Becoming a life insurance agent is an appealing career choice for a lot of people. You’ll be able to connect with others and help them find the right policy for their situation. If you are considering a career in life insurance sales, you are probably asking yourself, how much money can I make as a life insurance agent?
How much you earn will depend heavily on the type of pay structure you are on. Some will have a high salary but lower commissions. Others will favor high commissions with little to no salary, which gives you the best opportunity to earn more. An agent who puts the work in can earn $100,000 in their first year and grow from there.
While money shouldn’t be the only thing that motivates your career choice, it is important to make sure that you are fairly compensated for your time. Here’s what you need to know about the income associated with being a life insurance agent.
How Do Insurance Agents Get Paid?
First, we need to discuss how life insurance agents earn their money. This will depend on the type of agent you are. An insurance agent will get paid a commission for each successful sale, this is 30%-90% of the amount paid for the policy (known as the premium) by the client in the first year.
In some cases, you might also get a salary. Sometimes, you will get a higher salary in exchange for a lower commission percentage. In other cases, you will receive a lower base salary but get a higher commission. If you are an independent agent, you might be entirely reliant on commissions.
The best option for you will usually depend on what stage of your career you are in and how driven you are. For example, when you just start out, you are learning and building your skills. Because of this, it may be best to choose a higher salary. This gives you more financial security, but it does limit your commission earning posisblities. On the other hand, if you have built up a large network, or have a solid training plan, you might be better off relying on yourself and the commissions you can earn.
What Affects How Much You Can Earn?
Whether you are earning a salary isn’t the only thing that affects how much you can earn as a life insurance agent. Let’s look at some of the other things to consider.
First, how successful you are will often depend on your level of experience. Though it’s easy to pick up the basics, it can take a long time to perfect your skills. You’ll need to be able to learn the best ways to approach new clients and sell your services. As your experience grows, so will your network of potential contacts. This is one of the biggest factors that will determine your success. The larger your client base, the more sales you will be able to make. You should continue to grow your client base every single year.
Next, you’ll need to think about the type of products you will be able to sell. A captive agent will only be able to recommend and sell packages from one company. This can sometimes mean that you won’t have the right products to offer to your clients. Because of this, they might turn to another provider.
The type of products you sell can affect the amount of commission you are receiving. For example, multi-year policies will tend to pay a higher commission level. Often, you will get the highest commission in the first year. Every subsequent year, you will receive a commission, but at a lower percentage than the first year. With enough clients holding a long-term policy, you can build a steady income stream that keeps flowing.
Lastly, you’ll want to consider your ideal work-life balance. The more time you dedicate to the business, the more you will earn. But some people will be willing to sacrifice some income to spend more time with their family. It can sometimes take a few months before you find the right work-life balance for your circumstances. One of the big benefits to a career as a life insurance agent is that you can create your own work schedule, so the balance (and income) will be up to you!
What Does The Average Life Insurance Agent Earn?
According to the US Bureau of Statistics, most insurance agents earn $52,180 each year. However, this figure might not give you the full picture. Because it’s an average, it includes both the best insurance agents and those who are just beginning their careers or are working part time, only putting in a few hours a week. Typically, a new agent with average training will earn $2,000-$5,000 per month.
Those who are experienced in the life insurance industry will earn $100,000 per year, but many earn well above that. This is nearly double the average. Technically, there is no upper limit to how much you will be able to earn, which is great if you are a motivated person.
What Costs Are Associated With Getting Started?
Before you can start selling life insurance, there are some qualification standards that you will need to meet. Usually, this will require getting a license. There will be two parts to these expenses. First, you’ll need to get a study pack. These can cost around $100. You’ll need to take the exam in your state. How much this will cost depends on where you live. It will range between $43 to $150. (These prices are subject to change). Sometimes, an IMO will agree to help cover these costs. Once you have your license, you can start selling immediately.
There may be costs associated with running a life insurance business. For example, you might be responsible for paying for your facilities and supplies. Independent agents will be required to advertise for the business themselves. This can be expensive when you are first starting out. Because of this, most independent agents tend to have experience already.
How Stable Is The Income Of A Life Insurance Agent?
It’s also important to consider how stable your income will be. This is one of the things that a bank will be looking for when deciding whether or not you should get a loan.
Income security can depend on the type of agent you are. For example, some will have a higher salary. This gives a greater degree of confidence about your weekly earnings. However, you will still have sales targets that you will be expected to hit.
On the other hand, you might be more reliant on commissions for your income. This has the potential to create a lot of uncertainty. How much you get paid will depend on the number of policies you sell each week. If you want to take a holiday, you risk your pay decreasing.
There are some ways that you can get around this. For example, you might want to build a team. This will ensure that you are still making sales without needing to take the calls yourself. However, this will take a lot of time and money. Usually, you will want to build up a large base of clients for this to be a viable plan.
What Is The Career Outlook For Insurance Agents?
Demand for insurance agents will likely continue to grow into the future. By 2029, the industry is predicting 5 percent growth (this is higher than average). The bulk of the new positions are expected to be independent agents. Insurance companies are turning to them as a way of reducing costs.
This industry will likely offer plenty of protection against automation. When considering life insurance, people will still want to talk to someone. The human connection will remain key to the decision-making process. New technologies, though, can make your job easier. For example, it will be simpler for you to identify which customers will be interested in your products.
Final Thoughts
Becoming a successful life insurance agent won’t be an easy road, but then again, anything worth doing takes effort. At the start of your career, you might be making $2,000-$5,000 per month. You’ll need to put in the time and effort to improve your skills and grow your contact list. But, if you are willing to put in the work, it can be financially lucrative. Successful agents are earning well over $100,000 per year!
