How to Find Prospects for Life Insurance Clients

The most important skill you'll need to build your life insurance agency from scratch is to find the best way to prospect for life insurance clients. Unfortunately, in the life insurance business, it's not what you know that matters. It's marketing that knowledge to the people who need it that does. That marketing is called prospecting.

In this article, I'm going to walk you through how I approach prospecting. Are there other approaches that will work? The answer to that is yes, of course. This is just the way I do it.

So with that, let's get into my philosophy and approach.

Find prospects who want to work with you

The goal of my prospecting method is to find people who want to work with me. Life is too short to waste my time trying to twist someone's arm to become a client. So the very first thing I want to stress to you is that my prospecting system isn't designed to fight with people in order to get them to work with me.

I've always thought that the life insurance industry's bad reputation was well earned with all of the objection handling and high pressure sales tricks to get people to buy policies.

Because of that, I've tried to be the exact opposite and you should too.

Find prospects who love people

As silly as this sounds, life insurance is really about love. Let's face it. Love is hard to find and a lot of people in this world just might not have anyone in their life that they care about enough to buy life insurance.

Bottom line is that people buy life insurance because they don't want the people they love to struggle if they died.

You are in search of those people.

Build a large database of prospects that look like people who buy your product

The first step is to build a database of individuals and businesses that look like your target clients. For your life insurance agency, you'll be targeting individuals and businesses. Let's talk about what type of prospects you'll be looking for in both cases.

• Individual life insurance policies (3,000 prospects) For individual policies, you will be looking for families with children. You'll also target executives and individuals with good incomes. That doesn't mean that prospects who might be single or have other types of jobs won't buy life insurance. They will. Just when we are building our pool of prospects, we want to fill them with the people most likely to buy the policies we are selling.
• Group life insurance prospects (1,000+ employers) Small, medium and larger employers of all kinds almost all have group life insurance. I'd suggest targeting employers with at least 50 employees for group life insurance. To make things easier, you might want to make your pool of employer groups all over 100 employees as needed for the next target.
• Worksite permanent life insurance prospects (1,000+ employers) For our worksite program, you'll be targeting employers of more than 100 employees. Specifically, we also be looking for employer groups that have employees who aren't targeted by our individual sales efforts. The ideal worksite clients are manufacturing groups, government groups and hospital groups.
• Insurance brokers who work with employers (as identified) You'll also want to target brokers who work with employer groups that you want to work with.

The reason you want to build a large database is because you want to have plenty of people to call so that you don't feel so "married" to specific prospects that you put pressure on them. More prospects in the pipeline relieves sales pressure.

The Prospecting Strategy

Your goal is to get out of the sales mentality and instead get into the offer making business. To do that, you'll first figure out what those offers are, then you'll do the best you can to get that offer in front of as many people as you can and then work with those interested in the offer you make.

As you do this, you want to focus on getting people to at least hear your offers and then make a yes or no decision. You don't want to get wrapped up in what the decision is. Whether it's yes or no, accept it and move on. For the yes's, we'll start working with them. For the no's we'll recontact them at later dates.

Let's break down these steps:

• Craft an offer that solves a problem your prospects are likely to have The first step is to craft an offer. This will be the hard part. In future articles, I talk more about how to craft your offers that get interest and discussion started. These offers will be different for individuals and employer groups since they are different targets.
• Contact your prospects and make the offer Once your offer is crafted, you want to impress upon your prospects that all you want to do is make sure they hear your offer - whatever it is. Further, you want to stress that whether they become a client or not isn't what's important at this stage. You are indifferent to whether they buy or don't buy. But it is important to you that they at least hear the offer out.
• Work with those prospects who are interested in your offer For those that "raise their hand" so to speak, these are your real prospects and you'll take them through a predetermined set of steps to facilitate a yes or no decision.
• Do an awesome job and ask for their help identifying future prospects Deliver more than your clients expect and ask them to help you find more clients.
• Keep making offers and refilling your database Over time, your database or prospects will need to be cleaned and refilled to keep enough prospects. 

Now the hard part of the prospecting strategy that I've laid out is that there are still a lot of holes we need to fill out in the process I've outlined.

