How to Sell Life Insurance | How to Sell Insurance :: Editorial by Ashley Brooks

How to Sell Life Insurance is the intellectual property of Mr. L. Ashley Brooks.  Any reproduction without consent is in violation.  To request permission to use all or part of this tutorial, please email Ashley at ashleybrooks@sc.rr.com

 

Why should we be in such desperate haste to succeed and in such desperate enterprises?  If a man does not keep pace with his companions, perhaps it is because he hears a different drummer.  Let him step to the music which he hears, however measured or far away
– Henry David Thoreau

I.  Introduction

     Welcome to the Life Insurance Industry!  You are about to embark on one of the most financially rewarding careers that one can imagine.  The life insurance industry is absolutely booming and YOU are about to take advantage of this lucrative market.  You will be bringing a quality product to your family, your friends, your business associates, and just about anyone you strike up a conversation with.  You will have money making potential that ranks with that of Doctors and Lawyers with the FREEDOM to work when you want and as much as you want.  Many independent insurance agents work from home, as a second job, as a supplement to retirement and of course as a full-time, lucrative career.  Life Insurance Brokerage – Secrets Revealed! is the key to all this and more.  I am very pleased to be providing this information to you and I look forward to hearing your success stories. 
 

II. About the author, Ashley Brooks, CLTC

 

     Hey there!  I wanted to take just a moment to let you know a little about myself.  I am a third-generation Life Insurance Broker; having grown up in the Life Insurance Brokerage Industry.  My Father has run the family brokerage business now for over 26 years (Since 1977).  I am currently working at the family business as the Marketing Director.

     This leg of my career started in 1998 when I graduated from Clemson University with a degree in International Trade.  That summer, I came to our agency and I have worked here on a full time basis since then.  Throughout my life, I have worked at the family business.  I am proud to be carrying on the legacy and I hope to help others to be as successful as our family has been.

     My specialties include Product Knowledge, Underwriting, Marketing, Technical Support/Website design, Office Management, and price quoting.  I am currently certified in Long Term Care Insurance.  I thank you for your business and I am confident that you will find value in my product – How to Sell Life Insurance.

 

III.  My Stance On Independent Life Insurance Brokerage

Note: This article is specific to my State but the same principals apply to all States.

Buying Life Insurance - Trust your Local, Independent Insurance Agent!

By: L. Ashley Brooks, CLTC
November 5, 2003
 

     In the Life Insurance Brokerage Industry, we are finding that more and more folks are originating their search for Life Insurance on their computer; turning to fast-talking marketing agencies for answers to one of life’s most critical financial questions.  How much Life Insurance do I need?  What is the best Life Insurance Company for my situation?  How long will I live and how long should my policy last?  My goal is, at very least, to inform my fellow South Carolinians of the shortcomings of these fast-talking, out-of-State vendors of Life Insurance. 

     Out of State, Internet and Telemarketing Agencies like Matrix Direct, LifeQuotes, SelectQuote, ReliaQuote and InsWeb that blanket our radio airwaves and popup on our computer screens are becoming an all too common nuisance.  These companies supply quick advice and a quick sales pitch to the Life Insurance Buyer – who is often convinced that they are getting a better all-around deal by bypassing a live agent.  These folks are waiving their flags and sparing no expense to get the attention of the Life Insurance Buyer.  They are, without substantial explanation in their methodology, offering “rock-bottom rates”, “quicker service” and speed supposedly unmatched by your local Independent Life Insurance Broker.   

     What these fast-talking out-of-State agencies fail to tell you are that the various Insurance Company’s rates that they are quoting you are the equivalent as could be quoted by your local Life Insurance Broker.  Their Service is weak compared to what your Local Life Insurance Broker can offer you and the speed at which you would get the very same policy is, in fact, matched as well if not more diligently by your friendly, Local, Life Insurance Broker. 

     When it comes to critical decisions like life insurance why would you turn to these strangers?  Often times, uninformed consumers are roped in with the idea that they are getting a cheaper rate, easier service, and the same free quote that they could have gotten from a local representative.  What you are quoted are the lowest price of several different competing companies’ cheapest rates – rates that could not possibly be determined (except through the process of underwriting) but by an underwriter with your full medical file in front of them.  This is especially true of an applicant with compromised health or history of less than perfect health.  These methods of selling insurance are missing a key component that will never be replaced…the live and in-person Local Life Insurance Professional.  They are trying to convince you that by cutting out the live agent you are cutting out the middle man and somehow getting a better deal.  Nothing could be further from the truth.  Nothing could be more damaging to this Life Insurance Industry that plays a vital role in the prosperity and economic growth of our State.

