Whenever a NEW agent calls me and tells me they want to build a team right now, I cringe and typically offend them (not on purpose) by telling them the truth. The truth being: You have nothing to offer agents.
In my opinion, NEW agents who want to recruit are scared of selling life insurance and want the easy way out.
These agents typically get their life insurance license and freeze. As outgoing and friendly as they are, they can’t hack it in life insurance sales. There’s A LOT of money to be made in life insurance and many agents see it…but it’s just not in them to do it. So how else can they use their life insurance license? They look into recruiting.
Here’s what most agents don’t realize about recruiting in life insurance:
1. Agents have no idea how long it takes to build a livable income off of overrides.
This is something no one takes into account. Many agents will get a 5%-10% override to start IF they can find someone to do it. Most companies (not all) will pay the override as-earned even if your agents are advanced. Any way you work the numbers, it will take you at least 1 year to make a livable income and that’s IF you’re lucky.
Lets say your agents PLACE $50,000 of life insurance this month (which is a ridiculously high number for a new recruiting agent).
$50,000 x 10% (override) = $5000
$5,000/12 (as-earned) = $416/mo. for 12 months
Those overrides won’t even be paid until late the following month.
Reality is even if you’re killing it recruiting, it’s going to take at least 1 year to build a livable income…most likely 2-3 years.
Here’s another reality check. I have a friend who is strictly an independent recruiter. He told me he’s sold 3 policies in his whole career and he has over 50 agents in his downline. His agents place less than $8,000 every month and he gets a small override (most premium is from 2 agents). Lets call it $800 if it’s a 10% override. Now that override is paid as earned. So that’s $66/mo. as earned for 12 months.
This guy doesn’t have any marketing systems. He just has the ability to hand out great “street level” contracts. Being a new agent with nothing to offer other agents, that’s what you can expect.
2. They have no idea of the risks involved.
Most agents must have advances to live off of the first few years. When you recruit agents and are offering advances, then you’re on the hook for their chargebacks if they don’t pay them back. Let me tell you, it’s not IF that will happen, but it’s WHEN.
I have many industry friends who have been on the hook from an agent’s $600 chargeback to a $45,000 chargeback. Yes, the writing agent is legally responsible, but if you’re the upline, you’re signing off on the “ok” to provide advances. It’s like co-signing for a loan. If the agent skips town and is never to be heard from again, that chargeback rolls up to you as the upline.
I personally have never had an agent skip out on a chargeback, but that’s because I don’t hand out contracts to anyone. Only those that I’m working with. I know it’s bound to happen and if it’s big enough, you better believe I’m hiring a private investigator to find them and flying out to their home, repo man style.
As you can see, recruiting is overrated by new life insurance agents.
Here’s what I recommend if you want to build a down line of agents:
Become a successful producing agent first.
Be able to add value for your agents and train them to make more money – that’s the core of what every agent wants.
Get to the point where you can say “this works because I’ve done it myself”.
Establish relationships within the industry – you’ll be surprised how many opportunities will come your way when you’re a successful agent.
Get here and you’re ready to start the tedious and long process of recruiting.