There's what you say on the phone. There's what you put on your website and direct mail. And when you have prospects interested in your offer, there's a specific set of steps you'll still need to know. These are all things I'll expand on either here or in future articles that I have planned.

For now, the main thing I want you to focus on is that you need a large database of prospects, you want to start contacting those prospects to make your offers and work with those that say yeah I'll hear you out. Those that don't want to hear you out, move on and recontact them at a future time.

Conclusion

Prospecting is the key element to your success as a life insurance agent. If you don't do it, you won't succeed. Prospecting takes a certain mindset and isn't pressure. It's about identifying people who will work with you and moving them forward.

This is the prospecting roadmap I use to build a life insurance agency from scratch. As always, I love to hear from you about your prospecting philosophy and strategy.

Let me know in the comments your thoughts and suggestions.

Is It Better to Be a Captive or Independent Insurance Agent?

As you start your insurance career, one of the questions you will eventually ask is whether it's better to be captive or independent insurance agent. In this article, I'm going to talk about the differences between these two types of agents. I've been both a captive and independent agent and so I'll give you my take from both sides and maybe that will help you decide what you want to do.

What is a Captive Insurance Agent?

A captive agent is an agent that has a contract to work specifically through one and only one agency. They can only write insurance policies that agency allows them to write and those policies have to be written through them.

What is an Independent Agent?

If you are an independent agent on the other hand, you are in control of what companies you want to work with it. You can work direct with an insurance company, partner up with other agents and general agents or write business through independent marketing organizations (IMO's).

Captive vs Independent Agent

Captive agencies are more like traditional employers. An independent agent is like owning your own business. So let's talk about some of the other differences between captives and independent agents.

• Salary and commission With a captive agency, you might be paid a salary or have an incentive plan that helps you financially while you are getting started. As an independent, you'll be straight commission only. Most likely, that commission will be paid as earned. This means you don't get paid until your client pays the insurance company. However, as an independent, you'll receive the total commission you earn. Captives share their commission with the agency they work with.
• Formal training and assistance Agencies that hire captive agents may have a good training program or other agents that can mentor you. If you are and independent, you'll have to learn how to do everything on your own. 
• Expenses Being an independent agent means you'll be responsible for paying everything. As a captive, you might have help paying for your everyday business expenses. They may even pay for the cost of your life insurance license and e&o insurance.
• Benefits At a captive agency, you might be able to participate in benefits like retirement plans or health insurance that your agency contributes to. Independent agents on the other hand have to pay for all of that.
• Existing clients If you are lucky, you might be handed a book of business to service if you start at a captive agency. But as an independent, you'll need to build everything from scratch.
• Ownership Independents own their book of business whereas captive agencies own their clients not the agent. This means if you ever think you might want to go from being a captive to an independent, you most likely will have to start the new agency from scratch.
• Control If you are an independent, you have complete control over how you want to run your business. As a captive, you surrender that control to a large degree to the agency you work for.
• Competitive advantage I think you could argue that an independent has a competitive advantage in some cases because they can make decisions faster sometimes. They also don't have the overhead a captive agency might have. In addition, you could argue that a captive agency might have a competitive advantage if for example, they have name recognition on their side.
• Freedom Probably the best thing about an independent agent is the freedoms it brings. As a captive, you can still have a lot of freedom, but will still have to always answer to the agency for somethings. Things like quotas, expenses and other things like who you can and cannot write business through.

Those are some of the differences I see in between captive and independent agents.

Which is Better - Captive or Independent?

Whether you choose to go as a captive or independent will be tied somewhat to your tolerance for risk. A captive might provide you with a better starting financial safety net or might teach you the business quicker than going out on your own. And if you are more risk averse that will appeal to you.

Many agents choose a captive because that's how they were introduced to the idea of being an insurance agent. Agents also might be drawn to the training programs captives have in place. Again, this would also appeal to you if you prefer an agency to help get you going. This is especially true if you need help getting appointed to insurance companies that they work with like in the property and casualty business. In the P&C business, you might not be able to get appointed to certain insurance companies without their help.

