A CAREER IN

LIFE INSURANCE
Institute Research Number 40
ISBN 1-58511-040-X
DOT Number 250.257-010
O*Net SOC Code 41-3021.00

A CAREER IN

LIFE INSURANCE
SALES ACTUARIES
UNDERWRITERS CLAIMS
HIGH EARNINGS STABLE PROFESSION WITHOUT
GRADUATE SCHOOL
I DONT WANT TO TELL YOU HOW MUCH INSURANCE I CARRY WITH THE
Prudential, the comedian Jack Benny used to quip, but all I can say
is, when I go, they go too.
An obvious exaggeration for the sake of comedy. (Benny was also
said to be such a cheapskate that when a mugger demanded, Your
money or your life! he replied, Wait, Im thinking about it.)
Still, the wisecrack has an element of truth to it. Insurance is in the
business of risk, and it can be a risky business. It is the collective job of
the team of life insurance salespeople, underwriters, actuaries, and
investigators to make sure that insurance companies are financially
sound, that premiums are appropriately priced for each policyholder,
that payments can be made to claimants without the whole outfit
going bankrupt. (Premiums refer to the amount paid for an insurance
policy, usually in installments.)
Nobody wants to contemplate his or her own mortality. But the
alternative is to risk the possibility of premature death that leaves
dependents or loved ones unprovided for. Life insurance protects
against financial loss in the midst of personal loss. It can guarantee
that children are educated, a spouse can remain in the family home, or
elderly parents will receive a retirement income.
The simplest type of life insurance policy, and usually the
cheapest, is term insurance, which provides protection for a specific

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period of time (20 years, for instance, or until the policyholder turns
60). At the end of that period, if the policyholder wants to renew, the
premium increases. If the policyholder dies within the period
stipulated in the contract the term the named beneficiary
receives the agreed-upon amount of money.
A different type of policy, whole life insurance provides lifelong
protection, and there is always a payout since the policyholders
eventual death is inevitable.
An annuity is another financial product issued by life insurers, and
is designed to provide a steady allowance, for example, during
retirement years.
There are different types of term insurance and several versions of
whole life insurance; there are tax-deferred and investment options;
and endless add-ons and customizations can be made to any policy,
but you dont need to learn about them until youre selling, pricing,
writing, or investigating policies yourself.
The life insurance industry is made up of insurers, or insurance
carriers, large companies that invest the money accumulated from
premium payments from policyholders so that it can pay out the
claims to beneficiaries; and insurance agencies, which serve as the
liaison between insurance carriers and customers. Some agents sell the
insurance and financial products of just one insurance carrier; they are
called captive agents. Others are independent agents who represent a
number of different insurance providers. Independent agents can do
research on behalf of their clients to get them the best value for their
money and can put together a package with the policies and services
that best meet clients needs. In addition to life insurance, such a
package may include investments and securities. Agents are also
increasingly qualified to offer financial planning services.

There are excellent career opportunities in the

trillion-dollar life insurance industry, requiring a diversity
of skills and offering a variety of benefits and rewards,
so keep reading!

