The global life insurance industry is predicted to touch a milestone of $2.5 trillion by 2026. This statistic shows that the life insurance industry has a massive opportunity regarding job prospects. So, if you are considering joining such an agency or company, then you must be interested in how difficult selling life insurance career can be.
Is selling life insurance a pyramid scheme? This is another trending question among individuals looking forward to building a career in a life insurance agency. Let’s review whether life insurance is a pyramid scheme and how hard it is to sell such a financial product, shall we?
Life Insurance in Essence
In short, life insurance is a written contract between an insurance company and the respective policyholder. The insurer offers to pay a lump sum in exchange for regular premium payments from the policyholder. On the other hand, the beneficiaries can get financial services after death or after a definite period. Hence, life insurance knowledge is necessary for those applying for such profiles.
For example, the following terms and their responsibilities are equally relevant in this sector:
- Insurer: A company that offers life insurance.
- Policyholder: An individual who purchases life insurance.
- Policy Length: The contract period between the insurer and the policyholder.
- Premium: The amount of monthly or regular payment that the policyholder is eligible to pay the insurer.
- Beneficiaries: People who will get the mentioned death benefits.
- Cash Value: Permanent life insurance policies offer a value in cash.
In addition, a life insurance agent should learn about different types of policies. Typically, there are 3 kinds of life insurance policies, and they are:
Term Life Insurance
This type of life insurance offers up to 30 years of coverage. However, the coverage period might vary from one company to another and according to other norms. In addition, it doesn’t build a cash value. Term life insurance is best known for tax-free death benefits.
On the other hand, a term plan can be less costly compared to other life insurance policies. Premiums to term life insurance might vary as the policyholder ages. Therefore, the main uses of term life insurance are:
- Death benefits
- Income protection
- Income replacement
Universal Life Insurance
Unlike term life insurance, universal one provides a coverage period of permanent lifetime protection. On the other hand, this insurance can build a cash value and premiums can vary.
However, universal life insurance is more expensive compared to the term one. In addition, it offers the following benefits:
- Death benefits
- Income protection
- Tax-advantages with wealth transfer and preservation
- Tax-deferred asset accumulation
Whole Life Insurance
This type of life insurance is quite similar to the Universal one. However, the premium amounts to the whole life insurance are typically fixed. On top of that, whole life insurance is more expensive than term life insurance.
Additionally, the benefits of whole life insurance are the same as the universal one.
Is Selling Life Insurance a Pyramid Scheme?
Selling life insurance and its resemblance to a pyramid scheme might confuse the beginner. Is selling life insurance a pyramid scheme? Before answering that, you must learn what a pyramid scheme looks like.
A pyramid scheme depends on consistent recruitment. Every participant under a pyramid scheme has to invite new members. The more one can join the scheme, the better the result. Additionally, pyramid schemes don’t have a typical product.
On the other hand, most profits go to the upper authorities of the scheme. At the same time, the new members have to struggle with making money. Now, the thing is that selling life insurance is different from a pyramid scheme.
Usually, it’s not. However, some people have complained that insurance policies look like pyramid schemes. Therefore, we have come up with a few signs that can tell you whether the particular life insurance company is involved in pyramid schemes. Let’s check out:
Forces Recruitment over Selling
What does a life insurance agent have to do? The agent must promote or sell different life insurance policies and related services. Whereas Multi-Level Marketing companies who believe in pyramid schemes focus on recruitment over production.
Such insurance companies will pay the agent for collecting money from clients. Additionally, they will compel employees to extend the network instead of pure selling or business development. This company will tell you to sell life insurance policies to others or recruit new people.
Therefore, look out for such signs. If the company demands your people, network, etc., then it’s probably a pyramid scheme. Go through the following signs to be sure about it.
Showing off an Enviable Lifestyle
Has the contacting agent told you how luxurious a life the agent has been leading? The agent might have informed you about their flagrant consumption and wealthy purchases such as a Ferrari, Rolex watch or something similar. Now, this is a strategy that most MLM agents adopt.
They generally shed light on their lavish lifestyle and convince you it can be yours. How much can you earn by selling life insurance? Well, a pyramid scheme won’t let you earn huge money quickly. On the other hand, they might lure you with stacks of cash.
Hence, avoiding such agents who keep showing off their wealth will be wise. It’s generally a “fake it till you make it” strategy.
