Cover - Insurance MLM 101 – Learn The Unsavory Truth!

Insurance MLM 101 – Learn The Unsavory Truth!

By David Duford - January 03, 2023 - 5 Mins Read

I have an important message to deliver to you, and it involves multi-level marketing selling insurance.

Perhaps you’ve run across an individual who works for one of these companies…

Someone who’s forgotten how to function like a normal person, becoming so blindingly zealous to selling insurance for a particular company.

If you haven’t already guessed, the topic of this article the MLM insurance business, and why you should be very careful not to drink the “Kool-Aid” so to speak.

I like Kool-Aid and all, but when it comes to insurance and MLM, it ain’t that good of an idea to drink it.

We’re going to briefly talk about what multilevel marketing is, why it’s so popular, who it’s good for, and then why it’s probably not a good idea for you and some alternatives to consider.

NOTE: Are you an aspiring or new insurance agent looking for more insight on how the insurance sales industry works? Check out my free New Insurance Agent Resource Guide to help answer many of your questions (as well as ones you didn’t know you had!).

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What Is Multi-Level Marketing?

Multi-level marketing, if you’ve never heard of it before, is the action of recruiting people into an organization to represent a product.

It doesn’t have to be insurance, it can be all sorts of products.

Bottom line, the recruits are hired to sell the product, and to recruit people to do the same thing to build a downline and make passive income.

Really, working with a multi-level marketing company carries the perception of a scam. In a little bit we’ll get into why that is true I think to some extent in insurance MLM business.

While Scammy, MLM Insurance Is A Legit Business


It’s really how all businesses are run because all businesses have hierarchies, all businesses have executives and mid-level managers in a pyramid like fashion.

So, structurally-speaking, insurance MLMs aren’t an inherent scam.

Instead, the problem with multilevel marketing is within the work culture and the so-called “opportunity” the insurance agent gets.

Unfortunately, what is shown to them and what is promised does not match reality. And that’s what I’m going to try to prove to you today.

If you’re looking at one of these many insurance sales job “opportunities,” you should heed caution, and not necessarily jump in with both feet until you really give this some considerable thought.

Why Is Multi-Level Marketing So Popular?

If you look back into the annals of the insurance business, the biggest organization, specifically A.L. Williams, operated under a multi-level marketing insurance type of system.

They recruited agents and put them on the so-called “Crusade” of buy term and invest the difference,” then went out and sold that business to people who were happy to get term and to replace their whole life insurance.

Then those people were brought into the fold to carry on the crusade. People built these natural downlines this way.

An earthquake in the business happened when A.L. Williams was doing this buy term and invest the difference approach.

During this time, whole life was the predominant product. Today, whole life is a marginal portion of the total amount of insurance sold.

People who are ambitious, who want to recruit and build large insurance agencies, model the “A.L. Williams Way,” not necessarily the buy term and invest the difference way, but the recruit your friends and family and the people you sell to type of approach.

MLM Insurance Strategies DO Work


This method does work well in a lot of different organizations that aren’t necessarily insurance. They make a lot of money for the agency.

There are a lot of people who are predisposed to going the multi-level marketing route because it sounds great and it seems as if there is an opportunity there for them.

Before I go into explaining why that’s not necessarily the case most of the time, let me tell you who multi-level marketing is really great for.

If all you are concerned about is building an agency and you don’t care about the quality of training, and you love the concept of a multilevel type of approach to selling, then a MLM insurance organization is appropriate for you.

However, if you want to:

    • get into the business to sell insurance,

    • do not want to recruit agents yet (or ever),

…then multilevel marketing insurance business models will drive you crazy.

If that’s not enough reason why MLM insurance operations just aren’t the best place to be, especially starting off as a new agent, then I don’t know what is.

Where’s The Training?

The biggest problem with MLM insurance?

Most likely the person who recruited you has never sold a policy.

Again, when you’re brought into these multi-level marketing insurance organizations, the first thing they tell you is:

“Here’s a pamphlet on products you’re selling. And here’s some training, really good, valuable training on recruiting your friends, your family, your neighbors, your future clients, and bringing them into the fold. Don’t you want to create a passive income through building an agency?”

And while some people say yes, a lot of people say no.

How Can You Learn From Someone Who Has No Street-Cred?

It’s likely the training you’re going to get from your upline, from the person who brought you in, will not have value in teaching you the craft of selling insurance.

You’re already at a disadvantage because every product that you sell, every product that you rep, anything that you do in a professional capacity, you need to first collect a knowledge base based on first-hand experience.

You need to do training with people who know what they’re talking about, who have obvious levels of success.

You’ve got to have access to an insurance lead system. You’ve got to have access to fair commission levels.

And if you don’t get that, each one of those that you don’t get lowers your chances of success, even if you’re the greatest salesman on earth.

Downline Driven Business

Another thing that makes multi-level marketing bad is that it is such a downline driven business.

The starting commissions for first-year agents who are just brand new tend to be really low. We’re talking about sometimes half the level of commission you can get with another organization like mine.

If your intention is to become a world-class insurance SALES agent, why give up all most of your commission to pay people above you? People who practically don’t do a thing for you.

Why do that when you could start with an organization that maximizes your take-home commission?

MLM Insurance Takes Food Off Your Table


Why is this so important?

Most of the time, you incur costs of doing insurance business. In most circumstances, you’ll have leads to buy.

Like any business, you must invest your money in it.

And the more upside that you have on commission, the easier it is to overcome that cost of doing business.

There’s a lot of MLM insurance organizations that start their commissions off at 50% and their leads cost $50 a lead.

If you sell a $1000 deal and you make 50% of that, that’s $500 in commission. And if you had to work 10 leads to get that, you’ve just broke even.

Whereas if you made a 100% commission, you would have made $1000 in commission off of that same deal, and if you paid $500 for leads, you still have $500 left over.

So you made a return on your money. And the higher that margin is, the more flexibility you have if you have a bad week.

A downturn in sales happens. It’s normal. The less margin you have, the quicker you’re going to be taken out.

These are things that are going to matter tremendously in your overall profitability.

Work With An Organization That Is Passionate About Training And Coaching

When you don’t have access to training and coaching and you’re left to somebody who just only knows how to recruit insurance agents, it’s likely you’re not going to get the same amount of success, to say the least.

What you want to do instead is find an organization that’s focused on training. Find an organization that wants to take you in and mentor you.

Insurance sales training and coaching with a solid lead program optimizes your chances of success.

And best of all you’ll have continual support going forward, because even if you have all this to start with, you’re still going to have questions as you get out there and work your leads.

A lot of these multi-level marketing insurance companies focus on the spaghetti method or the shotgun methods…throw it up against the wall and see what sticks.


David Duford

There’s a saying in multi-level marketing that speaks for itself:

“Hire them in masses, train them in classes, sell all your friends and family and fire their asses!”

That is the mantra of the MLM insurance organization.

Do not fall into that trap!

Instead, if you’d like to learn about an alternative approach that offers agents a chance to learn and become successful, check out how my national insurance agency works here.

Also check out my Agent Success Stories as well as my highly-rated insurance sales books.

Send me a message via the contact box and we can begin a conversation to see if this is the right fit.

Thanks for reading!

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