Cover - 6 Signs Your Insurance Agency Is A MLM Pyramid Scheme

6 Signs Your Insurance Agency Is A MLM Pyramid Scheme

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

Are you thinking about selling insurance?

Perhaps, you’ve gone to a few “opportunity” meetings, but there was just one problem…

All these “meetings” discussed were Rolexes, high-end cars, and fat stacks of cash! 

Now you’re wondering, “Wait! Is this an insurance agency or a multi-level marketing pyramid scheme?”

If so, you’ve come to the right place!

The purpose of this article is to help you determine if the agency you’re interested in joining is actually a multi-level marketing organization or, as it’s more commonly known, a “pyramid scheme.”

More specifically, I’m going to give you 6 signs that point to whether or not the insurance agency you’re looking at is most likely an MLM “pyramid scheme.”

Lastly, at the conclusion of this article, my promise to you is that you’ll have an improved ability to determine if an insurance agency is focused on helping you sell insurance… or helping you recruit everyone you know with a pulse =).

Without further adieu, let’s get started!

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 a Multi-Level Marketing Organization?

So, I like to use the term “pyramid scheme” because it’s a popular name often used to describe any multi-level marketing (MLM) opportunity.

This isn’t to say the organization itself is a scam or operating outside the law. As we all know, pyramid schemes are illegal.

However, most of the insurance companies we’ll talk about today are 100% legitimate. The only downside is that they operate in a way that reminds people of the culture that’s rife within pyramid schemes.

Instead of focusing on what matters – hard work, training, customers – they push this idea of extreme material wealth and recruitment.

You’ll know what I mean when you see it. It’s one of those things. You walk in, and instantly, there’s more talk about recruitment, money, and wealth than there is about hands-on training and learning the art of selling.

There’s usually a charismatic leader, somebody who’s leading the crowd, and it feels like a tent revival or something similar. Whatever the case, it doesn’t feel like an insurance agency.

All Insurance Sales Organizations Have Multi-Level Marketing Organization Structures


Before we go any further, you should be aware that all organizations operate in a multi-level marketing way.

Here’s what I mean:

In the insurance sales business, there are multiple tiers within the company. The executives are at the top; the agents are at the bottom, and everything else exists somewhere in between. In a good agency, this will be training and a clear career path.

But this tier system or hierarchy isn’t the focus of today’s article and shouldn’t be a major concern. Most organizations across multiple industries operate in this way. What you need to pay close attention to is the culture that emerges inside the agency.

Sign #1 – Recruitment Over Production

In my opinion, the most important thing an agent needs to do is learn how to sell. Regardless of what you’re selling, that should be your first primary directive. Nothing else matters more than learning the craft of selling.

And if your goal long-term is to develop an agency, that’s great. But you wouldn’t decide to start an agency right away, right?! You don’t have anything to teach. You don’t have any street cred 😉

And that’s the main issue within MLM-type organizations. The culture focuses solely on recruitment rather than production, and no one cares that you don’t have any actual experience.

They want your network. They want your people. They want them recruited to sell insurance or to sell insurance to them. And then to repeat that process over and over.

#2 – Flagrant Conspicuous Consumption

Let me give you a quick story.

There was a guy I recruited years ago who was actually from a direct sales type of background. And he went to this well-known MLM cult-style agency’s opportunity meeting.

And the opening process of getting people excited about working for this organization involved the “cult leader” passing his Rolex around with everyone looking at it in awe. I mean it’s just a watch?!

And I wasn’t joking when I used the phrase “fat stacks of cash!” They passed actual money around to entice people to join. This was the sales pitch – being in awe of this random guy’s material wealth.

When you see Rolexes and Ferraris… run!

And to me, it’s stupid. You don’t see me flagrantly boasting about my income or other expensive shit that I own. And do you know why? Because it’s cheap theatre! It’s an illusion.

You can rent high-end sports cars and achieve that exact level of impact. None of it matters. It’s just stuff. Stuff that insecure people use to make up for their lack of self-esteem…

But I guess it must work on some people (probably a lot of people…)

Just don’t fall for these pretentious tactics. Please. It’s nothing more than a pitching strategy to manipulate you into joining.

Sign #3 – Tent Revival Level Rah-rah

A load of “rah-rah” is the best way to describe this next sign.

When you walk into an organization, what’s the first thing you notice? If there’s a lot of jumping jacks, push-upsyelling, hooting, hollering, dancing (aka rah-rah), it’s a cult.

Getting you physically invigorated, as opposed to thoughtful contemplation, is usually a clear sign that you’re dealing with an MLM style organization.

Motivational speeches are different from skill development lectures. If you want to see the difference, watch my videos. I do very little rah-rah. I simply express my opinion and let you decide what to do with that information.

In other words, I try to have a human conversation that isn’t built on rah-rah theatrics.

Sign #4 – The Ladder to Climb

What human beings want is a sense of belonging and status.

I do jiu-jitsu, and we have a belt system. There’s a pecking order, and everyone knows where they stand, so to speak.

MLMs do the exact same thing. They implement an “arbitrary” ladder. And by “arbitrary,” I mean meaningless. There’s no logical reason for it to be there. It’s simply a business strategy.

Still, it’s an effortless way of making you feel appreciated. Human beings need recognition. We need to feel valued for our time and hard work. And there’s nothing wrong with a genuine ladder system with actual benefits.

However, in an MLM-type company, it’s a ploy to reward you with “status” but hold out on commissions. You might have gained respect and a fancy title, but, more often than not, this doesn’t equal economic success.

No matter what organization you’re thinking of joining, pay close attention to the “ladder to climb.” Don’t accept their status and fancy titles at surface level. Find out for sure if there’s an actual viable career path.

Sign #5 – An Inner Circle


If you haven’t checked out Kyle Studer’s YouTube channel, you should. He used to work in an insurance MLM. And he’s done a lot of great videos about this stuff.

We did an interview where he talked about his experience. And one of the things he mentioned was the in-group language or the inner circle.

And this is true of all cults – they have a specific language, which members use to establish themselves as a part of the “in-group.”

In truth, it’s probably just another way for senior employees to show off their status. Cults tend to create an US vs. THEM culture. But the problem is that, as humans, we want to feel included. We want to be a part of the inner circle.

Sign #6 – A Flamboyant Charismatic Frontman

Every organization has a front man.

We think of Apple and Steve Jobs. We think of Elon Musk and Tesla. It’s not uncommon for big corporations to have a charismatic leader. And there’s nothing wrong with that.

But there’s a fine line between a confident businessman and a cult mascot.

In an MLM-type organization, this leader will be seen as ludicrously important. They’ll be considered the heart and soul of the company and more often than not viewed as “untouchable.”

They’re practically demigods…

The Verdict

Don’t join any agency that recruits positions left, right, and center.

Unfortunately, most insurance organizations operate in an MLM-type fashion. So you’ve got to be wary of whomever you join.

I did a survey on this topic, on the 103 Reasons Why Insurance Agents Fail or Quit the Business.

And the #1 reason is because they picked the wrong agency. 

Chances are if asked, “Which agency did you join?” eight out of 10 of them would have said an MLM-type company.

So please take your time. Do your due diligence. Don’t get head over heels for any organization. Insurance is a fantastic career and a great opportunity that shouldn’t be squandered.

It’s well worth the extra week or two figuring out which agency to join. Don’t let yourself get manipulated into joining the “best” agency in the world to find out it’s nothing like they promised.

If you have any questions, feel free to comment below. Thanks for reading!

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