     A key element to look out for is the rating class that you are being quoted.  Most companies have a scale that rates a client’s health, starting at “preferred best” and going to “standard” or even “rated”.  “Preferred Best” is often one agent’s way of gaining your business when, in fact, you will not truly qualify for that company’s best rating class.  Again, the only person who really knows what class you will be rated is the Insurance Company’s underwriter who you permit to review your protected health information.  This file often contains information like Doctor’s records (commonly referred to as APS’s or Attending Physician’s Statements), blood reports, EKG readings, Pathology reports, Driving records, and just about anything else that underwriter might need to thoroughly evaluate your true rating class with that particular company.  Rest assured, this underwriter will place you in that company’s pre-determined rating category with the utmost accuracy – his job and the integrity of his company depend upon it.  Life Insurance Companies are doing everything they can to give you the piece of mind that you seek; but by the same token, they are looking to make sure that they are not bankrupt from bad underwriting decisions when it comes time to pay your claim.  The message here is that this “Agent” on the other side of the phone or clicking that mouse at the other end of the internet is not a professional Life Underwriter.  These telephone salespeople are quoting you a price based on a simple phone conversation and not the facts that will eventually come out during the real underwriting process.

     An element shared by the local Independent Agents and the online/on-the-radio insurance agencies is the ability to feature products from a variety of competing companies.  This element dubs the agent as “non-captive” or “Independent”.  These competing companies that they feature often create their own price war; bringing the price down for the consumer.  The fact that an agent or agency can “broker” with various Insurance Companies distinguishes them from the rest of the Life Insurance Industry.  Whether an agent can sell a variety of companies or not should be a key factor in whether they are chosen to be your Life Insurance representative.  If they do not have a variety of products and will not show you alternate prices with alternate companies, you may be unnecessarily spending a significant amount of money on coverage.

     What really hits home with me are the advertisements commonly heard on the radio asking: “why spend hours with a life insurance salesman?” What’s ironic is the fact that if you call these people you ARE talking to a life insurance salesperson.  You are talking to a salesperson with whom you will spend an equivalent amount of time as a local; only they are in Utah, California, or who knows where.  They have no real feeling for you, your family for which you are getting this life insurance, or your personal situation.  The claim that you would spend hours with a Life Insurance Salesman is non-factual anyway.  Typically, you will spend about 30 minutes with a Local Professional Life Insurance Salesperson.  This time spent can be even less if you decide to do business with the local Independent Insurance Agent over the phone.  If more time is spent, it is only intended to establish a rapore with you and is not a requirement.  Even if a few brief moments are spent with a local agent, wouldn’t you want to know the person who may deliver that Death Benefit check to your beneficiaries one day?

     The next time you hear one of these radio ads, try, really hard, to pay attention to the fast-paced disclaimer at the end of the commercial.   Try to ask yourself why they are running that information by you so quickly.  The reason is that they are disclaiming the often false claims that they are making.  One of the things they say are the very core of my argument: “premiums quoted are based upon the preferred best rating category” (your rating class based on health details).  These “best” quotes made in the commercials are nothing more than the old bait and switch.  You are encouraged to quickly apply with the company quoted thinking that they can get you these premiums and no-one else can.  In reality, when you get the actual policy in your hand that the company’s underwriter has put his stamp of approval on (after much deliberation), you are not likely to get the price that these agencies are quoting you initially.  A true quote takes time.     

     A distinctive feature of the Local Independent Insurance Agent is the fact that they are required to be knowledgeable in their field; most always significantly more knowledgeable and experienced than online or “direct marketing” salespeople.  In the recent past, South Carolina State Licensing requirements have gotten more stringent and more difficult to acquire.  Once a license to sell Life Insurance is obtained, agents must complete 24 hours of Continuing Education every 2 years to keep their license.  An Out-of-state agent or agency on the other hand is not required to take any South Carolina State specific tests or keep up with South Carolina Specific Education – they are only required to fill out and submit a non-resident licensure form or two.  The Local Independent Agent’s full-time job is to stay abreast of current topics and cutting edge rates.  If our local Agents do not keep up with the ever competitive industry, they will inevitably be undersold by the agent up the block, on the telephone, or on the internet.  This creates an environment of natural selection in the industry whereby only competent agents survive.  The consumer can rest assured that they are getting the cream of the crop with today’s Local Life Insurance Professional.

     The next time you hear an ad for Life Insurance on the radio, read about that new low rate in the newspaper, or click past that annoying popup on your computer beware the difference between a local professional and glorified telemarketer.  When all is said and done, you will end up paying the same price, you will get the same service and you will enjoy the same speed of issue with your local Independent Life Insurance Broker.  These folks are not hard to find.  They are your neighbors, your fellow Church Members, your fellow policyholders and your fellow South Carolinians who will keep South Carolina money in The South Carolina economy.  They are a proud group of professionals, often with hard-earned designations such as CLU, ChFC and CLTC.  These are the folks that you should seek when looking for advice on Life insurance. 
 

Article Addendum:

The Independent Agent’s competitor is the non-independent or “Captive” agent.  Captive companies and agencies like State Farm vehemently restrict their agents from offering the consumer anything but the product and price that their company offers.  There is no diversity in price because there is no diversity in product.  You are being shown only one company’s product.  The most compelling fact is that the captive agent will not inform you of a better rate with another company because their company will not allow them.  Even if they did know of a better rate (and there is always a better rate) they could not sell it to you.  With this in mind, these captive agencies will only show you the rates for their company.  The company is thereby holding them and the consumer captive.  They are successful in this marketing plan as the excess expense to the policyholder is used to perpetuate their product through heavy market saturation and advertising expenses.  The Independent agent’s featured companies, on the other hand, do not advertise or market to this extent and pass this savings on to the policyholder.

