There are many myths and assumptions about being an insurance agent – unstable and risky income, stressful job environment, and a heavy focus on traditional face-to-face sales. In this article, we are going to look at how much an insurance agent actually earns and discuss and debunk some of the risks involved..
Myth 1: Need to have a background in insurance or sales to succeed
After spending seven years in the travel industry, Angeline Yong, took a leap of faith and joined Income’s SMA programme in 2021.
“Some of the skills that I have picked up from my previous employment continue to be relevant in my current role. For example, interacting with people and customer servicing are all skills that remain relevant regardless of which industry I go into,” she said.
Mid-career switches are never easy and venturing into the insurance industry with no background knowledge of the field is no small feat. For many of us, it would be outside our comfort zone. However, for Yong, she adapted quickly with the support of the management team and experienced supervisor. It also helped that the SMA programme is designed to allow people who are new to the industry, to learn and acquire proficiency at their own pace.
The truth is, most of our agents don’t have a background in insurance sales. They possess other innate, transferable qualities that make them quick learners and successful leaders. Though many of our top candidates have some prior experience in sales, business, and/or marketing, certain personality traits, such as having an entrepreneurial spirit, self-motivation, and the ability to communicate effectively, can lay the right foundation for success in becoming an insurance agent. From here, we equip our agents with focused training, continuing education opportunities, and one-on-one mentorship programs designed to help them learn the ins and outs of working as an insurance agent.
Myth 2: Unstable income
Joining the SMA programme at the start of 2021, Jacky Tan, said he was able to receive a monthly salary even while studying for the required insurance papers that are a prerequisite to becoming an adviser. Being able to earn as he learns gave him assurance and one less worry while studying for the papers.
As part of the SMA programme, trainees go through a personal mentorship programme with Income’s senior management team. In Tan’s case, his mentor is Income’s chief agency officer, Tan Chuan How himself.
As with any other jobs, it can be challenging. However, he finds it manageable with an understanding and experienced supervisor who is always around providing guidance. Coupled with good colleagues, he is able to build a strong support system to overcome challenges.
A casual search online will not reveal any official statistics on how much financial advisors really earn. This is normal as the amount that financial advisors make varies according to how many clients they can get.
However, if you were to read on Reddit or other forums, we can see some advisors in their 20s making $30,000 to $100,000 per year. These advisors may still be schooling and are bringing home $2500 to $8000 monthly, which is pretty impressive.
I also manage to get this figure from Indeed on a particular insurance company in Singapore. The average pay for financial consultants aka financial advisors is around $4,366 per month.
That’s not all.
As financial advisers advance in their careers and begin to expand their teams, they could earn between $200,000 and $500,000 annually, which is about $16,ooo to $40,000 monthly.
On top of that, we should also consider the bonuses that agents may receive in addition to their commission, which will boost their earnings.
Of course, none of the figures above covers business expenses such as transportation, telephone, and gifts. Furthermore, unlike office workers, most financial advisors do not have a CPF contribution or medical coverage.
Still, we can confidently assert that it is a profitable industry.
Insurance Commission Structure
We managed to get some commission data from one of Singapore’s biggest insurance firms.
Of course, different companies have different commissions rate.
Suppose you purchased a 15-year endowment plan that required a $300 monthly deposit ($3600 annually).
Your financial advisor would earn 30% of your first-year premium, which is around $1080. In the second year, he would receive 15% and subsequently 6%, 3%, etc.
From the table, it’s easy to see why certain financial advisers might prefer specific products like Investment Link Policy over others like term insurance. The commission is simply too tempting.
That isn’t to imply we shouldn’t use ILPs or whole-life plans because everyone’s situation is different.
Are you surprised by these numbers?
Now let’s break down to individual products and see how much my financial advisor could be earning from selling me insurance products.
For the calculation of the premiums, I would be using data collected by ValueChampion, a website I highly recommend for comparing different insurance policies.
First up is hospitalisation insurance. This, in my opinion, is the most essential insurance, and everyone who can afford it should get it.
As Singaporeans, we are covered by MediShield Life, a national insurance plan. Under this policy, part of our medical bills is covered by it. However, the remaining which are not covered has to be paid in cash or with our MediSave.
