Hey, good morning! Rich here with Summit Life Group. I want to take a few minutes to talk about some of the differences between being a real estate agent and a life insurance agent. Oftentimes, people may be considering one of these two different paths, so I thought I’d share my perspective.
Keep in Mind:
Please keep in mind, if you’re reading this, that I am a life insurance agent, and I own a life insurance agency. We provide training and support for independent life insurance agents, so naturally, I may be biased in that direction. However, I also have some of my best friends in the world who are very successful real estate agents, and I have a great deal of respect for them and for all real estate agents. I want everyone to be successful. So, while I’m a big fan of both fields, there are some similarities and differences worth discussing, especially for those considering one of these two career paths.
First Similarity:
First, let’s talk about the idea that people are often passionate about something, which might lead them to pursue it as a career. While there is some truth to that, I’ve learned over time that passion isn’t necessarily a prerequisite for success. For example, you can love real estate and be passionate about it, which makes sense if you’re looking to sell it. I enjoy real estate myself—I like to check out houses when I travel and compare prices, which I find very interesting. However, I didn’t have a passion for insurance when I first got my license. What I found was that as I got better at it and became more immersed in it, a passion developed over time. So, while passion can be a factor, it’s not necessarily the main driver of success.
The process of entering either field—insurance or real estate—is similar. It doesn’t matter much what your educational background is. In both cases, you’ll need to take a pre-licensing course, pass a state exam, and then obtain your respective license. After that, there are continuing education requirements and other similar steps. I can’t say for sure which process is harder or more costly, but I can tell you that both fields are commission-based. Whether you’re selling life insurance (which is what we specialize in) or real estate, your income will be driven by commission. Even if you’re in a setup where there’s a base salary, it’s still performance-based.
One thing worth noting is that the success and failure rates in both fields are quite similar. A large number of real estate agents and insurance agents don’t make money and eventually quit. From what I’ve seen, most of the people who fail in either field tend to do so within their first year. And when I say fail, I don’t mean it in a negative way—failing forward is part of success. Most people who leave either industry don’t just quit outright; they often hold on to their licenses for years while being inactive. However, just holding a license doesn’t mean you’re actively working in the field.
Second Similarity-
Another similarity is that many people start part-time in both industries. However, those who eventually transition to full-time tend to be the ones who make the most money. Going full-time can be difficult, and the first year is usually the hardest, especially in the insurance business. While there are people who make six figures in their first year, most of the top performers in both industries were not highly successful right away. Success often comes after a year or more of consistent effort and learning.
In both real estate and insurance, the top 1% make the most money. If you want to make a lot of money, you’ll need to aim to rise into the top 10%, 5%, or even 1% of agents. Now, let’s talk about some of the differences between the two fields.
First Key Difference-
In real estate, the average commission size is much larger than in life insurance. For example, selling a $300,000 home can result in a significant commission. While there are large commissions in life insurance as well, you often have to work up to that market and be well-qualified. On average, insurance commissions tend to be smaller, although they can still add up over time.
Real estate is also more cyclical than insurance. The real estate market tends to fluctuate more based on factors like interest rates, the economy, and even the time of year. For example, spring usually sees an increase in home sales. While successful agents can thrive in any market, these fluctuations can create challenges, especially for newer agents. On the other hand, insurance tends to be more consistent throughout the year and less affected by external factors.
Second Key Difference-
Another key difference is inventory. In real estate, inventory can be a challenge, especially in times when there are fewer homes for sale. This can limit the number of sales that can be made. In contrast, the “inventory” in life insurance is essentially unlimited. Most people are underinsured, and there’s a growing demand for life insurance, especially as many agents retire.
A big advantage in life insurance is the ability to earn renewals or residual income. In real estate, you can build a strong book of business and generate repeat clients and referrals, which is great. However, in life insurance, you can also earn a small recurring income from the clients you helped in previous years. Over time, this renewal income can add up, which makes the business more stable as you progress. Of course, you need to be in the right setup to receive those renewals, as not all agencies offer them to their agents.
In conclusion, both industries are great, and you can be successful in either path. The principles of success—such as mentorship, training, and consistency—are the same in both fields. If you want to succeed, it’s crucial to find quality mentorship and training to help you learn the ropes. Success in either field won’t come overnight, and it’s important to be patient and consistent, especially during the first year.
I hope this helps! Again, my name is Rich with Summit Life Group. We train and support independent life insurance agents nationwide. If you’re interested in learning more about life insurance or partnering with an agency, feel free to fill out the link below to learn more about us. Have a great day!
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