An independent agency on the other hand is appealing to those who want complete ownership and control of their operation. People with strong independent personalities and higher risk tolerance would also be better suited to going the independent route.

Which is better will also be determined a lot by your financial situation at the time you begin. It's a lot harder start as an independent with no resources although it can be done.

How I Got Started and My Experience with Captives and Being Independent

I first started with one of the big mutual insurance companies as a captive. I answered a help wanted ad and didn't really know that being independent was an option. I worked at that insurance agency for five years before going out on my own.

Once I became an independent, I still worked with another general agent. But the difference was that I was more in control of what I was doing than before. To me, having more control over how I worked with my clients made a huge difference to me personally as far as mindset.

Since I think the training programs at the big mutuals and some other captives are overrated, I'd say the hardest part of being independent is just like any other business you might start. At first it's hard because you aren't making anything and you have to build every aspect of it.

If I had to choose to start my career over again, I'd definitely be an independent agent. That's because it suits my personality better. But my advice would be, be prepared to struggle financially to begin with.

The reality of the insurance business, it's not so much how much you know about insurance as it is how many people you meet with. If you don't become an expert on how to find clients, then either is a bad idea.

Conclusion - People Buy You

In the end, your clients are really buying you. If you trust the insurance agency or companies you are working with, they will too.

Insurance is a people business. What it comes down to is that people say yes to people they want to work with. So while name recognition and training are important and might get you in the door to talking with prospects, in the end they buy you.

For that reason, I always suggest people be independent agents over captive agents all day long.

Let me know in the comments how you started and what your feelings are about which you think is better, captives or independent agents.

Errors and Omissions Insurance for Life Insurance Agents

Once you get your insurance license, the next step is to purchase errors and omissions insurance for life insurance agents. It's also sometimes called E&O insurance. In this article, I'm going to talk about why you need to have E&O, how much you need to get as well as where you can get it and how much it cost. For the purposes of this article, I'm going to assume you are a one person shop.

What is E&O Insurance?

E&O insurance is a policy that covers the cost of legal protection in the event you make a mistake and one of your clients sues you for it. These days E&O even offers coverage for reasonable expenses in the case of a data breach of personal identifiable information. As I wrote in my article about employer sponsored identity theft protection, data breaches costs millions every single year.

Why Do I Need It?

A data breach alone is serious business and reason enough to have some E&O protection in the unlikely event it will occur. But as you probably already know, we live in a pretty litigious society and while the risk is low it is a possibility.

In addition to the risk of liability, you are going to need an E&O policy to get appointments with any insurance companies you might want to work with. Most require it these days anyway.

How Much E&O Insurance Do I Need?

Most appointments are going to require a minimum amount of E&O insurance. As I write this, it seems the minimum coverage per act most require is $1 million. You might want to consider getting at least $2 million.

How Much Does E&O Insurance Cost?

The premium for your E&O policy will depend on whether you or not you also sell variable products. If you don't sell variable products and stick to just fixed products like life and health, the annual premium at this time will probably be $600 or $700 dollars for $1 million policy. My friend who also writes variable products and has $5 million in coverage pays about $2500 per year for his at this time.

Where Do I Get E&O Coverage?

For most of my new life and health agents, one option that I give them is AgentEOProgram.com that's offered through Arthur J. Gallagher Risk Management Services as part of NAILBA. You can get $1 million or $2 million of coverage from them and can include variable products if you need that to be included.

They can also get your E&O policy in place pretty quickly which will help you get appointed sooner.

Some insurance companies will have E&O insurance arrangements with certain carriers if you do get appointed to them. Also, if you have a captive insurance agent contract, the contract may have an E&O policy for those that work for them which you might be added to as part of your employment.

But for independent agents, you'll want to get your own policy suited to the risks you face. There are other carriers out there besides the one I mentioned and you should check around. As a side note, I don't receive anything for suggesting the NAILBA sponsored program to you.

Conclusion

In today's world, you need to have errors and omissions insurance to protect yourself as you start to build your agencies book of life insurance business from scratch or if you are already established.