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EXPLORING THIS CAREER
BECAUSE THERE ARE SEVERAL DIFFERENT CAREER PATHS IN THE LIFE INSURANCE
industry, there are different ways to explore and prepare for a career in
this field.
A good first step might be to look into an educational program
called Insurance Vocational Education Student Training (InVEST), which
is sponsored and administered by the Independent Insurance Agents
of America and is endorsed by the National Association of Insurance
Women. The mission of InVEST is to educate students about the
insurance industry and its diverse careers. It provides practical training
and experience, honing students talents into marketable skills. The
program is also designed to strengthen the insurance industry by
attracting a large pool of qualified recruits. An impressive two-thirds
of InVEST graduates enter some facet of the insurance industry.
The program, which can be implemented in any school or
community center, provides classroom assistance, job placement,
internships, industry guest speakers, field trips, prizes, and
scholarships. It uses the simulation concept where students establish
and run mock insurance agencies and home-based insurance practices.
Students sell policies, review and process applications, rate applicants,
perform bookkeeping, and handle claims. A step by step guide to
implementing this program is available on the InVEST Web site at
www.investprogram.org.
Also on the site is an interactive quiz to help you determine
whether you have the qualities necessary to be a successful
independent insurance agent. The bottom line is that you should enjoy
working with both people and numbers, prefer to express your
entrepreneurial spirit within a structure, dont require total job security
in a bureaucracy, are willing to both work in an office and travel locally
or regionally, and would rather advance by making your own
enterprise grow than by climbing a corporate ladder.
Practically the exact opposite description would depict the ideal
career candidate to become an actuary in the insurance industry. The
highly structured career path and upward mobility within a
corporation that are typical of jobs in this specialty provide the
stability and job security that many actuaries find appealing. Actuaries
usually have college degrees in a mathematical discipline, such as
actuarial science, calculus, or statistics; accounting, business
administration, economics, corporate ethics or law, finance, or another

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business field; or a technological discipline such as computers or
engineering. To prepare for this career, you should take as many of
these sorts of classes in high school as possible. The math courses in
particular should be pursued to the highest level offered and should
include college prep courses. This would also be the recommended
curriculum for aspiring underwriters, with an emphasis on computers
as well as math.
Ask your librarian or a math teacher to help you investigate
actuarial internships for high school students. These programs are
particularly interested in attracting minority students. The Minority
High School Scholars Academy for Mathematics-Actuarial Science
Careers is one example. It is sponsored by Katie Insurance School,
Department of Mathematics and Allstate Insurance Company and
takes place on the campus of Illinois State University in Normal. You
can find more information on internships online at this Web site:
www.BeAnActuary.com
Helping people manage their finances is an increasingly important
part of the life insurance professionals job, so the preparation
recommended for future financial planners also applies here. These
activities include investing in the stock market, which will tell you
whether you have the stomach and the confidence to make financial
decisions. (No shame if you dont thats why people hire financial
planners in the first place!) Join or start an investment club, in which
members pool their money and agree on investment vehicles, and
become its treasurer.
Try to get your school involved in the National Endowment for
Financial Education High School Financial Planning Program, which is
designed to improve the financial literacy of Americas youth in the
areas of goal setting, budgeting, and saving. It is provided free of
charge. Here is the Web site:
www.nefe.org/pages
/educational.html
If you plan to become a life insurance sales agent, you may be
able to improve your sales techniques with classes in psychology and
sociology, to help you understand why people behave the way they
do, and public speaking, which will help you make persuasive
presentations. But nothing you can learn in a classroom is as valuable
as the experience of selling itself even if its just homemade ices from
a cart attached to your bike. Especially if its just homemade ices from
a cart attached to your bike, because you are more personally invested

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in the process than if you are just ringing up jeans sales at the mall.
You have more to gain, and more to lose. Pride, self-confidence,
disappointment, discouragement are at stake. All salespeople must
learn not to take rejection personally, and if you start now you will be
way ahead of the game.

