On Becoming a Life Insurance Agent Specializing in the IBC

An open letter to those contemplating the business

Background

To no credit of my own, I’ve been blessed to work with incredible mentors in the life insurance profession, and specifically within the domain of the Infinite Banking Concept (IBC).

Consequently, I’ve enjoyed the opportunity to co-host the Banking with Life podcast with one of those incredible mentors James Neathery, speak at the annual Nelson Nash Institute Think Tank, and stumble into enough understanding to feel good about producing the Whole Life Insurance Mechanics series on YouTube—the only multi-episode, free, course or lecture series on the internet on the philosophy behind whole life insurance policy design.

In the aftermath of encounters with one or more of these resources, a subset of folks have engaged with me through my website griggscapitalstrategies.com or through the NNI Practitioner Finder to inquire about potentially becoming a life insurance agent on the expectation of specializing in the IBC. Some of whom have expressed interest in working with me directly.

Over the last three to four years, I’ve agreed to phone conversations of this sort. Yesterday featured two of them. After an evening workout, it occurred to me that I had spent the afternoon talking either to life insurance agents or to people thinking of becoming life insurance agents.

Through a series of revelations, something in me finally snapped, and the time for this essay that I’ve been pondering for over a year finally demanded its moment.

What follows is an open letter to those considering becoming a licensed life insurance sales agent in order to specialize specifically in the IBC.

The Big Picture

On August 17, 2022, LIMRA reported the following.

In general, there appears to be a gap between a [life insurance] candidate’s understanding of the job and reality. Survey respondents commented that recruiters need to be more honest upfront about the difficult aspects of the role.

A recent LIMRA and Finseca joint study surveying 56 field leaders and 21 home office leaders found that field and home office leaders indicate the need for more transparency in recruiting conversations with candidates. Home office leaders agree that new financial professionals may not clearly understand the challenges involved with the role, while field leaders cited career mismatch as a major cause of financial professional termination (other factors include personal characteristics, following systems and processes, and lack of early activity).

The picture may be more bleak than these general remarks suggest.

An Investopedia article entitled “Becoming a Life Insurance Agent” relates the following (bold added).

The retail life insurance industry is not an easy industry to break into or succeed in. According to the Bureau of Labor Statistics (BLS), there were 409,950 life insurance agents in the United States in 2020. With the U.S. population just over 332 million as of April 2020, the size of the industry provides one agent for every 1,234 people.

This highly competitive environment is conducive to filling America’s life insurance needs, but can prove to be a tough environment for a new agent who typically makes commissions from sales.

The burnout rate for life insurance agents is high. More than 90% of new agents quit the business within the first year. The rate increases to greater than 95% when extended to five years.

This dismal situation is not new. In September 2021, A.M. Best reported this (bold added).

The number of affiliated or career life insurance agents contracted to sell policies for a single insurer also has been steadily declining over the past two decades. The growth in the number of independent agents, who continue to make up the sector’s producers, has slowed in recent years, increasing only slightly from 190,000 in 2013 to 197,000 in 2018.

The independent life insurance sales world features all of the characteristics you might expect of a dying industry. One of the most telling facts is that the average age of the independent life sales agent is 62 (see the A.M. Best article, above). Spend much time on Google and you’ll discover many articles, like those referenced above, further documenting this grim reality.

IBC in Particular

Then consider that some potential agents may wish to specialize, maybe even exclusively, in something that the vast majority of the public have never heard of—the Infinite Banking Concept.

Not only is the IBC virtually unheard of, but its content, ethos, and implications are characteristically counter-intuitive.

“What? Banking? So you mean, like, replacing my checking account? Isn’t whole life insurance the worst place to put money? Shouldn’t I ‘buy term and invest the difference?’ Aren’t life insurance agents just a bunch of commission hounds? But I can get a better rate of return in the stock market! Why would I borrow ‘my own money’ and pay interest for the privilege?”

Literal, entire books could be written on just this slim subset of objections. Objections to something most people have never heard of, and what little of it they have heard of, they often understand to be the opposite of conventional, and advisable, wisdom.

And as with the broader life insurance sales industry, most who come to the question under consideration today, come with little to no sales experience. Or maybe even more deeply — little to no professional communication experience.