If you have any questions about E&O let me know in the comments. I, and my readers, would be interested in where you got your coverage and how much it costs. Plus, if you've ever had to file a claim and can share what the claim process is like, that might be interesting to hear about.

How to Get Your Life and Health Insurance License

To begin your career as a insurance agent, you have to get an insurance license. This license allows you to sell insurance and receive commission from the insurance companies you represent. In this article, I'm going to walk you through the steps you need to take to get your life and health insurance license as well as property and casualty if you want. I will also answer some of the most frequently asked questions people ask about getting licensed.

What Kind of an Insurance License Do I Need?

Different kinds of insurance require require different kinds of licenses to sell them. There are three primary types of insurance licenses that are the most common. They are:

1. Life Insurance A life insurance license allows you to sell life insurance policies.
2. Accident and Health An accident and health license allows you to sell other types of insurance like accident and health insurance policies.
3. Property and Casualty (P&C) A property and casualty license allows you to sell home and auto insurance.

 
To get start your life insurance agency from scratch, I recommend that you go ahead and get your life, accident and health license right from the start. If you are interested in selling home and auto insurance, then you'll want to get your property and casualty license. 

I personally have all three but never use my property and casualty license.

What's the Difference Between a Resident and Nonresident Insurance License?

Before we begin going through the steps you need to take to get your license, you need to know that insurance licenses are handled at the state level in the United States. If you want to sell life insurance in a particular state, you have to be licensed in that state first.

You have to get licensed in the state you live in first before you can get licensed in other states that you don't live in. Here's how both licenses work:

• Resident insurance license A resident insurance license allows you to conduct insurance business in the state you live in. It is issued by the department of insurance in the state in which you live. If you don't conduct any business outside of your state, it could be that you will never need the next type of license.
• Non-resident insurance license A non-resident insurance license allows you to conduct insurance business in the other states you do not live in. It is issued by the department of insurance in those states. In order to obtain a non-resident insurance license in any state, you must have a resident license in the state you live in first. 

While your resident license requires several steps, the nice thing is that once you obtain your residence license, getting your nonresident licenses in other states is basically just paying a fee and filling out some paperwork for that state.

Alright. Now that you know what kind of license you need and that you have to have a resident license first, let's walk you through exactly what you have to do to get that resident insurance license.

Step 1: Visit the Department of Insurance Website for the State You Live In

In my case, I live in Indiana and so I want to go the Indiana Department of Insurance website. I found the website I needed by going to Google and typing in "Indiana department of insurance". Just substitute whatever state you live in for "Indiana." Chances are you'll see a link to your state's department of insurance will be one the first listing in the search results.

Once on the department of insurance website, I located a link for "licensing" and then looked for information on resident licensing. This took me to a page that had several sections on it that had all of the information and requirements needed to get a resident license.

Step 2: Complete the Pre-Licensing Requirements

The next step is to figure out what requirements you need to complete in order to get your license. Usually this is some sort of education that you can do by going to class or studying on your own online. The companies that provide this education need to be approved by the insurance department.

In Indiana's case, they list the requirements on a website called Sircon.com. I looked through a few of them and looked for one that offered online courses through webinars. That would be important to me as it probably would be to a lot of people because it's a lot easier to fit into your schedule. But if going to class is your preferred method of study, be sure and look for approved providers who offer in person classes instead.

There were a lot of providers but I found one that I liked called ExamFx.com. Because I got my license many, many years ago, I can't say personally how good it is. I have had other people tell me it is ok. When I did mine I actually went to a week long class.

As I mentioned above, you want to take the Life and Health insurance pre-licensing.

After you've completed the required pre-licensing courses, you'll be ready for the next step.

Step 3: Take and Pass Your Insurance Exam

Now you are ready to take your exam. Just like the courses had to be offered by approved providers, the exams are also only given by those approved by your state.

If you chose a good provider for your course work before the exam, you should be prepared and be able to pass the test.

I use to always joke with new agents that no one with the firm had ever failed the licensing exam. I did this because of the movie The Firm with Tom Cruise. Before he took the bar exam, all of the associates of the firm came by and reminded him no one with the firm had ever failed it.

