Related Blog Posts
The median income for insurance agents in 2020 was $52,180 per year.
For comparison, the median individual income in the United States is currently $35,805, while the median household income is $67,521. This means that the average insurance agent today exceeds the median income in the United States by over 65%. Though income amounts vary among insurance agents, the opportunities are promising.
Are you considering entry into the insurance field? Read on to see just how your prospects look in today’s market, and what you can do to increase your chances of earning more.
Insurance agents often have a mix of base salary and commission. However, the percentage of your income earned by salary vs. commission changes depending on which insurance company you write policies for and how your contract or employment is structured.
Taking salary and commission into consideration, the majority of insurance agents average between $47,698 to $58,914 per year. According to the U.S. Bureau of Labor Statistics, the lowest 10% of insurance agents in 2020 earned under $29,000, while the top 10% earned more than $127,840. This means that even the very lowest 10% of insurance agents earn nearly the median individual income in the United States, while the top 10% of agents earn over four times that amount.
An insurance agent’s total income is directly affected by their ability to close new insurance policies. To have the highest chances of reaching the median agent income or higher, you’ll need to study up on the factors that can increase your performance as an agent.
There are numerous pieces of the puzzle when it comes to an agent’s yearly salary and total income, which includes commission. Some factors are determined from the start, such as salary, commission structure, and type of insurance sold. Others are more personal, such as salesmanship and customer service skills.
Even if you are set on becoming an insurance agent, it’s worth your time to learn about the insurance industry before joining an insurance company. Let's look at a few factors that can vastly impact your income as an insurance agent and save you a great deal of time and effort in the future.
Almost all insurance agents earn at least a portion of their total income through commission sales. No matter what type of insurance you sell or what companies you represent, total sales volume is one way to really set yourself apart.
Sales can be made through leads you generate yourself, or through a lead-providing company like Nectar. You’ll also need to learn a few sales skills to make sure your closing rate is as high as possible.
Another option if you're looking for life-, health-, or Medicare-specific leads, check out the Assurance agent platform. It's a platform that provides live-transfer insurance leads according to your schedule and allows you to work from wherever you want to follow up with leads. It's a great option for agents who enjoy flexibility in their lifestyle.
Did you know that there are many types of insurance agents?
Property and casualty agents (home and auto) are the most common, but there are also life-specific and health-specific insurance agents, among many other types of insurance. Property and casualty agents almost always sell life insurance along with home and auto, but may not sell health insurance. Meanwhile, life insurance agents may also sell health insurance, or vice versa.
Most large insurance companies primarily sell property and casualty policies but also offer life insurance. These include State Farm, Farmers, American Family, Farm Bureau, Progressive, Geico, Liberty Mutual, and so on.
For comparison, life insurance-specific agents tend to make a bit more than insurance agents who also offer home and auto insurance. The tradeoff is that home and auto agency owners tend to have higher residual commission rates on home and auto policies than life insurance policy sales provide. As a result, life insurance agents spend more of their time selling policies throughout their careers, whereas agents who offer home and auto insurance spend more time on customer service and retention.
The type of insurance you choose to sell (and thus the insurance carrier you choose to sell for) doesn't only determine your income potential. It also affects your day-to-day priorities, residual income rates, and lifestyle potential.
A captive insurance agent works exclusively for one insurance carrier, whereas an insurance broker is allowed to write policies for several insurance companies.
It may seem at first glance like having the ability to write policies for many companies is the smartest option. However, there are advantages and disadvantages to each route. Both offer agents the potential to earn a respectable living. The “right choice” is really a matter of preference.
Captive agents earn a residual (yearly) commission between 5% and 10% on home and auto policies sold. They are typically only allowed to sell for the one insurance company they represent. However, some captive carriers do allow agents to sell through other small insurance carriers as long as their main carrier cannot or will not provide coverage to a specific client.
Captive agents only need to learn one insurance sales system, which saves time and makes policy sales and services easier to handle. Captive agents also have national brand name recognition, which often drives large numbers of sales by itself.
Insurance Carrier Examples: State Farm, Farmers Insurance, American Family, Farm Bureau, Shelter Insurance.
Insurance brokers are technically “on their own” and can therefore represent any number of insurance companies. This can be a bit misleading, though. Many insurance carriers have sales and volume requirements before they'll accept a new broker to write policies for them.
To overcome this hurdle, many brokers opt to join a brokerage group, which grants them access to the group’s list of carriers, as the group’s total sales and volume is thereby counted toward the carrier’s list of requirements.
Insurance brokers typically earn a residual commission of around 15% on home and auto policies sold. They must either learn multiple sales platforms (one for each insurance company they represent) or work with a brokerage group that has a single platform connected to all associated companies. In either case, brokers have more companies, policies, and processes to learn.
Though brokers do get some business sent to them through national brand recognition, it’s less than captive agents. Brokers make up for this fact with higher commission rates and the ability to “shop” multiple insurance carriers to offer the best policies for their clients, which can increase their closing rates.
Independent Insurance Company/Brokerage Examples: Geico, Progressive, Nationwide, Hartford, Liberty Mutual, Farmers Union.
One of the best parts about being an agent is that how much you earn at the end of the day is up to you. Once you’ve chosen the type of insurance you want to sell and the company(s) for which you sell, the rest is up to you. People who typically succeed in insurance have drive, creativity, authenticity, and charisma — traits that can all be developed and increased over time. There are also some highly important, specific techniques and processes you should learn.
To increase your sales success — and your salary — focus on how you find leads and follow up with them, and then work hard to retain them once they become customers.
Leads are key to your success as an agent. And you need a lot — as many leads as possible, really. You can do this by joining networking groups such as your local Chamber of Commerce. Regularly visit local mortgage lenders, realtors, and auto dealerships, and develop an email list for ongoing marketing. Look into purchasing high-quality insurance leads. Do whatever it takes to get business coming in the door.
When you get an insurance lead, follow up immediately. Doing so within the first hour makes you almost seven times more likely to close the sale than following up by even an hour later. When you work with Nectar, we provide real-time insurance leads that have expressed interest in what you offer. You can select the best time to receive your leads too, so you're ready to follow up instantly.
The bulk of insurance agent commissions come from residual policies (those that renew year after year). So, customer retention is extremely important. Practice customer service skills. Read books on the subject, keep detailed notes on clients in your CRM (customer relationship management software), and get really good at listening to people. Retaining a current customer, after all, is five times less expensive than acquiring a new one.
Many people get into the insurance industry because there's no limit to their earning potential. How much you earn really is up to you. Because insurance agents are offered commission on sales as part of their compensation, they can earn more year after year.
The way to maximize your insurance agent career — especially early on — is to fill your calendar with contacting and following up with leads. Rely on Nectar to give you the insurance leads you’ll need to launch your agency. Our leads are real people currently looking for insurance coverage right now, and they're eager to connect with you.
This article reflects the features of Nectar as of the date of publication. Features are subject to change at any time. This article is meant for informational purposes only, it is not a guarantee that using Nectar will help you achieve specific business or financial results and is not intended to serve as the sole recommendation for any business financial decisions.