The gaping chasm separating the idea and the reality of the life insurance sales business — not to mention specialization in the IBC — is often filled with caricatured, virtually cartoonish guesswork at what the business consists of in the mundane day to day.

Some may persist under the false impression that really all they need to know is “the best” way to design a policy. Or maybe it's just a matter of buying into the right lead generation system. Maybe they just need to see “how its done” by sitting in on advisor-client interactions over the course of a few months.

Policy design, new business attraction, and client communication are important aspects to the business, indeed, but they are merely known unknowns. It’s the unknown unknowns that leap out from the dark to propel the dismal career statistics.

The full time life insurance sales agent must maintain some degree of regular availability for client calls. He or she must be knowledgeable enough about the product itself in order to communicate competently with home office staff — underwriters in particular — in order to successfully steward an application through to policy delivery. The IBC specialist must be enough of a competent financial product generalist in order to address questions about tax, “competing” financial assets, economics, estate transfer, and much, much more.

Frankly, the industry — neck-deep in conventional financial theory as it is — has an extremely poor understanding of the economic significance, and to a surprising degree, of the technical internal mechanics, of the whole life insurance contract. If you don’t believe me, reach out to a regional recruiter at a life insurance company, or wander on down to the office of the neighborhood financial advisor, and ask them what the conceptual relationship between cash value and death benefit is.

Further still, the test for the credential required to operate in this business — the life insurance sales license — and the educational material provided for it bears only vague resemblance to the practical, boots-on-the-ground substance of the advisory conversation. Dry, formulaic calculations of maximum insurability and siloed emphasis on death benefit protection over cash value capitalization will be unhelpful in this context.

Mentorship

The potential mentors from whom one might want to learn are — or at least, should be — the most productive, and the most profitable. Put differently, the people you might want to learn from are the people who can least afford to spend the massive time, effort, and energy required to help you unlearn the subconsciously absorbed mistakes of conventional finance and to guide you in the positive direction. Their opportunity cost is, much of the time, too damn high.

Now, brace yourself. What follows may be unpopular, but these are my genuine observations.

I have noticed that there is a certain subset of life insurance producers who enjoyed some initial success in production, in actual life insurance policy sales, and who can’t seem to escape client interaction fast enough.

The nature of life insurance agent contracting has something to do with it.

Often, carriers — the life insurance companies — will provide contracts to high-producing agents that allow that agent to turn around and issue a “downline” contract to a new agent. Then, whenever the downline agent “produces” — i.e., successfully sells a policy — the “upline” receives some compensation.

There’s nothing inherently wrong with this contractual structure. In fact, it has the elements of necessary, mutually beneficial incentive compatibility that both a downline and upline agent might want in order to lay the financial groundwork for a successful relationship.

However, what’s also there is the seed of temptation — the temptation for what you might call “agency building.” Again, there’s nothing inherently wrong with building an agency and focusing on training and agent development over direct client interaction. But to my mind, the situation is far out of balance, to the point where, as I’ve said, there seems to be a general tendency whereby successful producers can’t seem to escape the direct client interaction fast enough.

Quite plainly, I don’t think this bodes well for the industry, or for potential downline agents.

There’s something fundamentally anchoring in the one-on-one client interaction. That’s where the rubber meets the road. We can get caught up in clever slogans about revolutionizing the financial industry and changing the way “the public” understands financial strategy in the broad sense, and whole life insurance in particular. And all of those ideas may well be heroic and worthy and correct. But the only way that any of that happens is one client at a time. Not the many; not the group; not the collective; not society.

The one.

All else equal, the further we get from the emphasis on “the one,” on the set of eyeballs staring back at you from the other side of the table, or on the other end of a video call, the further we drift off into grand abstraction. And again, these abstractions may sound good, feel compelling, and instill conviction — which is all well and good — but they are not are practical, available, tangible solutions for the individual’s specific situation.

Maybe you have to take my word for it, but for all my own economic theorizing and the conceptual development — all of which has its place — what I’m telling you is that the eyeball-to-eyeball, direct, one-on-one conversation is where we separate the professional advisor from the amateur enthusiast.

And the further away the mentor or upline agent gets from the direct client activity, the more abstract and unrelatable all the polished, elegant word-smithing and motivational speaking becomes.

