Home Owners Insurance Agent Charlotte NC

How Much Commission Can You Expect to Make As an Independent Life Insurance Agent?

 

A Home Owners Insurance Agent Charlotte NC has the job of matching a client's profile with a policy that fits her or his needs. This is often done by working with financial and insurance experts in order to build a profile that details a client's specific financial profile, lifestyle, assets and liabilities. Once this information is gathered, it is then sent to a qualified Life Insurance Agent for review and approval. The process involves the careful evaluation of such details as current health conditions, medical records, debt loads, investment strategies, hobbies and past spending habits. All of these factors are looked at to determine what kind of policy would best protect a client's interests in case of an unforeseen death. The resulting policy is then purchased and coverage commences.

As life insurance agents work with different clients, they come in contact with a wide variety of clients. Some clients are looking for basic coverage, while others require much more detailed protection. Others may simply be looking for ways to transfer assets without paying taxes on them while others may be interested in saving for an IRA or other retirement accounts. Many clients are in between. In addition, some clients may only need assistance with one company or may simply be curious about Life Insurance Company snap-on policies versus whole life policies.

As one would expect, there are many differences between being a Life Insurance Agent and being a salesperson for Life Insurance Company. One would think that a Life Insurance Agent would be knowledgeable about all aspects of Life Insurance policies and sells them but this is not necessarily true. Salespeople work hard on the phone. Life Insurance Agents works hard inside the office. So when an agent is asked if he or she would sell life insurance rather than work on the phone for a commission, the answer would likely be no.

Captive agents receive commissions from Life Insurance companies, even though they are not allowed to sell life insurance policies. Some have been known to sell Life Insurance policies on behalf of a client even though the agent receives a portion of the sale proceeds. This is often considered a corrupt practice by Life Insurance Agents Association International. Such commissions should only be paid when the transactions meet fiduciary obligations. In most cases, Life Insurance companies contract with independent agents who represent their best interests.

Another interesting disparity is between commission percentages and hourly rates. Although Life Insurance agents are required to carry a fiduciary responsibility to provide truthful representation, it is the employer's responsibility to determine the type and frequency of commissions paid. For example, an employer may pay an independent agent one percent of the face value of the life insurance policy sold while also paying the agency one percent of the premium. The commission percentages vary because the employer pays a commission based on how many policies are sold, not how much each policy is purchased.

One reason why some commissions are low for life insurance agents is because many people have delayed buying policies. Typically, the waiting period is one to two years, during which time a standard premium costs only a few dollars per month. Therefore, agents are paid commissions only on new policy sales. In other words, if an insurance agent sells a policy to a customer in his first year of business, he will not make as much money as he would have had the person signed up earlier. This is a simple example, but the principle applies to all sales: the earlier a client signs up, the more likely he will be to purchase a policy.

The next disparity between agents is between sales and costs. In many life insurance companies, the commission is based on the number of policies sold during a month. The majority of independent agents make less than ten thousand dollars a year. To break even, many agents work as little as two hours a week or as many as eight hours a day. Their low pay and their lack of opportunities to sell life insurance to pay the price for their lack of opportunity.

As one can see from the above example and the preceding paragraphs, the financial planner is clearly much more skillful at selling insurance than the average agent. If you are an independent agent, it is imperative that you develop your own sales skills so that you can sell insurance to clients in your market. Do not wait until you become a well-known agent before trying to improve upon your sales skills. You will be much better served by exercising as much commission as possible now while you are building your portfolio and reputation and later when your skills become well known.