What type of insurance sales is most profitable?
Life insurance is the most profitable—and the hardest—type of insurance to sell. With the highest premiums and the longest-running contract, it brings in cash over a long period of time. In the first year, agents make the largest annual sum on a policy, bringing in anywhere from 40–120% of the policy premium.
On average, life insurance is one of the most profitable types of insurance to sell.
While there are many kinds of insurance (ranging from auto insurance to health insurance), the most lucrative career in the insurance field is for those selling life insurance.
- 64% of all life insurance policies in the U.S. are individual plans, which include both term and whole life insurance policies.
- Term policies accounted for 40% of individual life insurance policies purchased in 2021.
Insurance agents receive the highest commission rates for whole life insurance plans, often more than 100% of the total premiums for the policy's first year. The exact percentage depends on the age of the policyholder.
Selling Health and Life insurance can be an extremely competitive environment, with many agents pursuing the same prospect or client pool. In addition, if a person is licensed only in the areas of Life and Health coverage, they cannot sell other lines of insurance such as Property & Casualty.
If you have a great work ethic and are willing to place yourself out there to establish relationships with clients, you will get more opportunities to earn a higher income. Selling insurance may even make you a millionaire.
One of the primary reasons insurance agents can accumulate wealth is their commission-based income structure. Unlike salaried employees, agents earn a percentage of the premiums they sell to clients. As they build a client base and generate more sales, their income potential increases.
Most professionals who sell insurance are paid largely on a commission basis. In fact, most agents aren't even employees of the carrier. More often than not, they're independent contractors who are compensated based on how much they sell, with higher commissions for certain types of products.
It is not easy to make a living in insurance, but it is not as hard as you might think. As with any type of sales, becoming an insurance agent can be one of the best paying hard jobs or a terrible paying easy job. Dedicated agents will become successful at insurance sales, just like at any other job.
What is the fastest-growing insurance type?
- Cyber values at risk (data and information) grow and fluctuate much more rapidly than those for tangible property.
- Cyber property settings (hardware, software, and networks) evolve much more rapidly than those for tangible property.
| Company | Policygenius rating | AM Best rating |
|---|---|---|
| Lincoln Financial | 4.8/5 ★ | A |
| MassMutual | 4.9/5 ★ | A++ |
#1 Low Motivation
To be a thriving insurance agent, you have to want to succeed. Failure to work hard is one of the top reasons people in this industry want to call it quits. While it's true that this job isn't easy, it's also true that it can be very rewarding when you allow it to be.
A career as a life insurance sales professional can be challenging. The competition is fierce, and you may experience a lot of rejection before a successful sale. Conducting business in the comforts of your home isn't any different. You should be willing to put in the effort for your venture to grow.
Commission structures vary by policy and company. But typically, life insurance agents receive as commission 60% to 80% of the premiums you pay in the first year. They collect smaller commissions in subsequent years. Added up, 5% to 10% of all the premiums you pay over the life of the policy could go to commissions.
Most businesses don't make any profit in their first year of operating. It could take anywhere from 18 to 24 months for your insurance sales to actually provide profit. Don't feel discouraged. Every small business owner has to clear this hurdle.
That is a 90% failure rate for new agents.
Most independent marketing organizations will train insurance agents on all the products they want them to sell.
- Registered Health Underwriter (RHU) ...
- Certified Insurance Service Representative (CISR) ...
- Associate in Claims (AIC) ...
- Chartered Property Casualty Underwriter (CPCU) ...
- Certified Insurance Counselor (CIC) ...
- Associate in Insurance Data Analytics (AIDA)
Becoming an insurance agent can be a great side hustle for those looking to earn extra income while helping others and growing personally. With a bit of training and networking, you can start building your client base and earning commissions in no time.
Yes, selling insurance can be a good career for independent workers with strong sales skills. Sales agents often earn bonuses and commission, so their income potential depends on their talent.
Can insurance agents get rich?
Different employment websites provide varying salary ranges for independent insurance agents, with entry-level positions earning an annual average of $20,000 to $26,000, while the top-earners make more than $200,000 per year.
Insurance agents succeed when they prioritize their customers' needs over their own profits. The most commonly cited reason insurance agents fail is that they fail to listen to their customers and take the time to find the best product to suit their needs.
| New York, NY | $104,850 |
| New Jersey, NJ | $100,590 |
| Massachusetts, MA | $94,830 |
| California, CA | $92,670 |
| Minnesota, MN | $90,490 |
Benefit #4: Passive Income
Your commission percentage on a policy drops after the first year, but you keep earning 5% to 10% as long as the policyholder pays their monthly premium. This is passive income you receive each month without even having to get out of bed.
Do insurance agents lose money if clients make a claim? Generally, insurance agents don't lose money if clients make a claim. The responsibility of determining whether a claim is valid and paying out the benefits falls on the shoulders of the insurance companies.