 

IV. Getting Started – Get your license
 

     Aside from a sense of entrepreneurialism, self esteem, and a do-it-now attitude (which you obviously have if you are reading this!), you will need to get a few inches of red tape out of the way.  These are some of the things that make the Life Insurance Brokerage industry exclusive and seemingly hard to get in to.  You are going to have to attend a “pre-licensing” class.  Now don’t fret too much over this, I’m not talking about an MBA (2.5 years of classes) or anything but I am talking about 1) a commitment to 4-5 10 hour days of intense studying and 2) an ability to take time off of your regular job to attend these classes in person (not over the internet!) and 3) a small cost to attend the pre-licensing classes.  The most prohibitive aspect of the whole pre-licensing process is #2.  Most people cannot follow through with this necessary action as they either plan to and never get around to it or their current job is too time consuming and they cannot get away.  Whatever the reason, it must be negotiated in order to proceed.  If you have the time and are willing to do what it takes, great!  The time is now.

     As I live in South Carolina and I am familiar with local pre-licensing companies, I can give you the name and address of my local pre-licensing company as an example (This is to serve as an example of what is local/available to you in your area).  Every State has a resource such as this that can officially deliver the pre-licensing course information.  In South Carolina, the pre-licensing outfit of my choice is:
 

Brewer Insurance Information Service
714 Calhoun Street
Columbia S.C. 29201
(803)254-4046
 

     A 4 day class at Brewer’s costs ~$225 total.  You should contact your local Department of Insurance (I will refer to them as the DOI from now on) and ask them for pre-licensing services local to you.  These pre-licensing outfits are also available on the internet although I do not recommend them for my own reasons.  I feel that, in person, you are getting off on the right foot as the Insurance Business is all about in-person, networking skills.  Start off on the right foot and go, in person, to the pre-licensing course.

     Taking time off of your regular job is the 2^nd hurdle.  Some jobs, though, are somewhat partial to the idea of you getting licensed to sell Life Insurance.  Banks, for instance, are having a resurgence in Life Insurance Sales via their regular tellers.  If you work at a bank or a financial institution, you may be able to take this time off as well as have the courses paid for by the company.  You should contact a company administrator to find out if this is a possibility.  If you are not in such a situation, you will have to simply take the time off as vacation time (you will need to block off 4-5 days for the classes).  Remember, it always pays to be honest, so talk to the powers that be and see how they feel about your endeavors.  Being a Life Insurance Agent means Independence – you do not have to quit your current job! 

 

V.  Getting Appointed with A Company – Pick you’re Wholesaler!

     Before I go on, I want to reiterate something that I spelled out in my article (above).  There is a difference in Independent Life Agents and CAPTIVE Life Agents.  What I am training you to do is INDEPENDENT Life Agent work.  Captive agents are those that work for one company and one company only.  If these agents are caught even being appointed with any company other than their home company, they could lose their job with their home company.  Captive agents are subject to the company that holds them captive (production levels must me at a certain level for instance).  This is not the way that I’m advocating and training in Independent Life Brokerage.  As an independent agent you will be able to get “appointed” with ANY company you want to or any company your client wants as long as that company is partial to Independent Brokerage.  What’s more, there is for the most part NO minimum production level – if you don’t do much business with whatever companies you get appointed with, you don’t lose your contract!
     In the Independent Life Insurance Arena, there are 4 parties involved: 1)The client wanting insurance, 2) The Agent Selling the insurance to the client, 3) The Agent’s Brokerage GENERAL Agent (Broker/Wholesaler), and 4) The Company supplying the coverage.  One important point:  These Companies supplying the coverage WILL NOT do business with the Agent directly – the agent is required to go through the Brokerage General Agent; much like a “wholesaler” will not do business with the general public.  Restated: You will have to go through a General Agent to get to the product!  I have included a list of very respectable, very successful, established General Agents in your area (see link to General Agent List below).  It is important to establish a rapore with these General Agents as they are about to do you a HUGE favor that will save you time, money, and frustration. 

**Definition** General Agency – Insurance Wholesaler assigned a given territory by contract; can appoint local agents or “sub-agents” as well as special agents.  These agents are not captive to this BGA, they remain independent.

     Ok, on to the point – Now that you have a License to do business, you are going to need to get a product to sell.  With License in hand, contact one of the General Agents on the list (link below) and ask to speak to their licensing specialist.  If there is no licensing specialist on staff, go right for the gut and ask to speak with the Director of Marketing or someone in their “recruiting” department.  Don’t let the word recruit scare you!  These “General Agencies” are not going to ask you commit to them full time; you are not applying for a job – what you are doing as they perceive is offering a pool of clients (your friends, family, networking associates) as potential customers that you will write life insurance on.  These General Agents will be making money on every sale you make (see commissions) so they will give you the white glove treatment as long as you have something to offer (potential clients).  What you are trying to overcome is the idea that you will need or have experience in the Insurance/Life Insurance Field.  If a General Agent wants to be really hard-core, they will require that you have at least 2 years’ experience in Life Sales – this is because of Insurance Company restrictions and it differs by company.  There are PLENTY of A+ rated insurance Companies available for Brokerage that will waive this 2 year requirement.  What you have to find is a General Agent that will go the extra mile for you and match you to that company or vouch for you.  Once you sell some policies, you will have built “credit” or “credentials” that will enable you to gain access to any Brokerage Friendly Company you or your client like. 

