How Do You Make It...???

May 13, 2008

  1. Jerry Tibbs
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    Jerry Tibbs Expert

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    Please Forgive a newby for the question....

    I am a new agent....just licensed about 3mths.

    Looking at the Health Insurance biz...and from my calculations....this is what it will cost me to be independant and sell Health insurance.

    MTH COST
    -$750 for leads (100 leads)
    -$150 Novax, etc
    About 1k per month total


    Average Policy sold=$300 mth
    My comm is 20%= $60mth

    Have to sell....17 policies a mth to break even?

    What am i missing?
     
  2. STIBROKER
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    STIBROKER Like My post and enter the DRAWING,,,, Moderator

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    bring your lead cost to $5 and dump norvax......
     
  3. CHUMPS FROM OXFORD
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    CHUMPS FROM OXFORD Guru

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    That's pretty close. Little things like chargebacks, E&O, website costs and unexpected expenses (computer crash etc..) could change your numbers a bit, but not too much.

    Re leads...at $7.50 each, the quality will be OK...but not great. Of course...at $12.50 you might run into the same thing.

    Local advertising will be an expense but maybe worth it.
     
  4. rawannam
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    rawannam Expert

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    Well, if your month to month on commision your math is correct, but each month you will be adding on 17 policies so you should in theory be in the black $1000 by month 2 if you keep up that volume. But if you get advances then it becomes a much different game. If you are new I would also cold call a few hours a day to generate more lead volume and sharpen up your skills at the same time. Check out IHIAA for some tips and best of all the discounts on all the tools/leads you would need to make it in the business. I'm new myself but everyweek I get a better grip on the industry and the main thing I've learned is daily activity creates future rewards. If you arent keeping busy for 8 hours find a way to or you will fall off fast.
     
    rawannam, May 13, 2008
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  5. bill3173
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    bill3173 Guru

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    You may be new, but your advice is on target. 17 policies on a 100 leads will not only keep you working 8 hours a day, but will ignite referrals from those leads and a ballooning effect. If he follows your advice, he'll be able to make a living without getting fancy for a few years.
     
    bill3173, May 13, 2008
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  6. Dave020
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    Dave020 Super Moderator Moderator

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    No but you have to look at the bigger picture.

    First, drop your quote engine rates either by initially using the carrier's quote engine or, if you are only doing IFP and not goup, I think quotit and norvax charge under $100 for just the individual & family portion.

    You could also cut the number of leads and try to find ways, including your web site, to generate them more efficiently and less costly.

    Look at it like this:

    Monthly operating costs:

    Leads - $500
    WebSite - $7
    Quote Engine - $100
    E&O - $40
    Other Office Expenses - $50

    Total - $697 so figure $700 give or take

    Unless you are starting out with a large pool of multiple carriers, why not focus on one or two big ones in your area, use their quote engines (they should have an agent services system for you to use) and have a link with image for people to click on to get a quote. Just an idea to save money.

    Now the income math:

    Let's say you can write 15 policies per month. Using you average ($300) premium it looks like this FY:

    Month 1 - 15 x 300 x 20% = $900
    Month 2 - 15 x 300 x 20% = $900 + $900 from prev month's =$1800
    Month 3 - 15 x 300 x 20% = $900 +$1800 (1 & 2) = $2700

    So, you can see how it goes as long as everyone or most everyone is paying every month from the previous month's sales.

    By month 12 you would, at this production rate with 100% presistency have the following:

    15 x 12 (months) = 180 policies
    180 x $300 = 54,000 premium per month
    54,000 x 20% = 10,800 per month in commission income.
     
    Dave020, May 13, 2008
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  7. somarco
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    somarco That Medicare Expert Guy

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    Writing (and placing) 17 policies on 100 internet leads is something I would not write into a business plan for a rookie.

    Also, the figures above assume you place, and get paid in the same month, 15 - 17 policies.

    Figure at least a 30 day lag before the money hits your bank. Underwriting, outstanding policy delivery requirements, commission cut off dates, etc. come in to play to delay your $$$.

    I don't track closing ratio's, but I do know how much I have to invest in leads to get a new client. That figure is $82 (in 2007 . . . haven't run the numbers in a few months but don't expect a significant difference).

    If I were spending $700/month on leads I would expect 8 - 9 sales, not 15 - 17.

    Truly 15 - 17 sales is outstanding by my standards.

    I earn close to $650 on each sale ($54 per month) so 8 sales = $432/month.

    Maybe the rest of you guys get more out of your internet leads than I do, and I think I do reasonably well.

    Spending $700 on leads and writing 15 apps = $47 acquisition cost . . . a truly outstanding figure.

    Earning $60/month . . . $720/yr on $47 acquisition is a 15:1 ROI . . . another incredible figure.
     
    somarco, May 13, 2008
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  8. somarco
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    somarco That Medicare Expert Guy

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    OK, I stand corrected.

    Just tallied up my hard expenses for the year vs. apps. Lead costs + quote engine + newsletter + ISP = average $48 to acquire a new client.

    I must be living right.
     
    somarco, May 13, 2008
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  9. TonyC
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    TonyC Guru

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    Bob...that's because you're the Best Baby!

    Always like to hear from Bob...Good post....thanks buddy!

    ~T
     
    TonyC, May 13, 2008
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  10. NewHealthStrategies
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    NewHealthStrategies Super Genius

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    Somarco has it right in that you have to think like a true business owner (assuming you're on your own).

    Calculate the ROI and measure everything that you do... until you have down cold like Somarco.... over a long period of time the average will vary very little without you being able to know it.