A job selling insurance could be a position that is very enjoyable and highly lucrative. It could also be a position that makes you miserable. Everything depends upon your personal work values, your personality, and the drive you have for success.
Many people who sell insurance products find that there are several benefits that come their way. These advantages often outweigh the negative elements that come with this type of job. It can be a reliable source of income, an excellent career choice, and a chance to even be your own boss if you want. It can also be a job where you find yourself working hard without a paycheck every so often.
If you’re thinking about this type of opportunity right now, then here are some of the critical pros and cons of selling insurance that you’ll want to review.
List of the Pros of Selling Insurance
1. There are high commissions available to you.
The incentive to sell insurance is that you earn a good percentage on each policy sold. You can easily make over $100,000 during your first year with a strong work ethic, personal motivation, and a little luck. Instead of being locked into a salary that you’re paid no matter how hard you work, you can earn based on your true potential. There are always clear incentives to sell more because you’re going to earn more.
2. You have job security when working in the insurance industry.
People need insurance. They’re going to require their policies over a long time because that is what protects their personal assets. Health insurance helps to cover medical expenses. Homeowners’ insurance protects their property. Car insurance does the same thing for their vehicles. Unless the world experiences a complete paradigm shift over the next few years, you can rest assured that a position which involves selling insurance is going to be needed in your community.
3. Leads are frequent within the insurance industry.
People look for insurance online based on their specific needs. There are several websites, including employer-owned ones from your affiliate, which help to funnel inside leads to your desk. That means you can spend more time closing deals than looking for them. Because insurance is a need, there is always a possibility that a new client will walk through your doors or visit your site each day. Most clients have already done their homework, which means your need is to give them a good deal.
4. You can work almost anywhere selling insurance.
The markets for insurance rarely differ from community to community. That means the selling skills you develop when selling policies can transfer to anywhere. You get to choose where you want to live and what insurance agencies you want to represent. Although there is always a little uncertainty in earnings, some companies do offer commission advancements or a small base salary that helps you pay bills when times are tight. As long as there are people around, you’ll have an opportunity to earn a living when you work in this industry.
5. Several career paths are open to you when selling insurance.
There are several ways that you can break into a career in this field, even if you have zero selling experience right now. You can be hired into a corporate position which offers training on the basics of selling and the structure of the policies offered. You could become an independent affiliate of a national or international insurance provider. It is possible to own your own agency when you want to sell insurance. Management, executive, and segmented positions are all available too.
6. You can be paid for your training and certifications.
There are several certifications and licenses which are required by the insurance industry for you to become a salesperson. Many companies will either pay for this training or reimburse you for the expenses after you pass the exams. The cost of an insurance license is based on your geographic location (state, province, country, etc.), but in the United States, a full licensure package typically costs about $600. In Canada, the cost is upwards of $1,000. There may be renewal fees that you must pay as well.
7. Job opportunities are almost always available.
Selling insurance isn’t always a glamorous job. The salespeople driving fancy cars and wearing tailored clothing tend to get all the attention. There are a lot of people who sell insurance over the phone, working in cubicles for an hourly wage that is competitive with other industries. They must still earn their insurance license to be in that type of position. A lot of people fall out of this industry because their expectations of success are too high. If you want to be great, you must pay your dues, so look for entry-level opportunities and you’re almost guaranteed to find them.
8. You may have the option to set your own schedule.
If you’re self-employed and you sell insurance, then you can set your own schedule for working hours. That allows you to take care of medical appointments, handle personal errands, and reduce child care expenses because you are in more control of your work-life balance. It’s not completely flexible, however, because you also need to be available when your clients want to meet. There is more flexibility available, but even for company owners, you still need to put in the hours each week to earn your paycheck.
9. You can earn income based on residuals.
When you sell an insurance policy, there is a good chance that you’re not selling a one-time deal. You are selling a product with ongoing premiums and renewals which allows you to keep earning an income. If someone requires homeowners’ insurance, they’re going to need that policy until they move out of that property. When they move into the next property, they’ll need another policy. For most people who sell insurance, developing a book of customers with consistent renewals is their ticket to a comfortable income over time.
10. You can represent multiple carriers through your own agency.
If you are an independent insurance agent in your community, then you can sell insurance options that represent a variety of different companies. Most of your earnings will be commission-based in that scenario, but it also means you have more opportunities to be successful. Just keep in mind that your stress levels are going to be higher as you seek out ways to grow your paycheck. You must take care of yourself before you can properly care for your customers.
List of the Cons of Selling Insurance
1. Your paychecks can be unpredictable when selling insurance.
When you sell insurance, the compensation package may be 100% commission. That means your paydays aren’t predictable or structured. Stable wages are only possible if you consistently sell products. Since people tend to buy insurance online today instead of working with individuals, you may find it difficult to establish a set of clients that help you get your bills paid. You must budget your time and your money wisely.
