Money Blog

Career of an Insurance Agent

Are you fed up with your same monotonous routine jobs, that round the clock service and office politics on that? We all want to have our own business, who wants bosses? There are certain factors that keep us from kicking the job and creating our own enterprise. One, there is always a risk associated with new business, two, there is a gestation period, it takes some time to break even and to make it profitable, three, a lot of capital is required.

Can there be a vocation or business without these factors or risks, can there be a business where we can slowly switch from our job, with out getting into a financial crisis. The answer of course is yes. If we actually look out for such options, we’ll get them and one among the many of such options is the business of insurance agent. You can start it as a part time vocation and slowly when the income generated from your new vocation crosses your salary then you may write your resignation letter.

But there are two sides of a coin, it requires some skills and aptitude and there are some merits and demerits of this business, it may or may not suit your personality and skills. Now let’s have a deep insight into the profile of an insurance agent and then you may be in a position to decide whether it suits you or not.

Handsome commissions

Insurance is not bought it has to be sold. The job of an insurance agent is to sell something which does not have a demand, you have to create a need of it, therefore selling insurance is not very easy. And that is why an insurance agent is handsomely remunerated for the tough job. The commissions in life insurance are very high. In traditional plans the commissions are in the range of 30 to 40 percent of the premiums collected. Such commissions are not paid in any other business. Further more, besides these high commissions on the first premium, an insurance agent also gets reasonable commissions every time the policy is renewed. The commissions from second year of policy till the end of the term are generally in the range of 2 to 7.5 percent. And the beauty of this recurring business is that if you have sold a policy of 20 years term you will keep on getting your commissions till the end of term, means you get income for 20 years on just one sale. This is a kind of royalty income, which you keep on getting every year. And this is the major attraction of this business. So an insurance agent can plan his retirement much earlier than other professionals. If he works till the age of 40 and collects good premium during his career, he may keep on getting renewal commissions for he attains the age of 60.

A good part time business

If you are not very sure of its results you may take it part time. You can devote 2-3 hours after your office or on sundays to meet people or you may start selling your products from your office circle. And when you are convinced that you can make a good business out of it, you may take it full time. So the business of an insurance agent is flexible, it has no timings, you may do it at your convenience.

No capital requirement

In this business you do not require any capital to invest and it takes a very small working capital, to be used for telephones, conveyance, etc. You do not have to bear the cost of running and maintaining an office as initially you can operate from your home also.

One man show

This is a business that you have to do on your own. You cannot delegate and you cannot scale it up as it depends completely on your personal skills. And becoming an insurance agent is not difficult therefore, if you think of hiring a help, then the guy you are hiring for generating business for you, will take his own agency in case he is able to sell insurance. This is and will always remain one-man show. However, now a days corporate agents are there, insurance brokers are also there, they all are doing this business at large scale, but there are not many of them. Generally an insurance agent works alone.

Public perception of an insurance agent is not very good

You need to have a good social circle. This is a kind of business where most of it is procured from personal relations. If you have a good social circle, you may be able to push your products. Again, selling insurance is not easy, you have to chase a person from his home to his office to sell him your product, and generally it leads to spoiling of your relations, as those persons who do not want to buy insurance will start avoiding you. However, if you are dedicated to your job, these hurdles will look very small.

Low conversion ratio

When you actually jump into selling insurance, you will realize that the conversion ratio is very low. If you contact 100 people only 10 to 15 will listen to your illustrations and out of these 10-15, only 3 or 4 will actually buy a policy. Sometimes this becomes very frustrating, but you have to linger on to your job. So it takes utmost dedication and patience to be successful in this career.

You can do business with one insurance company only

As per the regulations of IRDA, an insurance agent can sell policies of only one insurance company. In case some other company comes out with some good product, you still have to sell products of your company, which becomes a bit difficult at times. Secondly you will not be able to compete with insurance brokers, who can sell products of all insurance companies.

The job of an insurance agent requires real dedication and hard work with patience. The commissions are undoubtedly high and if you really possess those skills which are required to push insurance products, you can make a lot of money out of it.