The Reason 93% of Life Insurance Agents FAIL (2024)

This article is a written adaptation of the video available on our YouTube channel, LIFE180.

It’s misleading to say that 93% of agents fail in this business, as no one gets fired. A more accurate statement is that 93% of agents choose to leave within three years.

Today, we’re discussing the primary reason I believe agents are leaving this business. Before diving in, I want to share my inspiration for this article. I recently completed a live video training session with some agents on a panel I host every Wednesday. As the discussion progressed, I found myself getting increasingly passionate about certain topics.

During this discussion, I began to recognize certain aspects of this business, especially concerning new agents and how they manage their practices. I realized there are elements I hadn’t considered before.

This is why I am passionate about creating content and engaging in discussions like these. It's incredibly rewarding to collaborate with agents on my team who are going live, starting their own YouTube channels, and producing valuable content.

But diving straight into it, what struck me during that session was something that had never occurred to me before.

You Don't Get Fired As A Life Insurance Agent...You Quit

We often hear about the statistic that 93% of agents leave this business within the first three years, but one thing that struck me during the live session is that agents don't actually fail out of this business.

When you join LIFE180 or any agency, you're not in danger of getting fired. Once you obtain your license, certifications, and secure contracts with different carriers, even on a career contract like with MassMutual, failing to meet quotas doesn't result in termination. You might lose some benefits, but you can continue selling life insurance.

In this business, no one fires you unless you commit something illegal or unethical, such as getting a DUI, which could jeopardize your license.

In this business, no one fires you. Therefore, I believe it's inaccurate to say that 93% of agents fail. What I will say is that within three years, 93% of agents choose to quit. They quit on themselves, abandoning their dreams and goals due to a lack of clarity and emotional connection to their objectives.

What Career Track Are You On?

As I was considering this, I realized it's important to delve deeper into this topic. Let’s run some numbers and discuss the potential paths available. Think about the track you're on and envision it as a ladder. Most people in this business have the opportunity to earn between $50,000 to $100,000 per year.

Track one allows you to earn between $50,000 and $100,000 per year. If you're in this income range, you're likely doing well. Earning $50,000 is above the average income, and $100,000 places you in the top ten percent of earners.

So, what does it take to be in the top 10 percent of income earners in the USA? The average income for the top 10 percent nationally is around $167,000. For the top 15 percent, according to USA Today in 2022, it's about $95,000. Therefore, let's consider earning $95,000 as being in the top 15 percent of income earners.

I would classify that as successful. Being in the top 15% of income earners means you're earning more than 85% of people. If you're making $100,000 a year, you're in the top 15%. It's fair to say that you're successful at that level.

Now, when you enter this business, it’s challenging and requires you to learn many new skills. However, the one thing I will say is that this business will push you to become the person you need to be to achieve the life you want to live.

There’s no option of just getting a job with a fixed salary and expecting things to work out on their own. This business will push you to grow and become the person you need to be to create the life you desire; it won't happen by default.

The Good and Bad About W2 Income

So, let’s consider track one: the traditional J-O-B. As a W-2 employee, you're tied to your career, earning a salary, and likely receiving standard benefits such as two to three weeks of vacation.

Recently, my wife and I were discussing an upcoming retreat we're hosting in the Dominican Republic to celebrate her 15 years of sobriety. We're inviting anyone interested to join us for this amazing health and wellness event. It will be a week-long retreat featuring yoga, breath work, and many other exciting activities. If you'd like to join us, please reach out.

However, many people she contacted responded that they couldn't come because they had already used up their vacation time or exhausted their travel budget. We found it disheartening that people have to live with such limitations, unable to fully control their life choices and opportunities.

When we consider this track, we need to reflect on what we're truly pursuing. Earning $100,000 provides stability, without a doubt, but it often comes at the cost of freedom. This freedom is sacrificed as your time and choices become restricted.

So, the question becomes: what are you actually achieving if you rely solely on this income? Even if, ten years later, due to inflation, you're making $145,000, you may still find that your freedom and flexibility in life are limited.

A Different Option For A Career Path

Let's explore another track, track number two. Before discussing why agents fail, it's important to delve into this alternative path.

So, perhaps in the beginning, you're struggling and earning around $30,000 per year because you're still growing into the person you need to become. Here’s the thing: if you commit to continuous improvement, whether in your sales skills, communication, or product knowledge, you can steadily increase your income.