     In summary, you are now contacting a General Agent (listed below) and asking them for a contract or “licensing” for one or more (you’ll get appointed with many companies soon!) of their companies.  Further, if you have no experience in the Insurance Business, you will be asking someone at the GA office to council you on what company would accept you as a new appointee.  If one of the General Agencies doesn’t want to go the extra mile for you, just go on to the next one.  You will eventually find a Brokerage “wholesaler” that wants your business. Out of state General Agents are not out of the question either.  There are many on the list that do business in all 50 States.  Also, if you would like to do business with my General Agency and we are licensed in your State, please feel free to contact me as I am the Marketing Director.

     One last note:  General Agents are NOT teachers and they do not want to spend time explaining life insurance to you.  They expect that you do your homework and learn on your own about products like “term insurance” or “whole life”.  Don’t spoil the relationship in that way – be professional and knowledgeable when you call your GA.
 

Below is a link to some of the most reputable General Agent Life Insurance Wholesalers in the USA. 

This is the core information of this program and should be considered confidential information once viewed. 

To support the hosting and management of this website, I ask that you make a small $10 contribution for access to this geographically organized, comprehensive list of General Agents.  Click the PayPal Icon below to proceed to secure checkout  - you will be sent the link to this important information by email once payment is received.
 

 

 

VI. Setting up Shop
 

     Now you have your Life & Health License and you are appointed with a company (or maybe even several companies!).  In this day and age, it would be to your benefit if you were somewhat cutting edge as far as some of the tools that you have in your “office”.  Again, as an Independent Agent your “office” can be your home, your car, or your local restaurant of choice…it’s all up to you!  One of the main tools that you will need is a computer.  If you are reading this, you’ve got that one licked!  On your computer, in addition to Microsoft Word, I would recommend you get:

·        Excel – To keep record of your clients.  This can be helpful in contacting your clients and sending them Birthday Cards, Christmas Cards, etc. (marketing to them).  Excel can also help you keep record of what your clients are paying – After a couple of years, you may want to review the client’s situation and re-do their policy or switch companies for them (due to better rates, rating classes they may qualify for, etc.). 

·        Symantec’s WinFax Pro – This is a fax program for your computer that will enable you to send AND receive faxes.  Many of your customers will need forms during the “underwriting*” process. WinFax is a quick and easy way for you to send documents to clients with fax machines.  What’s more, you won’t be needing one of those big clunky traditional fax machines!

Definition: Underwriting – The process of evaluating a client’s health, financial status, and general qualification for Life Insurance.  A client’s “underwriting class determines what rate they will get and what they will pay for their insurance.  Preliminary underwriting is done by the Agent with the assistance of the General Agent and Underwriting Guidelines set by the company.  Some clients will not qualify for Life Insurance as a result of information obtained in the underwriting process.  This is known as a “decline”.

·        Microsoft’s Internet Explorer – Most of the websites that you will be using to get quotes (if you choose to do quotes online) for your clients are compatible and will display properly when you use Internet Explorer (the little blue “e” icon on your desktop).  I highly recommend that you use IE as opposed to AOL, Opera, Netscape, etc.

·        Microsoft Outlook (or Outlook Express) – Outlook is my email program of choice for my business work.  I can store emails in “virtual” files, auto reply to emails sent to me when I’m out, and keep a schedule with reminders (VERY helpful).  Outlook Express is the scaled down version that I use for personal use – you can even have your hotmail account integrated and check all mail from all sources (including your dialup account).
 

VII. Rules & Regulations
 

     I’m going to spare you the headache in this section and just give you some pointers and contact information pertaining to “playing by the rules” in the Life Insurance Business as opposed to going into the gory details of each State’s official rules and regulations.  If you are suffering from lack of sleep and you do want some material that will help with that situation, feel free to contact your local Department of Insurance (DOI).  In addition to telephone support, your State’s DOI will also have a website with information on legislation, etc.

     The main thing that I can say to you that would help you in this department is be honest and be knowledgeable about what you are selling your client.  Many of the General Agents (GA’s) that you will be doing business with will help you with product knowledge as well as other compliance issues.  If you are ever in doubt, call your local GA first.

     Errors and Omissions Insurance (for you, the agent) is also available but NOT required.  If in the case that you are sued by a client for an “error or omission”, you would be covered by E&O insurance.  Here are a couple of resources for E&O:
 

Fireman’s Fund Insurance Companies
777 San Marin Drive
Novato, CA 94998

Cal-Surance
Brown & Brown of California, Inc.
333 City Boulevard West 4^th Floor
Orange, CA 92868
 

     The cost of E&O is anywhere from $300/year to $500/year, depending upon how you get access to it.  If you go direct to the E&O Company, you will pay top dollar.  If, however, you join your local Chapter of The Association of Insurance and Financial Advisors (NAIFA), you will get a substantially discounted group rate.  More information on NAIFA can be obtained at this address: http://www.naifa.org/sh_index.html or http://www.naifa.org/ .  More on organizations like this can be found in the “Associations” section of this guide.