The test use to be pass fail in my state back in the 1990's when I took it. I found out immediately after I took it if I passed. If you don't pass, then you can take it again after a set amount of time.

Once you pass your exam, you are nearly there and ready to take the next step.

Here's a video I did about the process if you want to watch it as well as read the rest of my instructions.

Step 4: Submit Your License Application to the Department of Insurance and Pay Your Licensing Fee

Once you pass, you'll go back to your department of insurance website to apply for your license. You'll have to submit your pre-licensing requirements along with the licensing fee. Most of this is done electronically these days.

After a short period of time, and a few dollars later, you'll be legal in the eyes of the department of insurance and can now get legally get paid commission from insurance companies

Congratulations! But you aren't finished yet. There's one final important thing to remember.

Step 5: Follow the Law, Complete Your Continuing Education Requirements and Renew Your License When Required

Each agent is responsible for follow the insurance laws in the states you are licensed in. Those vary by state. Your home state usually requires you to complete so many hours of continuing education every year or two. That education carries over to non-resident states as far as I know.

You don't want to skip the continuing education requirement or forget to renew your license. I know one agent who forgot to renew his license and continued to write insurance after his license expired. He was disciplined by the department of insurance, put on probation and had to pay a hefty fine. Now every time he applies for a non-resident license, it's a huge hassle to document what happened to that state's satisfaction.

How Much Will It Cost Me to Get Licensed?

To get your licensing completed, besides the time you need to invest in completing the steps, you can expect to pay between $300 to $500 to your life and health insurance license.

How much exactly will depend on the fees in your state and whether you take classes instead of self study.

Here's a short breakdown for Indiana to give you an example.

• Pre-licensing $150 self study
• Exam $50-$100
• License fee $40

To get a better idea, just check out the resources I mentioned above from your state's department of insurance website.

Should I Take Classes in Person or Self Study?

This is a tough one. In general, if you retain things easily and are a good test taker, you won't have any problem getting licensed and self study might work for you. However, if it's harder for you to retain stuff, then in person sessions might be a better way for you to go.

I will say the nice thing about in person classes is if you have a good instructor, they'll make sure you know what you need to know to pass.

Remember, all you have to do is pass. After you pass no one thinks about it anymore or remembers what you got.

As far as how hard the tests are, I'd say the P&C exam is little tougher than the life and health exams if you decide to take it but there's no reason you can't pass it.

Will I Know Everything I Need to Know to Be a Successful Life Insurance Agent After I Am Licensed?

Unfortunately, the study you do for the exam helps you to pass the exam. And while it's definitely important, the licensing process doesn't teach you what you need to know to be successful agent. The real learning starts once you are licensed.

Conclusion

The steps involved in becoming an independent insurance agent are really easy and are pretty similar from state to state. It just takes a little bit of time, a little bit of studying and a few hundred dollars.

Once licensed in your home state as a resident agent, you can then apply to be a non-resident insurance agent in state in the country. I know I'm licensed in double digit states and have worked all across the country over the years.

You can eventually too. After you follow these steps to begin your journey as an agent, you'll be well on your way.

If you have any problems, remember you can always call your the department of insurance and they will be glad to help.

Let me know if you if you pass your exams and what your experience was like in the comments. Also let me know if you have any questions!

Good luck!

How to Build a Successful Life Insurance Agency from Scratch

In this article, I want to share with you how you can start and build a successful life insurance agency from scratch. Building an ordinary life insurance agency is a lost art. There are fewer agents serving fewer people who need life insurance. Building an agency is both something that is tougher and easier to do than at any other time in history.  I'm going to walk you through what you need to know about how to do it below.

Why Start a Life Insurance Agency?

Obviously, becoming a life insurance agent isn't something most people want to be when they grow up. But a life insurance agent is a pretty good job if you learn how to do it right. That's the tricky part.

I'm not going to lie to you and tell you that it isn't challenging. It is. But it's a lot easier than hard manual labor is. That's for sure. Aside from the challenge of finding clients, there are a number of reasons why starting a life insurance agency might make sense for you.

