Life Insurance Agents and Brokers

Life insurance agents act as field sales representatives for the companies to which they are under contract. They may be under direct contract or work through a general agent who holds a contract. Insurance brokers represent the insurance buyer and do not sell for a particular company but place insurance policies for their clients with the company that offers the best rate and coverage. In addition, some brokers obtain several types of insurance (automobile, household, medical, and so on) to provide a more complete service package for their clients.

The agent's work may be divided into five functions: identifying and soliciting prospects, explaining services, developing insurance plans, closing the transaction, and following up.

The life insurance agent must use personal initiative to identify and solicit sales prospects. Few agents can survive in the life insurance field by relying solely on contacts made through regular business and social channels. They must make active client solicitation a part of their regular job. One company, for example, asks that each agent make between 20 and 30 personal contacts with prospective customers each week, through which eight to 12 interviews may be obtained, resulting in from zero to three sales. As in many sales occupations, many days or weeks may pass without any sales, and then several sales in a row may suddenly develop.

Some agents obtain leads for sales prospects by following newspaper reports to learn of newcomers to the community, births, graduations, and business promotions. Other agents specialize in occupational groups, selling to physicians, farmers, or small businesses. Many agents use general telephone or mail solicitations to help identify prospects. The emergence of the Internet has changed the insurance business. Today, customers are able to conduct research about life insurance policies and obtain quotes on the Internet. Then they contact agents or the insurance company directly to obtain more information and/or purchase a policy. Regardless of the method they use to reach potential clients, all agents hope that satisfied customers will suggest future sales to their friends and neighbors.

Successful contact with prospective clients may be a difficult process. Many potential customers already may have been solicited by a number of life insurance agents or may not be interested in buying life insurance at a particular time. Agents are often hard-pressed to obtain their initial goal—a personal interview to sit down and talk about insurance with the potential customer.

Once they have lined up a sales interview, agents usually travel to the customer's home or place of business. During this meeting, agents explain their services. Like any other successful sales pitch, this explanation must be adapted to the needs of the client. A new father, for example, may wish to ensure his child's college education, while an older person may be most interested in provisions dealing with retirement income. With experience, agents learn how best to answer questions or objections raised by potential customers. The agents must be able to describe the coverage offered by their company in clear, nontechnical language.

With the approval of the prospective client, the agent develops an insurance plan. In some cases, this will involve only a single standard life insurance policy. In other instances, the agent will review the client's complete financial status and develop a comprehensive plan for death benefits, payment of the balance due on a home mortgage if the insured dies, creation of a fund for college education for children, and retirement income. Such plans usually take into account several factors: the customer's personal savings and investments, mortgage and other obligations, Social Security benefits, and existing insurance coverage.

To best satisfy the customer's insurance needs, and in keeping with the customer's ability to pay, the agent may present a variety of insurance alternatives. The agent may, for example, recommend term insurance (the cheapest form of insurance since it may only be used as a death benefit) or ordinary life (which may be maintained by premium payments throughout the insured's life but may be converted to aid in retirement living). In some cases, the agent may suggest a limited payment plan, such as 20-payment life, which allows the insured to pay the policy off completely in a given number of annual premiums. Agents can develop comprehensive life insurance plans to protect a business enterprise (such as protection from the loss resulting from the death of a key partner), employee group insurance plans, or the creation and distribution of wealth through estates. The agent's skill and the variety of plans offered by the company are combined to develop the best possible insurance proposal for customers.

Closing the transaction is probably the most difficult part of the insurance process. At this point, the customer must decide whether to purchase the recommended insurance plan, ask for a modified version, or conclude that additional insurance is not needed or affordable.

After a customer decides to purchase a policy, the agent must arrange for him or her to take a physical examination; insurance company policies require that standard rates apply only to those people in good health. The agent also must obtain a completed insurance application and the first premium payment and send them with other supporting documents to the company for its approval and formal issuance of the policy.

The final phase of the insurance process is follow-up. The agent checks back frequently with policyholders both to provide service and to watch for opportunities for additional sales.

Successful life insurance agents and brokers work hard at their jobs. Because arranging a meeting often means fitting into the client's personal schedule, many of the hours worked by insurance agents are in the evenings or on weekends. In addition to the time spent with customers, agents must spend time in their homes or offices preparing insurance programs for customer approval, developing new sources of business, and writing reports for the company.



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