Should I or Shouldn t I Become an Insurance Agent

Transcription

1 Should I or Shouldn t I Become an Insurance Agent Angela P Smucker, ARM FSS LUTCF Angie.smucker@yahoo.com P a g e

2 I. Why Become an Insurance Agent? About 1972, there was a close family living in Kenosha, Wisconsin, with 5 daughters and 2 sons. The oldest son was planning to enter the seminary to become a Lutheran pastor. The 2 nd child, the other son, was attending college with the goal of becoming a Math teacher. It was a total shock to the family when their father died suddenly from a heart attack. Everyone rallied around the mother, Shirley, with anxious anticipation of the life insurance proceeds so she could keep the house while the youngest children, all the girls, grew up and finished school. That life insurance check never arrived. When asked about it, the insurance agent said, No! He cancelled that policy a long time ago. While the family questioned whether or not their father had actually cancelled the needed life insurance policy, they had no immediate solution to the problem of supporting the family. Paul, the son who hoped to become a Math teacher, rethought his plans. He knew that the family s insurance agent and other insurance agents in town made a decent living. He also knew that he wanted to protect other families from the potential devastation of losing a parent with no life insurance. Paul decided to quit school to join Lutheran Brotherhood, a church affiliated life insurance company. With much prayer and investigation, Paul took the leap to insurance agent. He has always had a natural ability to read people, to translate complex concepts in easy to understand terms, and to impress upon people the best way to attain financial security. Over the years, Paul was able to support his mother, his sisters, and his own family with different levels of financial assistance. It was through many, many long days, years of persistent work, which allowed Paul to earn sales awards, earn the respect of fellow professionals, serve as a leader in the community, and, most importantly, protect thousands of families in his community from financial collapse. Over many decades, Paul s sisters matured and had their own families. Paul s brother Greg become a well-respected pastor. Shirley was able to stay in the family home for virtually her entire life. Years later, about 40 years after their father had died, Paul, Greg, and their families were at church for the wedding of a grandson. The entire family took every opportunity to remember and honor their father and grandfather so they would talk about the different directions their lives took so many years earlier, when he died. When that happened, I decided to become a pastor so I could help families when their fathers died like Dad, Greg said. But, you, Paul, went into the business of taking money from people. 2 P a g e

3 That statement took Paul by complete surprise although he knew that Greg was very dedicated to help his parishioners in times of trouble. That s not what I remember, Paul said. You help people get through the heart ache of losing a loved one, of burying him, of remembering him, and reminds them of the hope of seeing him in Heaven someday. I went into the business of helping those same people so they can keep their homes, buy food, and go to college after they ve lost their parents. That s what happened. Now, this was a completely different explanation than what Greg had been thinking all those years. I had no idea, he said. Now I understand you much better than I ever did before. You are absolutely right. We are both helping people and you help them with financial security for many years. Over many decades, Paul has saved many children and widows, many companies and employees, from financial devastation. One year, 2 of Paul s best friends, both county deputies, were killed together in a car accident when they were hit by a speeder on cocaine. This married couple left behind two children who, while they were already adults, leaned on Paul to help them make important decisions about the joint funeral, the family home, school, and their futures. This is the impact that a good insurance agent can have on a family. We provide security when no one else can. 3 P a g e

4 II. Do I Have What It Takes? Qualities that exist in a successful insurance agent, in no particular order: Extroverted Self-confident Possess a high energy level Curious and enjoy learning Have a high level of integrity Enjoy meeting new people and talking to strangers without a formal introduction. Willing to continue learning Willing to help others learn also Competitive Nurturing Social Leadership skills Highly organized and somewhat analytical Determined Enjoy learning Willing to work more than 40 hours per week Have financial security and/or a support system while you get started 4 P a g e