Start with $30,000 and strive to get incrementally better each year. Perhaps you reach $33,000, then $37,000, and so on, with consistent effort. Eventually, you may have a breakthrough year where everything clicks, and you hit $75,000, and then even $100,000. It’s about sustained growth and improvement over time.

While I'm not an expert in this field, what I do know is that if you conduct your business correctly, you can benefit from renewals and passive income streams. Ten years down the line, you could potentially start each year with $80,000 to $100,000 in passive income, which supports your ongoing business efforts and client service.

If you reach $100,000 in annual earnings, with consistent production, you could increase your income to $180,000 to $200,000. Moreover, the $80,000 to $100,000 in passive income you start each year with will grow, becoming more substantial over time.

The challenge with this process is that many agents fail because they enter the business thinking they're just doing life insurance sales. While that's a significant part of the job, what they're really establishing is a life insurance business.

The Reason Life Insurance Agents FAIL

Here's the thing: when most people think about the life insurance sales process, they focus on the steps involved, having meaningful conversations, scheduling appointments, closing sales, processing applications, navigating underwriting, and providing ongoing client service. These are all crucial components of the sales process.

The challenge is that all these tasks are integral to the life insurance business. While many focus solely on the sales process, believing they have to handle everything themselves, the true value lies in building a scalable practice. This growth happens primarily through effective conversations, appointment setting, and closing sales.

Personally, I can tell you that I've never taken a life insurance application, not even in my early years in the business. It's crucial to consider how you're constructing and developing your business model.

Many people enter this business with the mindset of being a life insurance sales agent, thinking they'll simply sell policies. However, they often don't fully grasp the process initially. They start having conversations, scheduling appointments, and closing sales without fully understanding the next steps, such as taking applications.

Don't Be A Life Insurance Agent...Be A Life Insurance Business Owner

Then they encounter challenges with underwriting and client servicing. The reason these issues arise is often due to not managing their business cycle effectively and failing to outsource these responsibilities. They could consider hiring an employee with a salary, even if it's $50,000, or outsourcing these tasks to someone who charges a percentage, perhaps around 20%, to handle them efficiently.

Because here's the reality: many individuals prioritize applications, underwriting, and product knowledge, all critical aspects, no doubt. However, here's the catch: while product knowledge aids in closing sales, spending excessive time on these administrative tasks rather than focusing on enhancing skills in conversations, appointments, and sales closing means you may struggle to thrive in this industry.

The Life Insurance Agent Career Death Cycle

Here's why this approach is problematic: when you handle one-off appointments in a repetitive cycle, conducting a sales call, having a conversation, setting an appointment, closing the sale, and taking the application, you spread yourself too thin and can't focus on the most critical aspects of growing your business.

What happens is this entire process, from sales call to application approval, typically takes about 45 to 90 days. During this time, you're tied up with underwriting and getting clients approved, which means you're constantly juggling sales and administrative tasks.

Over a 45 to 90 day period, a productive agent can build up a pipeline with 10 to 15 deals. This is if you're doing a good job and effectively managing your sales efforts.

Now, with 10 to 15 deals in the pipeline, each one will demand a significant amount of your attention, focus, and energy. You'll need to check underwriting requirements daily to manage these deals effectively.

As you focus on managing these 10 to 15 deals, your capacity for prospecting diminishes. The energy required to handle the applications and underwriting consumes your day, leaving you feeling overwhelmed with problems and administrative tasks. This shift in focus can hinder your ability to bring in new business and grow your practice.

This shift pulls you away from the activities that actually generate income, creating a vicious cycle. Over that 90-day period, you might successfully close and get paid for 9 to 10 of those 15 deals. However, by the time you complete these transactions, you've lost your momentum in prospecting and generating new leads, making it challenging to sustain consistent business growth.

This momentum you initially had dissipates because you shifted your focus to administrative tasks. After 90 days, you find yourself needing to start over. You've crushed your momentum and, as a result, lost your habit, pattern, and discipline. You might even feel like you've lost your mojo and the fluidity in your natural conversations with clients.

Rebuilding your momentum takes extra effort. You have to start from scratch by rebuilding your pipeline, initiating new conversations, setting appointments, closing deals, and processing applications. This cycle can be exhausting and hinder long-term success if not managed properly.

When we consider this process and recognize that this is where the real money lies, we can turn to valuable insights from experts. Dan Martell, in his book, shares key strategies that my friend Charles Newton introduced to me.