 

VIII. The Company you keep – Ratings: What they mean & What they don’t mean

     A company’s ratings are a snapshot of their general financial stability and strength as assessed by a third party rating company.  The rating company that most Life Insurance Agents rely upon is “AM Best”: http://www.ambest.com/ .  As an agent, I recommend that you represent companies with at least an “A-” rating.  The scale in the “A” class goes: A++ (best A rating), A+ (2^nd best A rating), A (3^rd best A rating), and A- (4^th best A rating).  I do not carry, broker, or advocate a company that has less than an A- rating.

     You will find that clients are becoming savvy enough and are particularly interested in the rating of a company.  This is a natural and prudent inquiry as the client wants to make sure that the company they are doing business with is there when it’s time for a claim.  Ratings fluctuate every once in a while too, so make sure you are up to speed.  AM Best evaluates a Company frequently, but rarely changes its rating.  A lowering of a rating can mean that a company’s strength is going south (decreasing), but not necessarily. 

     A rating can be lowered simply because a company has been bought and the buyer or “parent company” has a lower rating than the sub-company.  One particular case that recently fit this profile was when AM Best lowered the rating of one of the finest and strongest companies in the business, First Colony Life.  First Colony WAS A++ rated - but because its owner/parent company, GE, (yes, the folks that make light bulbs!) is rated lower at A+ (for whatever reason), First Colony’s rating was reduced to A+ as well.  This happened not because First Colony is any lesser of a company and not because their claims paying ability was hampered (as a matter of fact, it is stronger because the parent company is GE) but simply because of a rule that AM Best has that says the sub-companies must have the same rating as the parent company.

     So before you go getting appointed with a company, make sure they are in the “A” rating range.  Ask your General Agent and gage their strength and integrity by the company that they feature for you to sell and the company they keep.

 

IX. Client building & Networking Techniques
 

     One of the advantages of the Life Insurance Business is the fact that the more people you know and talk to, the more chances you have for a sale.  If you are the type of person who loves to talk, loves to network, and loves relationship building the Life Insurance Business is perfect for you!  Aside from talking about life insurance with the people that you meet in everyday situations, the BEST ways to build your client base are through “networking”.  This is another one of those scary terms that is really not as bad as it sounds.  If you already have a group of people to market to (like a fraternity?), you’re set – move on to the “marketing” section.  If networking is for you, read on.

Definition: Lead – Basically, a lead is a referral given to you by someone.  Lead “generation” is the process of generating referrals through networking.

     I’m going to get right to the point here and list some great ways to have fun and network:

• Lead Groups – In my opinion, these groups are by far the best way to meet people in your area to do business with.  Basically, these groups are comprised of ONE person from any business type meeting, say, once a week (usually in the early morning hours, 6:30-7am, for breakfast).  Each member of the group is from a different profession: i.e.: One Banker, One Lawyer, One Life Insurance Agent, One Health Insurance Agent, One Advertising Executive, etc.  A good size for a leads group is about 30 members or so.  Member diversity & exclusivity is the key to the success of a lead group – if a member of a leads group runs into someone who needs, say, a life insurance policy, then that “lead” is given exclusively to the member of their leads group who is in the Life Insurance Business.  Exclusivity also means that your “slot” in, say, Life Insurance may already be taken by a member of the lead group you are interested in joining.  Don’t fret, though, there are many other lead groups out there (several in any given city!) and many others cropping up frequently.
       You will find small press releases and advertisements for these little clubs in your local newspaper’s business section or by word of mouth at your local Chamber of Commerce meetings.  You may also find information on lead groups AKA “marketing groups” or “marketing associations” in local magazines and mini newspapers in the “happenings” or “clubs & groups” sections.  Some of these clubs may look like some sort of fast business pitch, but they are actually very good resources and should be considered as professional.  In my hometown, one of the best lead groups is the South Carolina Business Development Club (SCBDC).  This club serves as a good example of what is out there – more information on SCBDC can be found on their website, http://www.scbdc.com/ .  You may also want to consider creating your own lead group. 
  
• Optimist Clubs - http://www.optimist.org/ – This is one of the best “service” oriented groups.  Optimist clubs are easy to get in to and very focused on helping children.  They have lots of fun: sponsoring Christmas tree sell offs, Box car racing for children, and general community service.  Optimist clubs will generally welcome anyone into their group; expecting you to help with the common cause.  One drawback is that there is really no exclusivity in professional “slots”; there may be more than one person in the group in the same profession!
  
• Rotary Clubs – http://www.rotary.org/ – Rotary is another service group.  They are generally larger in membership and more exclusive.
  
• BNI Groups – http://www.bni.com/ – Business Network International.  Literally the Mother of all Lead Groups.  BNI is very exclusive – again, if at first you don’t succeed in getting in because your “slot” is taken, try again with another group!  If you do get in with one of your local BNI chapters, you will be in the first lead groups created.
  
• Toastmasters – This is a group that specializes in public speaking (and networking, of course!).  The local chapters can be found in your local newspaper’s business section or in “clubs & groups” in smaller publications.
  
