

Sometimes, true-blue sales positions get a bad wrap, and this especially goes for insurance sales. In fact, I think one of my first introductions to the profession was in Bill Murray’s Groundhog Day. Murray’s character encounters “Ned” the life insurance salesman whom he tries to avoid in all but one of the cycles of his ever repeating day.

While making fun of the life insurance salesperson did make for pretty good comedy in Groundhog Day, it certainly shows how society can negatively view sales.

I recently read about LinkedIn’s efforts to improve how salespeople are seen in their campaign “The Real Face of Sales.” LinkedIn says their campaign wants to debunk misconceptions about sales. They say,

“Real Sales is about generating personal bonds with clients, solving problems and providing personalized value.”

I couldn’t agree more. Sales is important, and insurance sales is even more important now than ever.

Why Sell Insurance?

Selling Insurance is lucrative, has a low start-up cost, provides entrepreneurial freedom, and produces passive income. However, it does take hustle! In addition, the industry needs younger agents to replace the retiring ones, and there big online marketing opportunity as client demographics change.

The Agent Demographic Problem

If you are a Gen X’er, Millennial or even Generation Z, your country needs you. Insurance sales is an aging profession, and we are losing agents to retirement faster than we can replace them.

Aging Agents

The average age of an insurance agent is just shy of 60, and the need for agents is growing. According to ThinkAdvisor, at the rate agents are retiring, the industry will need 60,000 new agents every year for the next ten years to maintain numbers. 

Moreover, the profession needs growth, not just maintenance. The Bureau of Labor Statistics describes insurance sales as a faster than average (at +10%) growth profession that needs to add an additional 48,300 agents over the next ten years. 

Retiring Boomers

This need for insurance agents is especially dire in the health insurance industry. 

Just think about who is retiring now… the Baby Boomers. 

10,000 Baby Boomers hit Medicare age (65) each day. The first Boomers (born 1946-1964) started reaching retirement age in 2011 and will continue to retire in droves until 2030. 

Many media outlets have dubbed this the “Silver Tsunami,” which brings unique challenges to our society, but also exciting ways to make money.

Selling Insurance as a Side Hustle Opportunity

Moreover, more and more people need insurance agents, especially since some commercial and personal products have become more complex. They are now used for a variety of different solutions, and insurance agents are increasingly helpful for consumers in decoding insurance products.

As a result, there is opportunity to make money here, even as a side hustle. Even more, as the industry tries to catch up with advances in technology use, agents can begin to work smarter and reach more people in less time.

The younger Baby Boomer are pretty good with technology. They are finding more information for all types of insurance online and are even buying insurance online. Conversely, most insurance agents (especially in Medicare) sell in the old school ways and either don’t need to or want to change. 

The average 60-year-old agent has a good book of business and doesn’t need to rewrite their playbook. The result is more opportunity for younger agents to swoop in and meet the online needs of the changing demographics. 

How to Build an Insurance Business

When starting a career insurance sales, you must start by deciding why you want to pursue it and what kind of insurance you want to sell. Then, the next step is setting your goals and plans to reach them. After that, it is time to get out there and start selling, so that eventually, you will start to produce passive income.

Step 1: Find Your “Why” and “What”

Selling insurance is a long-term commitment. It is not something that makes you rich overnight, so you need to like it. Moreover, you need to ask yourself why you want to do it. Your why will also help you decide what kind of insurance sales would be a good fit for you. 

To Whom Will You Be Selling Insurance?

Picking your customers is a huge part of selling insurance. Moreover, it is often the main reason why you will want to continue in your insurance business or quit before you even begin to see results.

If you like your target customer group, identify with their needs and desires, and feel satisfied by helping them, then you will want to stick with it. It is so important then that you set-up your business to work with people you like. People that keep you energized instead of bringing you down. People that make you smile or laugh and that you are genuinely interested in.

What Insurance to Sell

There are many kinds of insurance to sell. What type you choose really depends what group of customers you like to work with. 

  • Do you like working with older folks? Try Final Expense or Medicare
  • Or would you rather work with younger people? Try Life Insurance (there are lots of different was to niche down here too). 
  • Everyone needs P&C insurance (home, auto) if you like working with people across the board.
  • If you like working with businesses and entrepreneurs, Commercial Insurance might be your happy place. 
  • If you enjoy working with businesses in construction, manufacturing or agriculture, try workers’ comp.

A Sales Job That Doesn’t Feel so “Salesy” 

Most agents agree that selling insurance feels more like an educational process than a sales job. The businesses and people you talk to need insurance. The insurance plans you sell add necessary value to their lives and protect their businesses from risk.

Agents are needed in every insurance market, and the most insurance products lend themselves to not feeling “salesy.” Any good agent, with their clients’ best in mind, will be a consultant and a leader in their sales field.

Independent vs. Captive Agent

Next, there are two kinds of insurance agents, captive agents and independent agents. Captive agents work for one insurance carrier and are sometimes even employees of this company. They must sell their company first.

Independent agents are more entrepreneurial types that pick which carriers they want to sell for and can represent many companies at one time.

Being an independent agent can take the pressure off of having to push just one plan or one product. For example, in the Medicare insurance industry, the U.S. is seeing a rise in popularity of Medicare Advantage (MA) programs. These are good plans for many people, but having more plan options can make the decision process more confusing for seniors.

Don’t get me wrong, captive agents can be great agents too. There is a need for both, and you need to discover what is best for your situation. I am only saying, there is an important distinction between selling and educating, and being independent helps you to do both, easier.