This is where hospitalisation insurance covers the gap. With hospitalisation insurance (Integrated shield plan), the amount of cash required to fork out for our medical bill would significantly decrease.
A recommended benchmark is to get a Private Hospital (or at least a public A ward). The reason is that there are differences in treatment from both private vs public hospitals, and it’s quite a world of difference in terms of waiting time and services.
For a 25-year-old policyholder (with no pre-existing conditions), the average yearly cost of Integrated Shield Plans for A Ward and Private Hospital Coverage is $90 and $300, respectively.
While the average cost for someone 45 years old is roughly $233 and $1061, respectively.
Next is Critical illness coverage. Critical illness insurance offers a lump sum payment when you are diagnosed with an illness covered in the plan. This money can then be used to pay for your medical treatment or cover day-to-day expenses.
There are two types of critical illness insurance. One is a standalone plan which you can purchase independently from other policies while the other is an add-on to a life insurance plan.
The recommended benchmark would be 5x your yearly income, which is around $316,000.
The average monthly cost of adding a critical illness rider to life insurance with CI coverage of $400,000 is $52 for a 25-year-old and $145 for a 45-year-old. On an annual basis, it would cost $624 for a 25-year-old and $1740 for a 45-year-old.
The final plan which I would add is life insurance. Life insurance will provide a payout of the sum assured when you die or are diagnosed with a terminal illness. In general, there are three types of life insurance policy, namely term plan, whole life and investment-linked policy.
The difference is this. Term insurance has no investment in it, whole life invests in an insurance company participating fund while ILP invests in unit trusts of your choice.
The recommended benchmark is 10 x your yearly income (up till retirement or no more dependents)
I am a ‘buy term invest rest’ type of person as I believe we should not mix insurance and investment. As such, I prefer term insurance to ILP or whole life. From the two charts below, you can also see why I like a term plan over whole life or ILP.
So, with a term life plan, a 25-year-old is expected to spend around $23.77 to $32.69 monthly. While a 45-year-old is expected to pay approximately $54.24 to $76.78.
Other plans that I will not discuss in this article are disability income, accident plans, and annuity plans. These are policies that you can consider depending on your life circumstances.
For guys, you can also take a look at Mindef Aviva Insurance which is an excellent supplement to your insurance at a meagre cost.
Total cost for my insurance
To sum up the three insurance plans, here is how much I have to pay if I were to get the plan when I am 25 years old.
Hospitalisation (Private) – $300 annually
Critical illness ($400,000) – $624 annually
Life Insurance (1 million*) – $982 annually
Total = $1906.5
Total commission my agent could earn for the first year = ($300 X 0.30) + ($624 X 0.55 ) + ($983 X 0.55 ) = $973.85
You should notice that insurance cost increases exponentially as we thus let us consider how much I have to pay when I am 45 years old
Hospitalisation (Private) – $1061 annually
Critical illness ($400,000) – $1740 annually
Life Insurance (1 million*) – $2303 annually
Total = $5104
Total commission my agent could earn for the first year = ($1061 X 0.30) + ($1740 X 0.55 ) + ($2303 X 0.55 ) = $2541.95
Myth 3: It is all about traditional face-to-face sales
As a daughter, wife, and mother to a 3-year-old child, Adlina Jasmuri is also an adviser.
Her answer to juggling all her duties: Leveraging technology by e-meeting clients through video calls such as Teams and Zoom. Income’s Remote Customer Engagement (RCE) platform allows Income advisers to communicate and engage customers anywhere, anytime as they can now virtually meet up with customers to review financial needs securely and complete insurance purchases.
Traditionally, advisers would need to rush from one location to the next to meet their clients. Now, with the use of technology, advisers like Jasmuri can simply e-meet with their customers. With the time saved, many advisers are seeing a boost in their productivity as they can meet and service more customers a day than they used to.
Jasmuri said, “I’m so glad that here at Income, we have leveraged technology in all that we do. This saves time and makes work more efficient. I am now able to connect with more clients remotely. Also, there is flexibility to manage my time and that extra time has allowed me to spend more time with my child and family.”