Motivational Speeches over Skill Development
If you visit a life insurance company and there is continuous dancing, motivational lectures, yelling, cheering-up, push-ups, etc., then it’s time to run. All these signs show that the insurance company is a Multi-Level Marketing agency and works on a pyramid scheme.
These companies stress physical rejuvenation rather than thoughtful and resourceful skill development. So, figure out the difference before it’s too late.
Circle or Group Culture
A team of any Multi-Level Marketing Company has an inner circle in which the corresponding members communicate in a specific language. All the members will talk in the same way.
Every senior team will show off some flamboyant status. Additionally, there will be a difference of culture between 2 different teams. Longing to be a part of the senior circle is quite visible among MLM employees.
A Ladder to the Job Growth and Position
You might sense an arbitrary ladder system inside a pyramid-scheming life insurance company. Every agent of such a company knows their exact position according to the pecking order. Additionally, they speak the same language.
It’s a business strategy that differs between a typical life insurance company and an MLM. However, a ladder system with benefits where your work will be appreciated is not harmful. Such MLMs might offer you a fancy title, but the economic achievement might not be equally exaggerated.
Fascinating Face
The mention of Tesla reminds you of Elon Musk, right? Just like that, an MLM company will introduce you to its charismatic leader. You have to understand the thin line between a cult mascot and a successful businessman.
For an MLM company, the respective frontman represents the heart and soul of the enterprise. However, demigods need to be in touch or reach even for the employees.
Generally, insurance companies will stop paying the policyholder if they fail to pay the premium. Whereas pyramid schemes offer you stable returns with regular investments. However, if you can’t convince people to join the network, then the earning might diminish.
On the other hand, the life insurance company will tell the current insured to collect premiums even if there’s no new joining. Here lies the main difference between a genuine life insurance company and a pyramid scheme.
Life Insurance Selling as Career: How Promising is That!
Are you eager to start your career as a life insurance agent? Life insurance selling might give you a handsome remuneration, but you might struggle to keep it sustainable.
Conversely, you can progress in the right rhythm if you find a potential and reputed life insurance company to begin your journey with. Let’s check out the ups and downs of choosing life insurance selling as a career.
Bright Sides of Selling Life Insurance
If you know how to sell life insurance successfully, this industry has tons of benefits. Here are some noteworthy perks of building a career in the life insurance industry:
Comparatively Higher Salary
You might know that Life insurance agencies offer the best commissions in the market. However, the amount of commission depends on the kind of insurance. A life insurance agent gets a percentage of the policy.
Besides that, the agent will receive a commission each year on renewing the policy. The salary range may vary widely, but a high remuneration is guaranteed for agents based on performance.
Job Requirements
A life insurance agent doesn’t require many higher educational degrees to get the job. Among all finance-related profiles, life insurance selling requires a high school diploma or equivalent degree to grab a job in this sector.
In addition, the demand for selling life insurance is escalating daily. Therefore, applying for the profile and securing a job is easy if you have the required skills.
Flexible Schedule
Generally, life insurance agents are allowed to work during their favourable hours. So, you can opt for life insurance selling if you don’t want to pursue a typical 9-to-5 job. Additionally, companies might grant you to work from home.
Disadvantages of Life Insurance Selling
Not to mention, life insurance selling as a career is quite impressive. Still, you should be aware of the loopholes, such as:
Highly Socialising
A life insurance agent has to interact with every type of person or customer, regardless of their backgrounds and places. A few will be friendly, whereas the rest will be difficult to deal with. If you are not careful enough, you may test with disdain. Consequently, this will leave a negative impact on your professional graph.
The Process
Is selling life insurance hard? Yes, selling a life insurance policy is more challenging than it sounds. You have to create an urgency for the insurance to sell out quickly. Instant appeasement is comparatively a tougher job in the life insurance sector.
Fast-Paced Profession
Since life insurance selling acts like other sales-only opportunities, you have to adopt a fast-paced lifestyle. Potential clients and leads might reject your offer and grant other agents’ proposals. Hence, you need to improve your sales and convincing skills to make a successful career out of it.
Commission-Based Payscale
Most life insurance agents don’t qualify for base salaries and benefits. Rather, they are assigned as individual contractors. Therefore, they must aim for a specific goal or quota to receive payment. In addition, you have to work hours after hours to get the desired remuneration.
Tips for Succeeding in the Life Insurance Industry
A few tips might upgrade your skill as a life insurance agent. For example, you can work out your customer service and communication skills. Learn how you can relate to people irrespective of their backgrounds and profiles. Moreover, dress professionally and build a supportive relationship with the team.