5 III. What is My First Step? A new insurance professional must make several decisions before entering the industry, some of which are made with no information. New insurance agents drastically need some financial resources during the early months, years that are required to learn the business. For those reasons, to help individuals decide if it s a good fit and to get field experience if possible, I make the following recommendations: 1. Take a Myers Briggs personality profile. You can find these online, for free. If your profile shows that you are an introvert, or that you lack some of the qualities I mention above consider insurance claims or underwriting instead. These are very well respected positions that do not require outside sales. 2. Consider whether you are pulled towards selling life & health insurance versus property & casualty insurance. Few successful insurance agents can do all of these. If you may wish to sell investment products, the life & health field is most appropriate. If you wish to work primarily with business owners, both areas are suitable but the property & casualty area offers the highest exposure for working with business owner professionals. Do you have a personal story, like Paul s? That may lead you one way or the other. As your career advances, you may decide to add more lines of insurance to your repertoire. Initially, pick life & health OR property & casualty. 3. Research a handful of insurance companies and agencies. If you find an insurance agency with a name that is different, like Smucker Insurance Services (which I used in Wisconsin), it s probably an independent agency. Every insurance company has their own website and their own career center with job postings. Most insurance companies will request that a candidate take a personality profile, as I mention above. Also, virtually all insurance companies require a good credit history and no criminal history at all. Fingerprints are always required. A resume is good to have but not always necessary. 4. While investigating which route to go, visit agents in your town and ask to shadow one. They must protect their clients privacy but you should be able to, at the very least, interview 2-5 agents with different companies. Remember that, if you are already licensed, they will work hard to convince you to sign on with their own company. Some recruiters and managers will stretch the truth to sign on a new agent because their parent company provides funding to them for each new agent. Ask about agent turnover. Ask to interview different people or observe, in their office. Do not make any decisions while you are in their office. There are many highly ethical, hardworking, insurance agents that would love to work with you. The problem is that the questionable agents are just as attractive, on the surface, as the ethical agents. 5 P a g e

6 5. As your career progresses, it is absolutely necessary, in my mind, that you join and attend meetings of a professional association. Find your local association and attend a meeting as a guest. Many questions you will have for me can be answered by members of the association and the competitors you meet at their meetings. Many companies intentionally do NOT tell their agents about these associations because they misunderstand the focus of the groups and are afraid that their members will hire agents away. The importance of a professional association is in their work to promote the industry, to protect our clients, to educate the public, to monitor legislators, to encourage ethical business practices, and promote initiatives that are socially beneficial. Congress is constantly attempting to tax the inside build-up of cash value in life insurance, for example. The professional associations in our industry monitor Congress closely to protect our clients from unfair taxation. This alone is a great reason to join. The biggest sales I ve had were when I had talked with a prospect, tried to understand what their concerns were, called a competitor of mine and received some wise counsel, then returned to the prospect to make a sale. A quality professional is not afraid of competition and recognizes that there is enough business in the country for everyone to be successful. Even in 2013, millions of people need a good insurance agent. 6. At some point, pick your route into the field if you haven t already. New agents often fair better when they join one of the large captive companies such as Nationwide or Farmers. These companies provide a base salary and/or office allowance. The name recognition is very valuable, too. As you begin selling, and for years down the road, as much as is possible, AVOID taking cash from clients. If you take cash, do NOT put it where you put your own money. 7. Depending on which direction you go, plan to take classes beyond the minimum continuing education requirements. Here are some designation programs that are very worthwhile and, if you were working with me, at least one of these would be required: Accredited Customer Service Representative Associate in Insurance Agency Operations Certified Financial Planner Certified Insurance Counselor Chartered Financial Consultant Chartered Life Underwriter Chartered Property Casualty Underwriter Life Underwriting Training Council Fellow And many more. 6 P a g e