Myth 4: Tough to get or generate your own leads
Understanding that generating leads could be a pain point for new joiners, Income lends a hand with its Leads Management System (LMS).
In fact, for financial services associate director, Chan Xin Yi, 80% of her customers come from the LMS. “We assist to review policies for customers who no longer have servicing agents, to make sure this group of customers are not underserved,” she said.
For most customers, their financial needs changes across their life stages. And having new advisers reach out to them proves to be helpful as many of these customers have feedback their appreciation for the assistance provided.
Over time, these new advisers will build up their own clientele base through referrals and word of mouth. “When clients feel that we genuinely want to help them equip themselves with proper protection to cater for different milestones, they will naturally introduce their friends and families to us.”
She added, “Without this lead generating system that Income provides for new joiners, I think I will face more struggles to kickstart this career. I am grateful for the opportunity Income provides. It allows me to touch base with more people and help them with their financial planning.”
There’s a lot of misinformation being thrown around to make this myth sound even more true. For instance, you may be hearing that “organic leads are superior” or “if you’re any good you don’t need to buy leads.” Organically generated leads are great, but that doesn’t mean that leads you buy weren’t organically generated, only that they weren’t organically generated by you. When you consider the marketing costs associated with generating your own leads, you’ll begin to appreciate what you’re paying for if you buy leads from a reputable insurance technology company.
There’s no way around it: At some point, you’ll have to make a decision. Will you invest in blogging, social media and paying influencers or will you just pay someone who’s already doing it to generate leads? Do you want to spend hours staking out new territory to shake each prospect’s hand or will you just try to make an authentic connection over the phone? The choices are simple enough but you’re shelling out money whichever direction you choose to go.
Also, don’t forget that leads generated by the right ads do work too. The quality of these leads depends on the quality of the ads and the process used to convert users into leads. With that said, if you buy insurance leads from a company with a strong advertising campaign, you don’t need to worry that their leads are not “organically generated.”
Selling insurance is largely a numbers game, and you’ll want to reach out to as many people as you can.
In the end, it doesn’t matter how a lead lands in your lap if you’re closing more business than ever. Selling insurance is largely a numbers game, and you’ll want to reach out to as many people as you can without going over your marketing budget. If that budget is heavily reliant on purchased leads and this strategy works for you, there’s no shame in your game.
Myth 5: Insurance is all about sales
Addressing the most common misconception of all time is the team manager and principal client advisor, Jay Lee.
“Insurance is all about sales” – To which Jay debunks and shares that we are in the business of taking care of people and serving their protection needs.” It is the mission over the commission with the right mindset. Clients’ needs should always come first. Lee finds a sense of gratification when she helps process claims and savings plan’s maturity proceeds for her clients.
Becoming an insurance agent is not another sales job; it’s an opportunity designed to help people protect who and what matters most. Insurance agents find their profession to be fulfilling and rewarding as they help individuals and families within their community protect their livelihoods and futures. They understand that their business is not just about insurance products – it’s about people, relationships, and making entire communities healthier, safer, and more secure. The Farm Bureau sales process begins with identifying a prospect, whether you’re selling a personal policy or a commercial policy. From there, you get to know the potential client/member, discover their needs and determine their long-term goals. This will help you develop a policy recommendation that makes the most sense for them.
It is about growing together with your clients. For Lee, some of her clients have grown to become friends over the years, treating each other as family and being invited to family dinners and celebrations.
At the end of the day, Lee said there is satisfaction in knowing that her customers are adequately protected and it is all worth it.
Exploring a career in financial planning? If you’re ready to learn more about what this opportunity entails, we’re here to help! Schedule a call with us or come in for a chat so we can answer any questions you might have. After getting a better understanding of what starting a career in financial planning looks like, you’ll be able to decide if it’s the right fit for you. We’re excited to chat with you and help you take the next steps in your career journey!
If you’re looking to work in the financial industry in Singapore, look no further than InsuranceJobs.sg. We provide details of insurance companies that are hiring right now, as well as helping you choose the right agency to join and guide you on become a successful professional in this sector.
Whether you’re thinking of starting out as an insurance agent or an experienced financial advisor looking for a change in environment, we can help you find the perfect opportunity.