• Chamber of Commerce Meetings – By all means, join your local Chamber of Commerce.  This is one of the best ways to network with other upstanding businesspeople in your community.  When you go the “Chamber” meetings (typically once a month at breakfast), you will have found the high rollers who really know how to network.  The Chamber is the best place to start when looking into “lead groups”.

 

X. Professional Associations

     Swim with the big fish in your profession and learn from them!  Professional Associations in the Life Insurance business are comprised of Insurance Professionals just like you that want to share information, network, and enjoy fellowship.  They usually meet once a month or so for lunch (as opposed to once a week as in lead groups).  At these meetings, you will meet people who specialize in areas of Life Insurance that you may not specialize in – It will help you to know specialists like this because you may want to turn over a case that you have to them and split the commission!

     Becoming a member of a professional association can boost your business and give you access to crucial resources.  As I mentioned earlier, for instance, you can get E&O insurance cheap by becoming a member of your local chapter of NAIFA.  Another feature of joining such an association is the fact that they frequently offer Continuing Education Courses (see my section on Continuing Education for more “CE” info) and motivational/educational speakers as a benefit of being a member.

     Here are a few of Professional Associations that you may want to consider being a part of:
 

• NAIFA – http://www.naifa.org/ – National Association of Insurance and Financial Advisors, previously known as “National Association of Life Underwriters; NALU”.  NAIFA is one of the easiest organizations to be a member of and costs roughly $285/year for membership.
   
• The Big “I” – http://www.iiaa.com/ – Independent Insurance Agents & Brokers of America.  This is one of the oldest professional insurance organizations, founded in 1896.  The Big “I” frequently has conventions and expos bringing the insurance brokers and companies in front of their members to feature their products and services.  The Big I is geared towards all types of independent insurance professionals.
   
• Life Leaders – “Life Leaders” is an ultra exclusive professional association that does very little public advertising – you will have to seek them out by word of mouth.  Here’s a link to one of the chapters in Georgia: http://www.associationsites.com/page.cfm?usr=GeorgiaLeaders&pageid=371 .  On this chapter’s home site, they outline the general membership requirements.  To be a member of Life Leaders, one must be doing a certain amount of Life Insurance production (half of MDRT production qualification –see MDRT).  Your local General Agent may know the details on your local Life Leaders Chapter.
   
• MDRT – Million Dollar Round Table.  http://www.mdrt.org/ – This is one of the most prestigious and well known organizations in the industry.  Here is a link to their membership requirements: http://www.mdrt.org/memreq.html

 

XI. Certifications

     Although it is not a requirement to be “certified” in any area particular area of insurance, it is of benefit to have some sort of credential.  Personally, I am certified in Long Term Care Insurance (CLTC).  Again, I did not have to get certified in this area to sell Long Term Care Insurance (or any other insurance for that matter) but it has been of benefit to my marketability.  The client’s perception of your ability to help them make the right choices can be the difference in whether they do business with you or whether they do business with your competition.

     You can obtain just about any certification applying to the Life Insurance field in under 2 years in your spare time.  The CLTC designation took me roughly 4 days of intense study and classroom attendance, and about 2 months of diligent reading at home (at home study).  A designation such as “CLU” or “Certified Life Underwriter” can take longer at an average of 2 years or so on a “distance learning” basis.  Below are some helpful links to get you on your way to certification.  All of these can be obtained on a “distance learning” or “at home” basis:

• 
  CLTC – Certified in Long Term Care (insurance) – http://www.ltc-cltc.com/
• 
  CLU – Certified Life Underwriter – http://www.amercoll.edu/ – This one is the most common with Life Insurance Agents.
• 
  ChFC – Chartered Financial Consultant – http://www.amercoll.edu/
• 
  CFP – Certified Financial Planner – http://www.amercoll.edu/

 

 

XIII. The Tax Man Cometh

     Now that you have an idea of the potential income we are talking about here, I need to go over a critical point that has often meant the financial demise of many Independent Agents.  Being independent means that you are totally responsible for your finances, especially your taxes.  When you get that check for $275 (as in the example above) you need to either consider:
 

1. Putting a percentage of that $275 aside for taxes (preferably in an interest bearing account)
    
2. Spend the whole thing and put your end-of-year commissions towards taxes – not recommended for the faint at heart!
    
3. Withhold an extra amount of taxes from your salary job (if you keep your day job).
    

     Implementing one or a mix of these three strategies for taxes will keep you in the clear with the tax man.  The first example is the best bet.  If you are anything like me, it is hard to save money for a year from now, but believe me, it will pay off come April 15^th.  Take my advice and take out at least $77 (this assumes a 28% tax bracket times the $275 commissions you just earned).  Put that $77 in the bank or in an interest bearing, liquid (no penalty for early withdraw) account somewhere.  Although the 2^nd suggestion is the most attractive in the short term, it is certainly not the way to go in the long term.  Come tax time, having made $30,000 in commissions in the past year in your spare time, you will owe roughly $8,400 in taxes – trust me; you don’t want to have to come up with this money at the end of the year! 
 