This is not to say that it is necessarily the case that all who seek to train and develop agents are inherently bad at production, at the advisory work down in the proverbial trenches; far from it.

But it is a tendency. And in my opinion, there’s an imbalance in the industry where there is too much focus on agency building and escaping day-to-day client interaction. The result is even greater upward pressure on the opportunity cost to the profitable, successful producer — from whom one might want to seek mentorship.

My Own Personal Experience

By no means am I the best in this business. My production is signficant, and for my age, I may be realtively ahead of the pack. Recall from above that the average age of professionals in this business is literally twice my own.

But as James as has said, “I’m not the last guy in line, either.”

I don’t participate in the click-funnel, “lead-gen,” promotional marketing approach. I write and speak — online and in person — and I’m fortunate that enough members of the public encounter my views and seek out my services. I’m eternally grateful for this.

But my start in this business was brutal. We’re talking 18 months of “living on plastic” as I like to say. Swiping on credit, and hoping, and eventually praying, in desperation, that something would give. That I would find, or that God would reveal, the right sort of workflow for me, to where I could effectively and efficiently communicate the value and internal logic of Nelson’s ideas to the point where someone was willing to pay a premium.

It was hard. Up to this point in my life, it’s certainly the most difficult thing I’ve ever done; and looking back, how it actually got done, is sort of a mystery. I wish there was a neat, clean formula to identify and articulate, if only to help make better sense of my own path. If there is one, I haven’t found it.

I knew the economics; I was generally top of my class academically; I had and have literally the best mentors one could ask for; and it was still brutal.

Nor, by the way, did I have many financial obligations and responsibilities. No spouse, no kids, and no major debt. Add dependents and responsibilities to the picture we’re painting here, and you only ratchet up the difficulty.

Now don’t get me wrong. Lots of people have endured brutal, and far worse, professional circumstances and succeeded. Difficulty is not the same as impossibility. I’m just recounting to you what my experience was because that’s all I’ve got, and because the image that the industry and recruiters and agency builders and industry-adjacent software and systems builders each with something to sell to a life insurance agent paint for the potential industry entrant is completely unrecognizable to me. And, given the statistics and survey responses we started with above, I don’t think this cognitive dissonance is unique to me.

The Side Hustle

Confronted with at least some of this reality, some potential agents will consider a half-way measure. The idea is often something like, “well, I’ll just get my license and I’ll do life insurance on the side for some extra income.”

If this idea has occurred to you, my encouragement is to release it in haste and never look back.

I can count on one hand the number of situations I’ve observed where people have successfully “transitioned” into the business from another form of employment or business.

Again! This is not to say that it’s impossible! I’m one hundred percent positive that reputable and successful agency builders will disagree with me. And fair enough. This is just one man’s view.

I’m a “burn the ships” sort of guy. Either you’re in, or you’re not. The mere existence of a plan B is a strike against the likelihood of success of plan A.

I remember one night when I was over at James’ house. I was a couple years into the business and I could not see the path forward. I was treading water and my legs were starting to cramp. I was seriously considering going back for a teaching credential and frankly, calling it quits. It was only after a phone call with a childhood friend whereafter explaining my dire situation, she remarked that very thing, “oh, so you’re quitting.”

Yikes.

For whatever reason, right then and there, I dropped my plan B. Either this life insurance sales stuff would work, or it wouldn’t; I’d accept that I gave it my best shot, file for bankruptcy, move back home, and start completely over.

That was in January of that year.

By December, I had earned a respectable income, could repay some of my debts, and caught little glimpses of what a life in this business could look like. I haven’t looked back since.

For people who take the transitional approach and enjoy success, I am in awe. I do not understand it, and for me, it did not, and I believe, could not, have worked. Those who are considering this approach to the business should take what I’ve said so far with a grain of salt and seek other counsel, because my own experience — biased and flawed as it is — suggests that it does not work.

Is There Any Good Approach?

“Well damn, Ryan, what gives? Is there any good way into this business? Or are you saying that literally no one should ever become a life insurance agent and specialize in the IBC?”

These are understandable objections. But I, nor others, do you any favors by painting over what I regard as the fundamental reality of getting into this business.

If there’s a “good” way into the business, I think it might look something like what follows.

