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Choosing a New Career in Selling Insurance
Choosing a new career is always a difficult thing, especially if you have limited resources and time to launch it. Most new careers require going back to school, becoming a student again, paying the fees. If you are a family person, it becomes a chore and you often wonder if it was the correct decision and if it will payoff, at worse, what if it does not work out?
One of the faster career switches is becoming an insurance agent for Farmers, Allstate, or State Farm, these are the major players, but there are many other smaller competitors. Many people never think much about this as a career, really know little about it and how money is made. Any agent will tell you that it can easily be lucrative, after 2-3 years your salary could be 75K a year or more. It is the first 2-3 years, which is like moving a ball uphill by getting new clients via selling policies. Not just car insurance, but umbrella policies that cover, home, car, travel etc. Agents basically earn between 10-15% of whatever the amount of the policy sold for and when renewed, another 10%. A single home with two cars could have several policies. FYI about average premiums: Auto-$1000\yr, Home-$600\yr, Life-$400\yr.
Most agents are independent 1099 workers that operate as their own business, so you are the boss. You, as an agent, usually can pass on your Agency to relatives or sell your client's to other agents should you decide to leave the profession. Because you own your own business, the tax write-offs can be significant-just keep your receipts!
The major players offer a multi-policy line: autos, home, renters, landlord, life insurance, business insurance, recreational, annuties, disability and financial services.So, you can easily see they offer a lot of insurance types and the agent can have diversity in their accounts.
How much an agent makes entirely depends on the agent. When starting, their are quotas to meet every quarter, so maybe 30 sales every three months (this could be 75 policies you get commissions on). An agent's income is based on new business and renewals, together there is a compounding effect. Your first year, you might earn only $21000 in new business and only $3200 from renewals. The 2nd year could be $27000 in new business and $22000 from renewals (based on 30-35 new sales every quarter). By the end of the 5th year, new business might be $33K, while renewals is 81K!
Most agencies require successful agents to continue signing new business, even if the agent really does not need it. As you can see, the new business turns into renewals that arrive with no further effort on your part on the following year.
Most major agencies have in-house training programs that last 1-5 months. During that time, a newbie obtains his State insurance license at his own cost, then, the agency will start training them about their various insurance lines to offer, marketing etc. You develop your own agency and some will subsidize you until you get up and running or fail for 1-2 yrs. There is turnover because it is sales. It is a numbers game. It is some cold sales, some lead sales that you purchase. It is not passive sales where most parties come to you. Most of the time, it is active-follow-up calls, cold calls, marketing.
Agents sell protection for your assets. If you have a $40,000 car, yet have minimum coverage of $15,000 if wrecked, well, you need better protection in case the worse does happen. If you have a $700,000 home, yet insure it for only $500,000, obviously, the protection (insurance) is inadequate. True, your premiums may be cheaper, but paying a little more for adequate protection is cost effective for unforeseen events. I guess, it is sort of gambling. You, the buyer, are willing to gamble by paying less, in that, nothing will happen. Your insurance agent is telling you it is better to be prepared because after the event happens, you could be up that creek with no paddle.
Being an insurance agent can offer serious money and independence of having your own agency. If you have 500 policies, you easily have a monthly income of $10K or more. Just know, the first two years are the worse and a grind. If others have done it, so can anyone.