     The last example is a bit more viable.  If you do plan to do life insurance agent work as a side job, a sound plan for taxes would include shaving some of your current wages back some and putting an excess amount towards taxes.  The IRS certainly doesn’t mind getting the extra cash!  But consider, the IRS is now holding your cash for the end of the year – and making interest on your money!  This is why I believe a mix works best. 
 

     No matter what you do, please consult with a tax advisor or a CPA about any questions you have.  There are things that can come up that can bite you – a good CPA is an excellent tool that you will come to rely upon.  You can meet a CPA at one of your lead groups or you can pay one ~$150/year to do your taxes for you.  Some CPA’s will do Quarterly reports for you as well – taking a snapshot of what you’ve made thus far and predicting what you will make, and OWE at the end of the year.
 

Important Note: You will be getting your commission checks from the Insurance Company on that Insurance Company’s paper.  You are NOT a salaried employee of the General Agent and the GA will not be writing you a check in most situations.  The GA will simply be receiving your check from the insurance company and forwarding it to you as they are the “middle man”.  On your “commission statement” (see one of mine above), you will get a breakdown of all of your cases that you are getting paid on with that particular check.  You will be getting commissions on a case roughly 2 weeks after you collect the premium from the client.  Further, you will be getting a 1099 from the Life Insurance Company or Companies you deal with (not the GA!) at the end of each year.  This 1099 will include your year-to-date commissions.

Disclaimer – This advice is just that, advice! 
Accurate and up-to-date tax strategies and information are to be
obtained from an official CPA, Tax Advisor, or the IRS itself.

 

 

XIV. Taking the Application

     Otherwise known as taking an “app” – no, not a nap!  This is the process of either mailing an app, faxing an app, emailing it, or personally visiting a client in order to collect the information necessary to start the underwriting process.  The underwriting process, by the way, takes about 4 weeks.  You will be collecting some basic information on the client with this application including:

• Name, address, phone number, social security number, date of birth (DOB), etc
• Amount of insurance (Typically $100,000/$250,000/1 Million dollars death benefit!)
• Type of insurance (Term or Permanent)
• Financial information – Income, net assets, net worth, net liabilities

     Each insurance company has its own application; each insurance company’s application is different from one another!  You should familiarize yourself with the application before you present it to your client.  Your General Agent can help you with the application process – if you have a question about how to fill one out, you should contact your GA.  Click here to link to a typical “forms” resource on the web.  Forms, such as applications, are readily available on your General Agent’s website.  You should download an application (pick a company!) from the link I just gave you now and review the application.

     Once you have a completed application in your hand, it is now time for you to call for the paramedical exam.  This is not hard to do and it does not cost you anything.  It is just one of the duties of an insurance agent in the client’s application process.  A paramedical examination company is a third party examination company that is paid by the insurance company to do a brief exam of the client.  Once you call the paramed company and ask that they examine your client, they will immediately contact your client and set up a time and place for the exam.  This exam can be done at the client’s home, office, the local burger stand, etc.  They will be collecting a blood sample and a urine sample.  They will also be taking a blood pressure reading and sometimes a “resting EKG”.  The paramed will ask your client a few medical/health questions.  The whole exam takes about 20 minutes and is delivered by a licensed nurse. 

     Once the exam is done, the exam company sends off the blood and urine samples to the lab.  The lab results are then sent to the insurance company; whatever insurance company you took an app for.  If your client is applying with several insurance companies (and picking the best offer), they will need to do more than one exam (and give more than one vial of blood!).   The exam company also will then send the answers to the medical questions off to the General Agent and the insurance company’s you’re dealing with. 

Some Paramedical Examination Companies you can call on:
 

• Portamedic – http://www.portamedic.com/
   
• APPS – http://www.appsnational.com/    
      
• ExamOne – http://www.examone.com/
   
• EMSI – http://www.emsinet.com/
   
• Call your GA for more available paramedical companies  in your area!

Once you have scheduled the exam, it is now time to
turn the completed application in to your General Agent!

 

d.      Compile a list of current medications

e.    Compile a list of current and past doctors, reasons for visiting doctor

 

 

XVI. Types of Policies

     In your pre-licensing class, you will be going over the different types of life insurance in detail.  I would suggest you start with term insurance and work your way up to permanent policies as permanent polices are much more detailed.  The intent of this program is not to teach you about all the different types of insurance so I’m not going to go into too much detail.  My intent is to give you the inside scoop on how to broker life insurance.  Detailed information on the types of insurance can be found all over the internet and in the library.  Basically, the types of policies that you will be selling are:
 

• Term Life Insurance – The cheapest life insurance policy by far (at least in the short run).  Term insurance will cover your client for a 5, 10, 15, 20, 25, or 30 year period of time.  During that time, the price of the policy will not go up or down for that set term period (i.e.: 10 year term, premium of $375/year for 10 years).  Term insurance is perfect for loans, mortgages, and short/critical periods of time in which the client needs coverage (i.e.: John Brown and Judy Brown just bought a house with a 15 year mortgage.  If John dies, Judy will be solely responsible for the balance on the house.  John buys a $150,000 death benefit, 15 year term policy to cover that risk.).  Term insurance is like “renting” insurance – you build no equity or “cash value” and you own nothing at the end of the term period which is essentially a lease.  The contractual/agreed upon term premiums must be paid on time and in the exact amount or the policy will lapse.  You should research “term insurance” on the internet and familiarize yourself with this product before presenting it to your client.
   