There is a reading list at the end of Nelson’s Becoming Your Own Banker.

How many of those books have you read?

How well can you articulate the threats posed to the individual’s financial situation by our economic system?

How comfortable are you in front of a crowd? With talking to complete strangers? With talking to complete strangers about one of the most important aspects of their lives — their money?

How much premium do you pay?

How long have you practiced the IBC in your own life?

What rationale did you employ in selecting the agent you decided to work with?

Do you know why you bought the policy or policies from one particular company, and not the others? Was that decision ever presented as a choice variable in the first place, or did you just go along with what was proposed at the time?

What’s the premium structure on your policy or policies? Are you comfortable articulating that? Do you know why you’ve got the structure you’ve got?

Why might people not “buy term and invest the difference?” Doesn’t the stock market generate a linear 12% annualized average rate of return? Isn’t death benefit on whole life insurance the most expensive form of death benefit there is?

If you had to sit down right now and write an essay answering all of these questions to be turned in for a grade, could you do it? What if the penalty for poorly-articulated answers was, let’s say, 50% of your current annual income?

Do you notice the turn we’ve just taken?

We’ve gone from looking without to looking within.

Rather than seeking the answer from the next great mentor or from finding the right sales system or from finding the right client presentation script, we’ve turned the table.

Here’s a potentially uncomfortable idea. Agent recruitment based primarily on anything other than the degree of your own introspection — on your own transformation — may be fundamentally misguided.

Far, far too often, the questions I get from potential new agents in this business have to do with which pattern of activities he should or shouldn’t do. Far more interesting, and far more potent, to my mind, is who you need to become in order to be successful in this business. And maybe that’s the case in any business. What attempts have you made to live and breath this stuff?

Or are you just tire-kicking?

Are you guilty of outsourcing responsibility that ought to be born squarely on your own shoulders? Are you looking for someone to make it easy, or show you the way, or send you leads, or in any way, shape, or form, to transmit whatever knowledge you feel you lack, and to thereby fill a propositional gap?

This is speculation, and please understand that I really do try to assume angelic intentions, and I believe the incidence of real malevolence in this business is few and far between. But the idea that you’re going to become a truly independent, critical thinking, bona fide financial advisor specializing in the IBC by growing dependent on some sales system or software or lead-gen or other knowledge source is far-fetched.

In my view, the path to authoritative, credible, substantial, value-dense financial advisory service starts with raw initiative, with sitting in the discomfort of not knowing the contours of the exact path forward, but feeling and then embracing the intellectual — maybe even the spiritual — calling deep into the things you may not yet fully understand, like business cycles, conventional credit structures, and the internal functional dynamics of whole life.

Because if that calling — if that attraction — is real for you, then the necessary suffering involved in getting into this business will be worth it.

A Practical Update

I’ve shared bits and pieces of what I’ve just conveyed in the prior section with folks in the past, and what I’ve found, virtually without exception, is that it strikes the listener as extremely counter-intuitive.

A couple years back, Jamea and I put together the necessary contractual infrastructure to issue agent contracts to individuals wishing to represent life insurance companies and become financial advisors.

For me, the basic result of that enterprise has been categorical failure.

For the foreseeable future, I am withdrawing from any form of new agent contracting. My focus should be on economic theory and direct one-on-one client advising, and that’s where it will remain. I will make consulting services available to current and potential members of the financial services profession, but only for a fee commensurate with something approaching my opportunity cost. Of course, current and future clients will continue to enjoy complimentary access to me as part of my on-going commitment to client service.

For those who have contacted or are considering contacting me as a potential upline or mentor or with inquiries as to the nature of entering this profession, this essay is for you (and I expect there will be more in the future).

Otherwise, it seems to me that my view of approaching this business is too contrary to conventional methods; and my academic and professional obligations no longer permit the expenditure of resources required to facilitate what one might regard as a thorough deprogramming from these ordinary ways.

Fortunately, even still, some of you may well be in luck.

As of this writing in November 2023, James Neathery is still available to engage with potential new agents. Anyone considering reaching out to me for mentorship or to contract through my office with life insurance companies should instead contact him through his website at bankingwithlife.com. For those of you who do this, you should mention this essay in your initial message.