Fortunately, I've been fairly adept at this throughout my life, although there's always room for improvement. One key focus in Dan Martell's book, which I've gotten better at, is an area where I can still see potential for growth. Maybe it's been luck, intuition, or a combination of both, but I've managed to navigate it well so far.

In this industry, I emphasize the importance of mastering the art of conversation. If you struggle with this aspect as a life insurance agent, it doesn't mean you can't excel in the field. Instead, it's crucial to dedicate time and effort to improve your conversational skills.

Become highly proficient in client servicing, taking applications, handling underwriting, and providing excellent customer service. Although these tasks contribute to about 20% of the deal's overall value, they allow you to handle larger volumes. To truly succeed, it's essential to find a partner who excels in the conversational and sales aspects of the business, leveraging their strengths to complement your own.

How To Fix The Death Cycle of You Life Insurance Business

If you can find a partner who excels as a rainmaker, focusing on the conversational and sales aspects, they can handle about 80% of the deal. Meanwhile, the person handling underwriting and client servicing manages the remaining 20%. This type of partnership can be highly effective and mutually beneficial in maximizing productivity and success in the life insurance business.

The primary reason for failure in this industry is attempting to handle everything independently. Instead, individuals should focus on leveraging their unique abilities, concentrating on revenue-generating activities, and refining skills that directly contribute to achieving desired outcomes. By prioritizing these areas and possibly partnering with others who excel in complementary tasks, success becomes more attainable in the competitive field of life insurance.

When you disrupt your momentum and take on the burden of handling every aspect of the process alone, you're functioning as a life insurance agent rather than a life insurance business owner. Owners focus on strategic growth, delegation, and optimizing processes to scale their operations effectively.

It's crucial to approach your role as a business owner in the life insurance industry. Successful business owners are willing to invest in their enterprise. This includes investing in marketing systems, personnel, streamlined processes, and whatever else is necessary to ensure growth and efficiency. Moreover, they invest in their own development through mentorship and continuous learning to achieve their business goals effectively. This mindset is key to thriving in the competitive world of life insurance.

My encouragement to you, especially if you're new to this business, is to define clearly the income level you aim to achieve and then reverse-engineer your path to reach that goal. If you haven't already watched our video discussing the formula for determining the steps needed to earn your desired income in this industry, I recommend checking it out for insights tailored to your specific circ*mstances.

Once you've determined your income goals and reverse-engineered your path to achieve them, my encouragement to you is to focus on building your business with dedication. It's important not to give up on your dreams. In this industry, 93% of agents don't fail because they fail in their work. The only true failure occurs when you give up on pursuing your aspirations. Even if you find yourself in a comfortable position, such as within the top 15% income bracket, it's essential to continue striving and growing.

I'm not placing any judgment or assessment on that. If earning within the top 15% income bracket is your goal, that's fantastic and commendable. However, if you aspire to achieve more, for instance, if you're currently earning $50,000 and you aim to break through to $65,000 within the next decade, then settling for less may not align with your long-term happiness and aspirations. It's about striving for what truly fulfills you and propels you toward your desired future.

If there's a possibility to pursue a different path, perhaps working part-time initially and gradually transitioning to full-time, or dedicating yourself more intensely to achieve your goals and attain freedom within a few years, why wouldn't you explore that opportunity?

Building the life and career you aspire to, with the freedom and fulfillment you seek, is a worthwhile pursuit that aligns with what we've discussed. It's about seizing opportunities that lead to the life you envision for yourself.

Certainly, achieving similar results doesn't have to be limited to the life insurance industry. There are numerous other business opportunities that can offer comparable outcomes. However, my expertise lies in the life insurance sector, which is why I focus on it and speak passionately about it. The key is finding a path that resonates with you and allows you to achieve your desired results and personal fulfillment.

The Reason I LOVE The Life Insurance Business

I find the beauty of our industry lies in its unique ability to directly correlate earnings with the value we bring into people's lives. Few other industries offer such a direct relationship between personal contribution and financial reward at the level we experience in the life insurance business. It's this direct impact on individuals' lives that makes our work deeply rewarding and fulfilling.

I hope you found value in this discussion. If you did, please consider liking and sharing it. If you know other agents who could benefit from this perspective, feel free to pass it along to them. Until next time, have a blessed and inspirational day!