• Permanent Insurance: A policy intended to be “in force” as long as the client lives or for a period of time far exceeding that of a term policy.  A permanent policy will cost considerably more than a term policy in the short run but as much as or less than a term policy in the long run.  A permanent policy is flexible in premiums – you can pay a minimum premium or a maximum premium.  Permanent insurance builds “cash value” that the policy owner can take loans on or even withdraw.  The earlier in life a client buys a permanent policy, the cheaper.  As with term insurance, simply use the web and research permanent insurance such as the types below before you present these products to your client.
   
  • Universal Life Insurance* – A permanent policy with flexible premiums.  The client can pay as little as the minimum premium and as high as the government will allow (there are rules that limit the amount of money you can dump in to these things).  UL policies can be custom made for any given client and any given situation.  For example, a client can have a UL policy that guarantees to cover their life for as long as they live provided they pay the target premium.  More information about UL can be found on the internet.  UL is a great choice for many situations; it is moderately priced – higher than term and lower than whole life.
     
  • Whole Life Insurance* – A permanent policy with stiff & inflexible premiums.  The main thrust of a whole life policy is that at age 100 the “cash value” of the policy is equal to the “face amount” or “death benefit”; the policy “endows” for the “face amount”.  You must pay the full premium (which is high)
     

*Again, for now, don’t worry too much about committing these details to memory.  You will be learning this information in your pre-licensing course and in Continuing Education classes throughout your career.

 

XVII. Quotes & Prices for Insurance Plans – How to quote
 

     One of the main values that you are brining to a client by offering them in-person service as an Independent Agent is the ability to show them many different rates from many different companies.  Every company out there that you will be dealing with is constantly examining the market and keeping their product, price, and underwriting current and competitive.  Your ability to “do the homework” on behalf of your client makes your service a value to them.  I am going to show you 6 ways to quote TERM insurance for your client as term is the easiest to sell, the easiest to quote, and the easiest to understand.  It is a very popular product that many of your clients will be asking for. 

     Here are some tools for quoting Term Insurance:

·        Determine How much Life Insurance is needed – A rule of thumb is to sell your client roughly 7 to 10 times their annual income.  If you want to take all the angles into consideration, though, here’s a helpful calculator that is available online:  Determine Life Insurance Amount Online

·        Rate Cards – The oldest way to quote life insurance.  Rate Cards are simply brochures with lots of numbers in them that will help you determine the cost of insurance in any given situation for any given client.  Rate cards can be obtained from your General Agent.  Basically, you will need to know: The age of the client, the amount of insurance wanted, the length of term wanted (10, 20, 30 years, etc), the gender of the client, and the underwriting class of the client (see section XV. Rating Classes).  Once you have this information, look at the card and match the age of the client with the rating class on the grid. 
     Below is an snippet of a rate card showing the rate grid for a 20 year term, face amount between 100k and 250k (Some companies offer different rates for different “bands” of face amount – consult your GA for details). 
     Follow this example: Male age 25, PBNN (Preferred Best No Nicotine – the best rate class available), wants 100k of 20 year term.  Look under “issue age” at the man’s age (25).  Then look over to the PBNN column under “male”.  The rate factor is .62 (cents) PER THOUSAND.  Now, how many thousand does he want? à 100 thousand, right?!  Ok, so take out your calculator and multiply .62 times 100, you should get $62.  This is the BASE annual premium for this man at 100k.  Now, add to that $62 the “policy fee” – usually, companies charge a policy fee of around $50.  Each company’s policy fee is different; you should contact your GA for details.  Now, the sum of that $62 and the $50 policy fee is $112/year.  For $100k of 20 year term on a male 25 that would fit into the PBNN category the cost of Life Insurance per year is $112 (your commission is roughly $90 on this sale!). 
     Now, let’s say your client wants to pay this premium on a monthly basis instead of an annual basis.  You would then use what’s called a “modal factor”.  Modal factors are as follows: Monthly – usually ~.0875 times annual premium, Quarterly – usually ~.26 times annual premium.  Modal factors assign a finance charge to the premium in the event that the client wants to pay their premium other than annually.  Processing monthly premiums costs the company money so they need to pass that cost down somehow.  So in the example we’ve been working on for the male age 25, his monthly premium would be his annual premium ($112) times the monthly modal factor of .0875:     112 X .0875 = $9.80/month, your client would pay $9.80/month for 20 years for 100k of life insurance.

·        Online Quotes through your GA – Rate cards are convenient in that they can be carried with you anywhere, but as you can see they are somewhat laborious and time consuming.  If you have the convenience of a computer and a connection to the internet, I recommend that you use online quotes.  Using online “quote engines” will enable you to not only quickly determine the cost of insurance for any given client/situation, but it will also enable you to compare the rates of several different carriers at one time.  Your General Agent should offer an online quote “engine” for you to use – if your GA does not have this, you should seriously consider finding another GA – after all, you are going to be in competition with folks like Matrix Direct, ReliaQuote.com, etc.