View Full Version : building an insurance business
03-13-2002, 01:38 PM
Has anybody here try to sell insurance to build their own buisness? I have attended this seminar hosted by this this company that is part of the Aegon life insurance enterprise and people, your friends, etc. would recruit you to join in and become a rep. so you can start to build an empire yourself providing retirement and wealth building products(i.e. a form of life insurance policy) to people. The concept of the payment model and "system" is like Amway. Anybody heard of this or even interested?
03-13-2002, 01:47 PM
ever hear of AL Williams?
what you describe sounds like WMA, which is an offshoot of the old AL Williams organization
03-13-2002, 02:31 PM
It's now called The World Financial Group, a member of the Ageon Life Insurance. The plaque in the office still has the name WMA on it. I am trying to get some feedback from people who has experience in this.
03-13-2002, 02:48 PM
I was once licensed and have spent most of my career dealing with agents. Primerica (AL Williams) has a poor reputation amongst the insurance community, I would say rightfully so.
Building a block of insurance business can be far more lucrative than an actuarial career, and can offer more freedom. An actuarial background can be great for this. However it seems that you are being sold something here and I suggest you pause and consider the following:
- is selling insurance what you want to do? Don't gloss it up - it's selling insurance. If you are a believer in the product (as I am) see below, if you don't have a clear picture of the value of insurance to consumers then you won't be successful
- can you handle rejection? It's part of the job. You have to take 10 no's to get one yes. This is what kills most sales careers in the industry, so don't take this aspect lightly. And it is rejection - I've sat on the phone with a list of names of people I don't know, listening to 'no', 'no', ...
- If it's what you want to do, accepting the first sales job from a company because they hit you first, is the wrong approach. You don't have to sign up with them, in fact you probably shouldn't (and I don't even know who you're talking about). Research your options on support and getting licensed. The newsgroup misc.industry.insurance is one starting point, there are some oldtimers hang around there who will help you. The biggest thing you will need to worry about in the first two years of this career is support and training so look heavily into that. You should also ask some tough questions of the company - like what percentage of their agents are still with them after 2 years? after 5 years? What is the average annual commission for their agents? And get hard answers, not pat replies to these questions. You'll be surprised - 80% of agents fail in the first two years, and I wouldn't be surprised to see annual commissions in the range of $15,000-$25,000.
Of course, if you CAN do it, your income is unlimited. I've seen this too.
Oh, one last thing - the specific approach you describe above is just about exactly NOT the way you want to start your business.
<font size=-1>[ This Message was edited by: glenn on 2002-03-13 14:50 ]</font>
03-13-2002, 02:49 PM
03-13-2002, 03:14 PM
I once got suckered into going to one of the WMA meetings. I couldn't believe they actually thought I would quit my job and submit myself to that scam.
I was mildly entertained by the hordes of subintellects that were telling me that they were all making 15K a month selling variable life insurance.
03-14-2002, 12:09 PM
Here is an actuarial angle to this thread. Check out the quote from the link above:
Look at the example chosen by the Western Reserve Life(WRL) actuaries to illustrate the benefits of the Prospectuses for WRL Financial Freedom Builder Individual Flexible Premium Variable Life Insurance Policy and WRL Series Fund, Inc.(I received the 1998 prospectus as a solicitation to join the WMA and buy the VUL). A 35-year-old male nonsmoker paying a $2,000 annual premium receives a death benefit of $165,000. At age 65(retirement), the cash value in the account(assuming the maximum allowable gross interest rate of 12% for such projections) would be $287,206(WRL Series Fund Prospectus, page 45). One reason is that the subaccount-mortality and portfolio-operating fees reduce the interest rate 1.85% the first 15 years, and 1.70% t
he last 16(if you even believe their claim that the fee might be reduced). Even if you purchased the same expensive insurance, simply investing in the mutual funds directly without the WRL's pickpocket interest fees would yield a cash value of $430,775. Using a price quoted for the same 35-year-old non-smoker category from Zurich Direct (January 1999), and adjusting the price downward to reflect the $165,000 death-benefit coverage, buying term and investing the difference directly into the same mutual funds would yield a 30-year cash value of $505,198.
The WRL actuaries chose to illustrate Option A only. In Option A, if you die, your heirs receive either the death benefit or the cash value, but not both(whichever is greater). The cash value is multiplied by a limitation percentage(page 15 of the Prospectus). Even if you did receive both, imagine you died at age 65. The total of the WRL $165,000 death benefit + the WRL cash value of $287,206 = 452,206, which is less than the total cash value of the alternative cash value of $505,198 not even including the $165,000 death benefit($505,198 + $165,000 = $670,198). Under the WRL plan, the heirs of the insured would actually receive only $338.577.
The actuaries chose not even to illustrate Option B, which allows one to receive both the death benefit plus the cash value(times the limitation percentage) because the premiums must be increased proportionally to the coverage, which will significantly lower the cash value of $287,206 calculated for Option A. Similarly, the WRL Freedom Elite VUL has mortality fees which reduce the earned interest rate by 0.90% and portfolio subaccount fees ranging from 0.44% to 1.20%. The total reduction, therefore would range between 1.34% and 2.10% depending on the choice of subaccounts. Again, this interest-rate reduction would lead to an enormous reduction in customer cash value when compounded over a long time, e.g., 30 years to retirement.
03-14-2002, 02:49 PM
<font size=2>That excerpt failed to take into account the tax implications of the mutual fund. I mean, isn't that the main draw of variable insurance?
<font size=-1>[ This Message was edited by: The Mister on 2002-03-14 14:50 ]</font>
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