Here they are:

• Low startup costs The costs to get started are low. You can probably get started for under $1,000-$1,500.
• Easiest line of insurance to start Many agents want to start by writing other types of insurance like property & casualty insurance also called P&C. This allows you to write auto, homeowners or other types of insurance. But getting started as a P&C agent has stiffer requirements than life insurance only does and many people can't meet those requirements. The main one is that it might require more money to run an operate.
• Low fixed operating costs Unlike many businesses that might require significant fixed costs that you have to cover each and every month, like inventory and office space, you can get started with a phone, a computer and basic office supplies.
• No office required While you can have office space if you want, I've ran my own life insurance agency from home since 1995 right from my own home office.
• No employees required Unless you want to go big, you'd be amazed at how much you can do with no employees. I recommend starting as a solo operation.
• Not as competitive as you might think Let's face it, the number of life insurance agents is dwindling and will continue to do so.
• Set your own hours I work pretty much when I want to but I make myself available 24/7.
• Work from anywhere You can set up shop wherever you are licensed.

Those are just a few of the reasons that starting a life insurance agency is something to strongly consider.

How to Get Your Life Insurance Agency Started

OK. So you've decided you want to start a life insurance agency. What do you have to do to get started? Let's walk through the steps to get set up.

1. Satisfy your resident state's pre-licensing requirements Every state has a process in place to get licensed. That process starts with what's called pre-licensing. Pre-licensing is the required amount of study you need to do prior to taking the state's licensing exam. I recommend taking both the life, accident and health.
2. Pass the licensing exam Once you've done your pre-licensing requirements, you need to schedule, pass and take your state's license exam. While your pre-licensing requirements prepare you to take the exam, they don't prepare you to succeed as an agent. 
3. Pay your licensing fee Once you pass your exam, you pay your state the required fee and they give you a license to write life insurance. You'll have to renew it periodically. As part of that, you'll also have some continuing education as well.
4. Satisfy any other state requirements to operate You may have to register with your secretary of state and satisfy other requirements in order to conduct business. Every state is different so you'll have to research those additional requirements that may apply. I suggest starting as a sole proprietor at first and at the very least, you might register a doing business name with your state. Keep it simple to begin with. It can be your name and then "insurance" after your name. You can always change the name later and incorporate later.
5. Purchase errors & omissions insurance (E&O insurance) Insurance companies these days require you to carry insurance in the event you make a mistake. At the time I write this, a $1 million dollar policy is the minimum you should get which will cost you between $600 to $700 a year. Consider getting $2 million in coverage. You can read more about errors and omissions insurance for life insurance agents.

I wrote a whole article that expands more on the how to get your life and health insurance license you might want to check out.

Once you have taken these steps, you can officially write life insurance policies and earn commission but you need an insurance company to write business through. That's the focus of the next section.

Decide What Kind of Life Insurance You Want to Sell

Once you get all set up, it's time to figure out what kind of life insurance you want to sell. When it comes to life insurance there are three specific types of life insurance that you should focus on. A good place to begin reviewing types of life insurance is my guide to life insurance.

The three types are:

1. Individual life insurance The first type of life insurance you can sell is individual life insurance. This would be term life and permanent life insurance such as universal life and whole life. You could choose to focus on final expense policies, mortgage protection and income replacement. And within these types there are different types of underwriting from no exams to full underwriting. In the end though, you would be focus on individual clients who would buy life insurance directly from you. Learn more about the types of term life insurance and permanent life insurance policies.
2. Group term life insurance The next type is group term life insurance. Group term life insurance is life insurance that is offered through employers like basic group life and supplemental life insurance. Your target clients would be businesses. (Read more: How does group term life insurance work?)
3. Worksite permanent life insurance The final segment of life insurance you could offer is what is called worksite permanent life insurance. This is life insurance that is offered to employees of businesses with reduced or eliminated underwriting. The employees pay their premiums through payroll deduction or premium direct deposit. Your target client here would also be businesses.

You could personally build a life insurance agency on one of any three of these lines of life insurance but I think what you should try and do is set up your life insurance agency to build each of these lines of business.