7 IV. Insurance is a Racket, Right? Risk is something we all live with, 24 hours every day. As soon as you leave home, you risk tripping and falling. No one lives without risk. What insurance does is transfer some of the risk we have to a financing tool, the insurance companies. When we have a $500 deductible on our car insurance, we are retaining that portion of the risk. For more information, follow this example that I ve written to demonstrate this point. But, this idea of transferring risk applies to all types of insurance. A Primer of the History of Insurance Many, many years ago, people migrated and built their homes in groups. This provided security, and fellowship among those who shared their resources. In fact, there was once a small town called Hamlet. In this town, there were 100 homes with 100 families. Each home, at the time, cost about $1,000 to build. After a few years of living together in Hamlet, the residents noticed that occasionally one of their neighbors would lose his house in a fire. They heated their homes with fire pits and they cooked over fire, too, so it was understandable that this could be a problem. Through the years, it became clear that, during most years, one house would burn down. Some years, two houses would burn down. Other years, no houses would burn down. On the average, one house per year would burn down. The Hamlet-ians eventually identified this trend and decided to organize so that no family would have to risk their health and security when their house might burn down. The Hamlet-ians each pitched in $10 per year. The town elder, John, was given the responsibility of holding on to the money for safe keeping. With 100 homes contributing, they would accumulate $1,000 each year for John to give to the family whose house would burn down. This would allow for a quicker rebuilding period for that family. During years of good luck, the money would accumulate. During years of bad luck, the surplus money would be used to help everyone who needed to rebuild their home. Over time, it became obvious that some people were less careful. Those who were very careful resented the use of their money to help the families they thought were careless. Also, it became obvious that houses were going to cost $1,100 to rebuild, a $100 increase. More people were resentful that they had to increase their annual contribution to $11 to pay for the increased costs. Some Hamlet-ians would argue with John that, My house cost $1, years ago so the houses built today should only cost $1,000! Other Hamlet-ians would argue that, The blue houses burn down more often! People who live in blue houses should have to pay more! Most of the houses were blue, so of course it may seem unfair to those in pink houses. And, other Hamlet-ians would say, My house is never going to burn down! It hasn t yet so I know it won t! I am not going to pay. 7 P a g e

8 As time went on, John had to focus more on helping these neighbors with their homes, managing the money, and arbitrating disputes. He requested a yearly stipend to pay for his work, particularly because it took up so much of his time that he could not also work full-time at his usual profession. Through a vote, the majority of the community agreed that it would be fair for each homeowner to pay John $.10 for his work. At that point, the monthly insurance cost because $ Every family who lost their home due to a fire had their new home built very quickly so that they would not have to become homeless or move in with a friend for very long. Everyone who had a house fire was glad the funds were there and John was available to make sure they could resume a normal life. No one who ever lost their home in a fire ever complained again about their annual contribution to the fund. This is a basic explanation of the development of insurance, which goes back hundreds of years. 3,500 years ago, Moses instructed the Israelites to contribute to a group supply of food for the needy (Deuteronomy 14). Lloyds of London began in 1688 as an informal sharing of shipping risks by investors as they met in Edward Lloyd s pub. Every insurance company has an interesting history about how it formed to serve the needs of a certain group, class, industry, etc. The insurance industry evolves as the people it serves, the economy, and the business environment change. Now, when someone complains to me about insurance companies, I tell them this: Insurance companies are like auto makers. In the 1970s, people decided that cars were too heavy and used too much gas. The mileage was very low. Car makers listened to consumers and started making cars from lighter weight materials. In the 2000 s, insurance companies are working to relieve the high cost of health insurance. They ve developed high deductibles on major medical policies to keep premiums low. Consequently, supplemental insurance companies like Combined are having more success through selling less expensive types of health insurance that can help a family cover the high deductible costs on their major medical insurance. It s an evolution that exists in every industry. Nothing stays the same so be ready to learn thoughout your career. If you are paying attention to all the changes, you will not be bored. 8 P a g e

