Should You Buy Or Generate Leads As A Life Insurance Agent

What is going on? Ladies and gentlemen, in this video, I'm going to be answering the question, should you buy leads or should you generate leads as a insurance agent? Now, basically, as you can see, I have a handy dandy spreadsheet on my computer screen here. And what I'm going to do is not just like, speculate on whether you should buy leads or generate leads. I'm really going to break down the numbers for you and show you guys exactly how this looks. Right. So this sheet here that you guys can currently see, let me see if I can maybe zoom in here a little bit so it's a little bit more visible. Cool. So this is what I call the insurance profit calculator, right? And basically what it is is it's a spreadsheet that allows you to figure out based off of how much you want to make. Right? When I say make, I mean net net income, like after chargebacks, after leads, after expenses. What do you want to take home to put food on your family's table? Right. Like, what, what is that number? And based off of that, we're going to plug in all of your other, you know, stats, which I'll cover in a second, and it's going to tell us how many leads we need, how much we need to spend on leads, how many policies we need to write a day, how much AP it's going to take, how many dials, so on and so forth, right? So let's take two examples. I'll show you guys. One where we're buying leads from a vendor and then one where we're generating our own. And then we can kind of piece it together and see what makes the most sense. Right? So let's say for the sake of this example, you want to make $120,000 a year, right? That breaks out to about $10,000 a month. Maybe you want to make more, maybe you are okay with less. Whatever. We're going to run with this number for now. So 120k a year. Now, let's say your commission rate is about 100%.

Which basically means that the commission that you get when you sell a policy is 100%. Now, retention rate, this is going to be of if you write 100 policies, how many stay on the books, right? I like to use the number 75 just because it's a conservative number. I've seen people with, you know, retention rates up to 85% usually is the highest. You'll see with like, final expense, Maybe even like 95% if you're doing, like, IULS or mortgage protection. But that can also fluctuate. It can also be lower, seen as people have as low as like, 50% if they're just, you know, doing a lot of things wrong. So we're going to use 75% as an average conservative retention rate. Now, average policy size. If you are selling, like, direct mail leads, this is usually going to be closer to like, whoops. This is usually going to be closer to, like, the $800 range. From what I've seen, around 800 bucks, right? So let's just say, for sake of example, this first example, let's say we're using direct mail leads right? Now. Let's say our dials per sale is 200, meaning that to get a sale, we make $200. So for every sale we make, we make $200 to get there, right? And then let's say our premium per lead, which this number is basically just your total annual premium that you write divided by leads. And this gives you your ppl. So ppl. This is a stat that's like, really important because it's basically like, it's a. It's kind of like miles per gallon. So it tells you the efficiency of yourself as an agent. Right? So this is a number that we really monitor closely with all of our clients because it tells us like, hey, how much money is this person making or not making? And what do we need to do to get them making more. More money, right? So ppl. $50 is like a good spot to be. So what that would mean is, let's say you. If you took 100 leads on 100 leads, you would write $5,000 in annual premium. That's what. That's what ppl is right? Now, this first example, we're going to be saying this is direct mail. So let's say our cost per lead for direct mail, that's going to probably be about $40.

Right? So if we want to make 120k, our commission's 100% retention, 75 average policy size 800. $200 per sale, $50 premium per lead. Cost per lead is $400. Well, let's see. Did I put in a number wrong?

All right, so I figured out what was going on, and I think this is probably going to prove my point here with the direct mail leads. If your cost per lead is $40 and your premium per lead is $50, and. And you only retain 75% of your business, you would be losing money.

So enough said there. This model is not going to work. So we definitely should not be paying $40 per lead. If our PPL is going to be 55, let's say, just for the sake of this example, it's like 70, right? So we were writing $70 a premium per $40 elite. Per 40 and paying $40 elite, right? So in this example, if in order for US to make $120,000, we're going to need to get 26 leads a day, which means we're going to have to spend $1,000 per day on leads, we're going to have to write $56,000 a month and make 672 dials a day. So needless to say, this is not going to make any sense. So if you're paying $40 a lead, even if you're writing a lot of premium per lead, tough spot to be in right? Now, let's say you're buying Facebook leads, for example. Now what I've seen with Facebook leads, the average policy size is considerably higher. This, our average policy size is like $1300 on Facebook leads, right? So let's say same, same income you want to make, same commission rate, same retention rate, Average policy size, 1200 bucks dollars per sale is the same. Let's say premium per lead is the same. And let's change our cost per lead. Now, Instead of paying 40, we're probably going to be paying about $20, right? For a fresh exclusive Facebook lead, maybe an exclusivity window, meaning that we only have it exclusive for a short period of time. But let's just say it's 20 bucks, right? That means in order for us to make $120,000, we need 10 leads per day. So we're going to be spending $200 a day on leads. We're going to need to write 21k a month and make $173 per day. Now, you may be saying, okay, that's much more manageable buying the leads as opposed to doing the direct mail leads. Like buying Facebook leads makes so much more sense. And you're right, it does. But let's see what happens when we look at generating our own leads, right? So if our cost per lead goes from 20 to nine.

Watch what happens to these numbers. Right? I'm going to show you guys before, right? This is before.

This is after. Move my. Move my face. So before.

After.

Meaning we look how much less we're having to spend per day to make the same amount of money. So $202 per day, $68 a day, we have to write 5k less a month. And we have to make 50 dials less per day. So we only have to make 130 dials, spend $70 a day and write 193K versus 258K. So literally, just by cutting our lead costs, all these numbers are staying the same. Because like if you're buying leads versus generating them, if you're generating them, the quality is probably going to be a little honest. All of these numbers just got so much easier, right? So let's say now we can bump this number up to like 200k and see what these numbers actually look like. So now if we want to make 200k and this is all, all of this is very manageable, we need to write 26k a month, spend $113 a day and make $215 per day. So if we go back here and let's change this back to 20.

These numbers are still doable. But now we're talking about spending $330 every single day and writing 35k a month as opposed to 26k a month. So I'll kind of tell you guys how I think through this and why. I personally recommend generating leads is.

Not only the numbers that I just showed you guys, but also you have so much more control over your lead source, right? When you're buying leads from a vendor, you have no idea what that person is actually running or what that person is using to get you leads. And from what I've seen on Facebook, most of the stuff out there is like state approved burial program trying to get somebody to, you know, give their name, email or phone number to get a free benefit. And then you as the agent have to call them and try to like save that situation, right? So what I recommend, I recommend generating your own leads on Facebook. You know, the exact ad that is being shown to your people. Not only are you going to have more transparency, but we just looked at all the numbers. You're just going to make more money if your cost per lead is lower. You're basically just paying half the cost for the exact same lead. So, final verdict. I recommend generating your own leads. Let me know if you disagree or agree with me in the comments down below. And if you guys want help with generating your own leads and how to, you know, set this whole thing up, our team will literally run all of your ads for you, do all this, we set everything up. You can click the link down below to learn more about that. And we also have a free course if you don't want to do it with us. So either way, I'll see you guys soon. Take care.