Get Appointed to the Life Insurance Companies You Want to Sell For

The next step in building your agency is to get appointed to the insurance companies you want to sell for. An appointment is an agreement with the insurance company that allows you to represent them. Once they "appoint" you, you can then offer their products.

Appointments to an insurance company can be direct, through a general agent or through independent marketing organizations (IMO's). Another option is that you can be captive to one specific life insurance agency instead of becoming an independent insurance agent.

When I first started I was a captive agent, then I worked through a general agent for a long time and now I am a general agent. Over the years, if I have needed something special, I have also worked with a couple of IMO's.

If I had to do it all over again, I think I would skip being a captive agent and work through a general agent instead. That's because I could work at my own pace and not at the captive's pace. Getting started in the life insurance business has a learning curve and some people can't learn fast enough at a captive to write enough insurance to satisfy the captive production requirements. What this does is basically shut them down before they can get going.

I personally also like to work with one company and give as much business to one company as I can. As a general agent that's what I do.

As an agent, you can take the approach that you want to be able to write whatever life insurance policy your prospect needs or find the prospects that the insurance company you want to work with targets. I prefer the latter of those two.

When I was researching an insurance company I wanted to represent, I looked for one that offered all three product lines I wanted to offer, had a solid reputation and was a mutual company as opposed to a stock company.

Getting appointed is pretty simple once you choose the insurance company. You contact that insurance company to obtain the paperwork, fill it out, provide your license, E&O insurance and anything else they might request. Once they review to make sure you are the kind of agent they want, you'll most likely get appointed unless you have some issues in your financial or personal background.

Review the Insurance Company's Portfolio of Products

Once you get appointed, the next thing you want to do a complete review of the products that company offers. Usually they have a product guide of the products you can sell. You want to look at the suite of products.

At this point, you aren't looking to know everything about each individual product in the portfolio. You want to identify potential products that fit with the three product areas I listed above. 

While the insurance company you get appointed with may offer every insurance product under the sun, you want to keep it simple and stay focused.

Select the products you want to offer

The next step is to select the products you are going to offer. As an example, in my case, on the individual side, I was interested in offering term and whole life insurance but I did not want to offer universal life. 

Even though the insurance company offered universal life, I did not include it the portfolio of products that I wanted to sell.

Choose only the products within the insurance company you want to offer and move onto the next step.

Learn All About the Specific Products You Chose

Once you know which products fit your guidelines, it's time to dig in and learn everything you can about only those specific products. Identify all of the sales material, product specs and any other information you can get your hands on.

In addition to learning about how the products work you also want to learn how to submit clean business to the company and understand their operating procedures.

Now when you do this, it's easy to get hung up on the fact that you might want to know everything before you try and sell everything. Just keep in mind you want to have a good foundation of knowledge when you first start. Once you start getting out there talking to people, you'll expand on that foundation of product knowledge.

Two other important tips I'd give you are to start with one product at time. Term insurance for example is easy to learn than whole life. Start with one product and move on. The second tip is that compliance is important and you want to follow the rules the insurance company gives you

If material is marked "agent use only", then you don't use it with prospects. So in addition to learning about the products, you'll have to stay compliant in how you market those products.

Build and Organize a Database of Prospects

Armed with products and foundation of product knowledge, it's time to identify what type of client you are looking for. What I do is break down each product area and think about the ideal prospect that those products are suited for.

Let's take at look again at the three products lines and what these prospects might look like:

• Individual life insurance Target families and executives.
• Group term life insurance Target employer groups with at least 100 employees.
• Worksite life insurance Target employer groups with at least 100 employees.

Once I've formulated the type of prospect I am looking for, I need to create a database of those prospects that's large enough to work on a daily basis.

This might be 3000 or 4000 individual prospects and 1000 companies that fit my criteria. For each prospect, I will want contact information. Building a database of prospects will take some time and effort. It might be that you buy some lists or research your own. There are people who buy leads of "hot" prospects but I am not a real believer in those.

I then keep this database in a spreadsheet. Nothing fancy because at this point, I want to keep everything simple. 