9 V. Captive Agent Companies When starting out as an insurance agent, you may need a base salary for support while waiting for sales to build up. You may also be concerned about finding a company that provides a lot of training and back-office support. This type of support is most often available from captive insurance companies. Unfortunately, in this industry, someone who has an insurance license can get empty promises from sales managers to encourage that agent to join that company. Large companies fund each local office based on the number of agents appointed. Following is my own, biased, list of good companies with good support for new agents. This support is often financial but also with training. Also, be aware that many companies will re-write the agent contract down the road. Some companies have been known for forcing hundreds or thousands of agents to renegotiate their contract because of financial challenges within the company. It s not always bad, but you need to diligently advocate for yourself always. These are captive companies, which mean that you can only sell their products. It s a disadvantage that can be offset by the other benefits of being a captive agent including huge name recognition. As an experienced insurance agent I believe that the most knowledgeable professionals typically work for independent agencies, which are those not affiliated with any one company but rather represent 5-50 companies. Starting with a captive contract is usually best for someone new in the industry. PROPERTY & CASUALTY PRIMARILY Farmers Insurance Nationwide Insurance State Farm Insurance Liberty Mutual Insurance Allstate Insurance LIFE & HEALTH INSURANCE Modern Woodman of America New York Life Insurance Thrivent Financial for Lutherans Mass Mutual Principal Financial Group AXA Financial Group 9 P a g e

10 VI. Resources Following are some resources for investigating a future insurance career as well as for getting support during your career, finding resources for your clients, and growing as a professional. Strong Interest Inventory make sure this is the type of career that fits your personality Myers Briggs Personality Profile National Association of Insurance & Financial Advisors Your city has its own local organization and their own website. Independent Insurance Agents of Texas ( Big I of Texas ) Independent Insurance Agents National (with state links) Horsesmouth a resource for insurance agents The American College of Financial Services Insurance is regulated by each state. The uniformities are through the work of the National Association of Insurance Commissioners. Each state s Department of Insurance and Commissioner of Insurance has its own website with resources for agents and for consumers. It s Texas, it s Million Dollar Round Table an international organization consisting of the top 2% of life/health insurance agents in the world. Their websites have many resources that will be useful to you now. Books: Get every book you can find on selling to consumers, to business owners, on consultative selling, including Small Business for Dummies, Marketing for Dummies, internet marketing and more. Also, read your local newspaper, national newspapers, INC, MONEY, etc., so you will know what your clients are concerned about, what they are reading. 10 P a g e

11 So, now you have an idea of what you may be doing in the future. Is it worth it? Will you make money? I can t answer that for you. What I can tell you is that, for those of us who can work hard and, especially for those who are talented in working with people, the sky is the limit. As an insurance agent, you will never hear these words, We really can t give you a raise this year. More than in any other profession that I know of, the harder you work, the more money you make. Some agents make $30,000 but the really good ones make well over $300,000 per year, some over $1,000,000. In every state, each year, hundreds of people take the insurance agent license tests. Most fail in the industry. Let s make sure you don t. Read this entire piece again and take the 1 st step, whatever that is for you. If, after investigating the profession, you decide that sales is not for you but you do like the idea of working in insurance, make a list of insurance companies. In the United States, there are hundreds of insurance companies, most of which you haven t even heard of. Go into each company s website and look at their job postings. It s a fascinating industry and you ll always have a job, even if you re not in sales. Finally, I want to encourage you to create a Linked In profile. It s the Facebook for professionals. There are over 100 books written about how to make Linked In work for you for getting a job, marketing your services, helping others, and more. I m at Link up with me. Thank you for reading my thoughts on becoming an insurance agent. Remember that, while I have decades of insurance experience, this is entirely my opinion and anyone is welcome to disagree with me on any points that I make. If you need more details on something I ve written, please do your own research before contacting me. If you can t find the information you need, by all means ask me. If you have a suggestion of something I should add to this piece, please let me know. I hope this is helpful for you. If you would like me to address other issues that I ve neglected, or have more detailed questions, please feel free to me. Angela P Smucker, ARM FSS LUTCF Angie.smucker@yahoo.com P a g e