Being independent is just another way to not make insurance feel less like a high-pressure sales job.

Room for Growth

Finally, if you desire, insurance sales gives you a great platform for expanding your business into other forms of financial products later. Just like insurance, financial products also require you to be a good listener with a passion for matching the right clients to the right products.

Step 2: Set Your Goals & Plan

This business has a start-up year where you might not make that much money initially, but then it picks up with residual commissions after year one. That is one reason why it sometimes needs to start out as a side hustle. After year one, you can set your sights on full-time selling or keep it part-time. 

Start-Up Costs

As I mentioned, insurance sales has a pretty low start-up cost. You don’t need expensive equipment or even an office (as you can meet with clients in their homes or even over the phone).

What you do need are a state licenses where you want to sell, Errors and Omissions (E&O) Insurance, business cards, a website, and training/licensing materials and tests for the products you want to sell. I spend well under a thousand dollars on all this each year.

For more information on how to become an insurance agent and learn all about the tests, licenses and fees require, please read this article.

Finding Your Support System

Yes, you can go at this all alone, but it is much easier with a support system. It will help you get off the ground faster, and it will keep you going when you want to quit.

When I first started selling insurance, I went with a very formal support structure and joined a large Insurance Group. I was “independent” but was trained and supported on one particular insurance brand that I lead with. This can be great if you meld quickly with the culture of the local office, but I didn’t really find my groove here. So, after a test run, I quit working with this group.

It wasn’t until two kids and a stint with a corporate job later, that I figured out where I suppose to be. Moreover, discovering what kind of support I needed.

Now, I work as an independent agent, with a small insurance agency as my support system. I have an “upline” mentor that helps me sell and even helps me set appointments, all for an override on my business. This works out great for me because I am still completely independent, but I have someone to call when I need help or need encouragement.

You need to find out how much support and flexibility you need. From corporate to “mom-and-pop” there is a support system for everyone.

Contracts and IMO’s

As an independent insurance agent you will need to decide what carriers you want to represent and then get contracted and trained with them. This is tricky to do all on your own. So you will need to find an insurance brokerage or an “Insurance Marketing Organization” (IMO) to help you get contracted and hold your contracts for you.

Training

Once you are contracted or appointed with a carrier, you will need to be trained on their products. (This is especially true for Medicare sales where you need to take a Federal training and pass a test each year to be able to sell this line. On top of that, Medicare Advantage and Part D drug plan sales require you to test on individual products with each carrier before you can sell them.)

Training is huge for all types of insurance, and it goes beyond just initial product training. In order to be good at selling insurance, you need to fully understand the various products and how they can all be used to add value to your customers lives. Therefore, you must be the kind of person that doesn’t hate training and learning. It doesn’t have to be your favorite thing, but if it is, then you will have a leg up on every other agent.

Fully training on and understanding the products will help you to be more helpful to your clients and more creative with your solutions for them.

Step 3: Getting Out There

Marketing & Leads

After you are contracted, trained, networked and ready to go, it is time to get out there!

Another cost associated with insurance is sales leads and marketing. This is a place where it is very smart to have help. When I first started out, I did not have any help besides a few people at my insurance marketing organization (IMO) that I could call sporadically with questions. It was difficult to navigate the industry, especially industry marketing, by myself. I didn’t get very far until I connected with an experienced agent as an “upline” and mentor.  

There are many organizations that will help you (or charge you) for leads, and some of them are very good. In addition, the insurance carriers will also throw in some money and leads depending on what kinds of insurance you are selling. These opportunities are also much easier to secure when you work with someone experienced. 

Of course, the hard work/low-cost avenues available to all sales professionals (networking, speaking, canvasing) are always there too. Referrals are the best form of marketing you will have, but those take time to build-up. Many agents use lead sources while they are in building mode. Market to market, results with these are very different, and it makes sense to research your area of the country first before sinking a lot of money into leads. 

Agent Marketing Newsletter

Creating a marketing plan that works and evolves as you evolve is an ongoing process. The full extent of this project is beyond the scope of this article, but we have free resources for you to begin or continue what you may already have.

New Marketing Avenues

Insurance buying habits are changing as all generations become more tech savvy. As an example, in the past, traditional insurance carriers have been the pen and paper type. However, insurtech companies and online sales are changing that. In the past, insurance companies have not known for being on the cutting edge of technology. However, we see companies every year roll out new ways to market and new ways to sell to customers online. 

Step 4: Produce Passive Income

This article is about selling insurance as an independent agent – not a captive agent or an employee of an insurance company. There are insurance agent jobs where you get a salary and maybe a commission or bonus on top of that, but I am talking about a pure commission position. The entrepreneurial side of insurance and sales. 

In this role, you are your own boss, but you only get paid when you sell. The upside to this is your commissions are significantly higher than if you were an employee. 

You get paid a little differently with each insurance product. However, in some lines of insurance, commissions and rates are often regulated by the government to ensure fair pay.

Typically, after the first year’s commission that can include an upfront advance payment, with most products, you will get a monthly residual commission for every policy you have active on the books. That passive income is one of the major benefits of being in insurance sales. This is true on both the commercial side and the personal side.

Is Selling Insurance for You?

There is money to be made in the non-glamorous niches like insurance. 

If you are an entrepreneur with more of an educational bend than a sales bend, then give selling insurance a shot!

Are you a commercial insurance agent? Get appointed with Foresight today.

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Author: Foresight

We’re a team of compliance, safety, and commercial insurance professionals transforming workers compensation. We write about technology, trends, regulations, and value-adding services.