Create an Offer that Might Appeal to Your Targets and Start Contacting Your Prospects

Up until now, all of the steps we have talked about so far are a piece of cake. The real challenge once you know what you want to sell and who you might want to sell it to, is to start calling people and making offers to them.

So you'll need to sit down and give some thought to what problems you can solve for you clients. That way when you call them, you'll have something specific to say.

Assuming you have a complete database of prospects, the way it will work is you will call each of the prospects and make your offer and let them decide what they want to do. You'll get a lot of voice mails, no answers and no's but you don't want to worry about that. You just want to make your offer to as many people on your list as you can. If they tell you no, then you just move on.

With a large database, you'll try and contact each prospect every three months.

Eventually, you'll warm up your list and people will start talking with you about their life insurance.

Develop a Sales Process that Converts Prospects to Clients and Then Service Those Clients

Once you get people talking to you, you have to figure out how to convert them into buyers. What's involved here is doing a detailed fact finder that helps you understand what life insurance they have, work out how much they think they might need and determine the best policy to help with that.

Now you won't be able to help everyone you get to talk to. That's normal.

What I typically do is find out what they have and if I notice a problem with what they have or a need they might want to fill, I figure out how I would recommend.

The way I approach it is like this. I just want to make sure my prospects know why I would do what I suggest and then I don't get wrapped up into whether they do it or not.

I just focus on making offers.

Those that accept, I write the business, submit it to the company and review what I've set up with on an annual basis.

Keep prospecting and prospecting and prospecting

After you get your first client, you just have to repeat the prospecting step again and again until you get another client and then another. It's simple, yet hard to do at the same time.

Conclusion

To sum things up, a life insurance agency is low cost business you can start. You can offer life insurance to individuals and businesses. It's fairly easy to get set up and get appointed. Once you learn about the products you want to sell, the hard work is finding clients.

In fact, finding clients is what your whole day will be.

Hopefully, this outline of how to build a life insurance agency from scratch was helpful and as I get time, I'll go into more detail about each step.

If you start your own life insurance agency, I want to hear about how it is going. Let me know in the comments how it is going or if you have any questions. I am always looking for agents to work with and am happy to help.

Why You Shouldn't Use Commissioned Enrollers

One reason that negotiating access is sometimes tough to do with employers today is because of agents who worked with their employees in the past. One bad experience with the wrong agent can unfortunately keep the good ones out. Many agents that work with employer groups don't recognize that it's a privilege to work with their employees and great care must be taken to continue to receive that privileged access.

One of the biggest complaints that employees often have is that they feel pressured to buy insurance. But where does that pressure come from? The reason that pressure is there is because of the type of enrollment process they use or it's likely that the person was paid on commission.

Commissioned based sales is an honorable business, but a commissioned based enroller can cause potential problems and one of those problems is that they overly encourage people to buy their offerings just so they can earn a commission.

When that happens employees can sense it and they don't like it.

Therefore, a good policy to follow is to only allow enrollers paid on a per diem basis to work with your employees. Insisting that per diem enrollers are used has the following advantages:

• The enroller is paid the same whether employees sign up or not
• The focus is on the enrollment's educational process and not focused strictly on the number of people signing up
• Employees can feel when enrollers are there to help them and they appreciate the help

So, to ensure the above, what you'll want to do is make sure that enrollers that have access to your employees are paid on a per diem rate and not commission on a per app basis.

The other thing that's an important step to eliminate perceived pressure from an enrollment is to add a step to the enrollment process that allows employees to take the information home before they decide instead of making them decide on the spot.

Sometimes, not devoting time for employees to review a product offering gives the illusion of pressure even when per diem enrollers are used.

On all enrollments I conduct, I only use per diem enrollers and I also build adequate time in my enrollment process to let employees take the information presented to them home before they decide. This eliminates the perception of pressure where it doesn't exist.

The only hint of pressure that should ever exist in an enrollment is in encouraging people to at least hear the offer available so that everyone benefits from the elimination of underwriting and requirements for all.

I talk more about my enrollment process in my post called 3 Steps to More Effective Benefits Communication at Enrollment.

Let me know what you think about paying enrollers commission.