Lecture Notes: How the Money Works in Selling Life Insurance

Introduction

• Presenters: Jalen and Mike
• Focus: Ways to earn money in life insurance business

Structuring Yourself in the Business

Two Types of Agents

1. 1099 Agent

   • Works with an IMO or agency
   • Paid commissions directly from the insurance carrier
   • Benefits:
     • Direct payment within 24-72 hours after issuing policies
     • Own your own book of business
     • Flexible schedule
   • Costs:
     • Responsible for marketing and lead costs
   • Training varies based on agency

2. LOA Agent

   • Works under an agency
   • Paid by the agency instead of directly by the carrier
   • Benefits:
     • No lead or marketing costs
     • Typically receive better training
   • Drawbacks:
     • Lower commissions

Captive vs. Broker

Captive

• Represents only one insurance company
• Easier to learn due to focus on one set of products
• Benefits:
  • Good training
  • Free leads
  • Easier to handle chargebacks
• Drawbacks:
  • Lower commission (40-60%)
  • Limited product offerings

Broker

• Represents multiple insurance carriers
• More options for clients
• Benefits:
  • Higher compensation
  • Own your book of business
  • Flexibility
  • More comprehensive coverage for clients
• Drawbacks:
  • Training may not be as robust

How Commissions Work

Advanced Commissions

• Typically a 9-month advance (75%) of the annual premium
• Example: If a client pays $1,000 annually, you may receive $750 upfront
• Important to reinvest earnings and save for chargebacks

Mailbox Money

1. Back-end Pay

   • Remaining 25% of the annual premium is received in months 10, 11, and 12

2. Renewals

   • Continues after the first year
   • Averaging around 5.5% of original premium annually
   • Builds over time, contributing to long-term income

Building a Team

• Earning overrides by recruiting other agents
• Example: 20% override on $10,000 sales = $2,000
• Important to provide training to downline agents

Company Bonuses and Incentive Trips

• Bonuses and trips offered by carriers for high production levels
• Potential for additional bonuses from your agency

Conclusion

• Choose between LOA, 1099, captive, or broker based on your career goals
• Importance of finding a supportive agency with good training
• Engage with the presenters on social media for more insights