Becoming a life insurance agent is a multiple step process. Very basically it’s a two step process. First you will need to write a qualifying LLQP (Life License Qualification Program) exam, available at various educational providers in Canada. Successfully completing that exam qualifies you to write the government licensing exam. Once you have written and passed the government exam you are almost able to act as a life insurance agent. The final step requires that you get sponsorship for your license from a life insurance company. While this is mostly just a step in the paperwork, you cannot sell life insurance until you have both the exams and the company sponsorship.
There are various ways to prepare for the exams. Many involve self study, some companies who recruit agents directly provide classroom settings to prep people for the exams. Time frame can be as short as a few weeks to study and pass the initial exam. However, you will need to book your final exam with the government, then receive proof from the government that you have passed the exam, and then complete the company sponsorship. The company sponsorship consists of a background check. And again, you cannot sell insurance until all of those steps are completed – and the full process can take 1 to 2 months.
The Financial Services Commission of Ontario has a document that describes all of this in further detail, you can download it here: http://www.fsco.gov.on.ca/english/licensing/BcmLifeSickAgnt.asp
Agent? Or Broker?
While there are strict technical definitions between those two terms, effectively Canada has two basic distribution methods, ‘career’ or agent shops, or the brokerage system.
Career or agent shops are set up and run as distribution channels for a specific company. Sun Life, Freedom 55 (London Life), and Primerica are examples of Canadian companies that run their own career shops. If you are an agent under this system you will primarily offer only that company’s products to your clients. The expectation is that in this environment you would receive support and training from the insurance company.
The last two decades has seen a shift from the career system to a brokerage system. In this system, agents or ‘brokers’ are left to their own devices. They receive little if any support from insurers in terms of training or office expenses. Under this distribution method however, companies typically do not want to deal with thousands of individual agents who each may only send them one or two cases a year. So there is a middle layer in this distribution method called an ‘MGA’ or Managing General Agent. Under the brokerage system, agents typically work with a single MGA. The MGA then offers a variety of life insurance companies to their brokers. Brokers send their business to the MGA, who then funnels all of their cumulative business to the insurance companies. This allows the companies to deal with the larger MGA’s rather than individual brokers and agents.
In years past it was common for agents to start out under the career or agency system and receive their training under that umbrella. Once the agents were experienced, many would then strike out on their own under the brokerage system. Today if you start out as a broker you will likely need to find and work with a specific MGA.
After the LLQP
The material covered in the LLQP will provide you with a basic understanding of life insurance principles, it ill prepares you for the actual business of selling life insurance. Two big deficiencies that you will need to cover are the administrative issues and the sales issues.
Administration
In today’s environment, life insurance is a well regulated marketplace. As an agent or broker you are required to know more than just how to sell insurance. Some of the things you should be well aware of are:
- DNC (Do not call list) – if you are telemarketing, you will need to be fully aware of this legislation and how it applies to you.
- Proceeds of crime and money laundering – The financial industry has new regulations on what you are required to do, and they are both very strict, and non-intuitive. Your duties under this legislation likely far more than you would expect. As an agent you should be fully aware of and compliant with this legislation and not simply treat it as legislation you don’t have to bother with. Learn it and abide by it. More information available at http://www.fintrac.gc.ca/
- Life insurance contracts – the policy that you sell is a contract. You should actually read and understand the contracts you are selling. Most companies have sample contracts available. Read them.
- Life insurance applications – they form part of the contract. Get one from your MGA or company and read it, cover to cover. Even the fine print is important, you should know it and understand. Completing applications ahead of time is also a good confidence building exercise prior to any actual sales.
- Know your client – as an agent you are now required, and may have to prove, that you have done a proper analysis with your clients. More documentation on this obligation (and other) is available at http://www.clhia.ca/advisors/index.html
As a professional, you need to understand and follow all of the above, or risk losing your license.
Sales
There are many sales techniques, and many great salespeople. However the key to longevity in life insurance sales isn’t just sales ability (in fact, you can be succesful with little to no sales skills). It’s having an ongoing stream of people to talk to – every day, day after day, year after year.
In today’s environment many experienced agents work their existing block of business. Once you have an established client base there may be enough business from referrals to keep a broker working. However this takes many clients and years of building a business.
For new brokers and agents, you need to have a system that provides you with some number of new prospects every day. Some companies will basically throw the phone book at new agents and tell them to start calling. This is not sustainable. Other companies will show you how to work your friends and family as prospects. Again, this is not sustainable.
In the long term you will need some type of system to provide you with prospects. Some agents use the internet. Others use telemarketers. Yet others use direct mail. It doesn’t matter what method you use, as long as you have some number, 5, 10,15, 20 or more, new people to speak to every day. Without such a system you will eventually run out of people to speak to who are interested in insurance, have no sales and thus no income. Note that ’schmoozing and networking’ is not a system. While many professional agents do network, that alone is not enough to provide a sustainable business model.