2. You are in full control of your earning situation.
Selling insurance requires people to be self-motivated. Most salespeople aren’t sitting in their office for their 40 hours per week. They work independently, set their own hours, and use personal resources to advance their career. This setup creates more freedom than other jobs offer, but it also requires you to create a plan to earn your money each day. You’re not going to achieve your goals unless you get out there and sell. There’s no boss, but you also lack a network when you first get started.
3. You might be selling something that people can’t afford.
Insurance products are not always affordable. Take the average policy for an automobile today. It feels like it is affordable because you might pay $100 per month for each vehicle. The reality of that situation is that you’re selling a family a $2,400 per year insurance policy. Customers look at the final cost of the product more than the monthly payment, which means it can be difficult to close some deals – even if they are required by law to hold the type of insurance you sell.
4. Your customers are going to shop around for the best deal.
You can’t blame a customer for wanting to pay less for their insurance needs. Everyone shops around for a good deal, even if they are fully covered already. When you’re selling insurance, you’ll discover that a lot of your outside leads are asking about rates because they want to compare what you can offer to what they have already. If you can’t beat that rate, then it makes you look bad as a salesperson. It also makes your policies seem overpriced, which can lead to unwarranted negative reviews.
5. It may take several years to establish an insurance business.
As a general rule, for every salesperson who earns a significant salary in the insurance industry, there are 10 people who are barely scraping by. Even if you’ve held insurance positions in the past, it takes time to develop a network of customers in your community. You can be a hard worker and close lots of deals when they come your way, but it’s impossible to close a deal which doesn’t exist. There will be many days when your work is a future investment instead of a current paycheck.
6. It is easy to feel stuck in this profession.
When you’re selling insurance, it feels like that is all you’re doing in life. You are helping people with specific needs, of course, but the options for career advancement are relatively few. If you own an independent or affiliated agency, then you’ve reached the top of the mountain already. The only push left is to keep earning more money to achieve the eventual work/life balance that you want. For some salespeople, that isn’t enough motivation to keep pushing people for a policy every day.
7. Your commissions are often paid upfront.
Let’s say that you sell an insurance policy that is worth $10,000, which nets you a commission of $1,000. About 80% of that commission is paid up front, which means the remainder is based on the actual payment received from the customer. If a person lies about their circumstances or their rate goes up from the quote to the point where they decide to stop their policy, the money you earned could be recalled in your next paycheck. Even when you earn, there is a level of uncertainty in this career field that isn’t found in other jobs.
8. There is no guarantee of a paycheck.
If you’re good at sales, then there’s a good chance that you can earn $10,000 per paycheck when you start selling insurance. 95% of people who try to be salespeople end up quitting the profession or start selling a different product. There are people working in the insurance sales industry right now who haven’t been paid once in the last four months. Although you have some control over your circumstances, you’re never in full control – even if you own the company.
9. Selling insurance still requires a prospecting element.
Even though you have access to more inside leads within the insurance agency than other industries, cold calling is still part of the job responsibilities. You must be prospecting every day if you want to earn a significant income with this type of job. Perception is reality for your prospects. As Chris Burand writes for the Insurance Journal, how people think and feel is a commodity.
“Their perception ranges from [insurance] being a government conspiracy designed to enrich insurance companies because it is mandatory to it being a necessary but unpleasant expenditure… One of the scariest versions is that insurance should cover whatever anyone wants it to cover.”
10. Being an affiliated agent comes with a lot of strings attached.
If you operate your own insurance agency, then you can either be affiliated with a national carrier or work independently. If you are an affiliate agent, then you’re not in full control over how you can market yourself. The company you represent will have specific rules that must be followed regarding how you can use their name, when you can use the logo, and how often you’re permitted to advertise. Come carriers will even monitor the companies with whom you’re communicating and dictate who you can or cannot sell policies to in your community.
11. You might not receive paid sick days or vacation time.
Insurance salespeople can sometimes be hired as an independent contractor instead of as a formal employee. If you’re an IC, then any time off you want to take will be unpaid. The same issue may present itself for salespeople who are paid 100% on commission. If you’re not working, then you are not earning money, which often leads people toward burnout.
The pros and cons of selling insurance are helpful to think about if you’re looking to start a new job. As long as you went to college, you’re almost guaranteed a position at an agency somewhere. Lots of people come in and out of the industry every year, so there’s a chance to establish yourself and your skills. If you have a support network that can help you through periods of short pay, it could be a lucrative opportunity. If not, you might want to look for a position with a salary which is more secure.