HISTORY OF THIS CAREER

MERCHANTS AND TRADERS IN THE ANCIENT CIVILIZATIONS OF CHINA, BABYLON,
and Phoenicia pooled their resources and shared their risks to protect
against loss. The earliest insurance initiatives were designed for
merchants engaged in especially risky commercial ventures, for
example, if a ship did not reach its destination intact or failed to return
to pay the merchant for the sold merchandise. The trader would
borrow money using the seagoing goods as collateral; if the ship
returned with the merchants payment, he repaid the moneylender for
the loan, plus interest, plus a premium for the insurance. If the ship
did not return, the debt was forgiven. Lenders found this practice to
be very profitable for ships returned more often than not and
merchants were happy to pay extra for the guarantee that one
catastrophic shipwreck or unscrupulous crew would not put them out
of business.
Ancient Rome seems to have been the birthplace of life insurance.
There, burial clubs or associations covered funeral expenses for
members, who made regular payments during their lifetimes, and
provided financial assistance to the family members of the deceased.
Around 220 AD, a Roman public official and legal scholar had devised
perhaps the worlds first mortality table. A mortality table calculates
life expectancies for people with various characteristics (for instance,
economic status and gender) and at different ages. Today, these tables
are prepared by actuaries and are an indispensable tool for the life
insurance industry.
Guilds, which were sort of the Medieval version of a labor union
and were formed by practitioners of different crafts, took care of their
members families in much the way life insurance carriers care for their
policyholders today. Some even guaranteed the payment of ransom in
the event a member was kidnapped by pirates! But life insurance
became prevalent much more slowly than other types of insurance,
such as fire, because it involved two practices that were illegal in many

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places: usury, or the charging of interest on borrowed money; and
placing stakes on a particular outcome, which was considered betting.
In 1693, the astronomer Edmund Halley, for whom the comet is
named, developed the first mortality table based on statistical
principles. Halley used baptism and death records and the laws of
compound interest to calculate the appropriate price for life insurance
products and the value of an annuity.
The first life insurance carrier in the United States was
incorporated by the Synod of the Presbyterian Church in Philadelphia
in 1759. The Corporation for Relief of Poor and Distressed Presbyterian
Ministers and of the Poor and Distressed Widows and Children of
Presbyterian Ministers solicited funds from congregations, church
elders, and ecclesiastical councils. In addition to providing financial
relief to ministers and their widows and orphans, the foundation lent
money to the Continental Congress to finance the battle for
independence.
Around 1810, life insurance began to be sold to the general
public, and there was a great need for it. With industrialization,
Americans left their farms for the city, which put them at greater risk
both financially and physically, and epidemics (yellow fever) and
diseases (tuberculosis) often ensued from overcrowding and
unsanitary living conditions. The Civil War and conflicts related to the
United States expansion westward meant that a certain longevity was
by no means guaranteed. Seven leading life insurance companies were
established between 1843 and 1847, all of which are still in operation.
By 1850, the total value of existing life insurance coverage in the US
exceeded $97 million; within two decades, that figure would approach
$175 million.
In the mid-19th century, financial misjudgments made in the
fervent struggle to acquire customers forced several insurance
companies to declare bankruptcy. States began to form regulatory
bodies to monitor the industry, which ruled, for instance, that insurers
must deposit reserve funds with state treasuries and prepare annual
reports describing their current state of operations. A national
economic depression in the 1870s adversely affected many financial
institutions, but the insurance industry was revived by the increasing
need for insurance brought on by spreading urbanization and
industrialization. In addition to life insurance, a demand was
developing for auto liability insurance, property insurance, disability
insurance to replace income lost due to illness or injury, workers

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compensation to protect employees whose illness or injury was job
related, and industrial life insurance for low-income workers. Among
the innovations in life policies around 1900 were the cash surrender
option, in which the policyholder terminates a permanent life
insurance policy for a reason other than the death of the party insured
under it. The cash surrender value depends on the holders contract
and equals the cash value minus surrender fees charged by the
insurance carrier.
When the United States entered World War I, a substantial
amendment was made to the War Risk Insurance Act enabling the
federal government to provide life insurance for servicemen.
Commercial insurance companies were reluctant to underwrite
coverage for members of the military since death rates during wartime
are impossible to predict; therefore, insuring servicemen was an
extremely risky business operation. Ninety-three percent of the eligible
candidates accepted the governments offer, and the majority chose
coverage in the maximum amount of $10,000. This made the US
government the nations largest life insurer.
During the Depression, the amount of insurance sold plummeted;
death rates were high, forcing payouts to some policyholders, while
other policyholders were unable to pay their premiums; and economic
circumstances enfeebled insurance companies investment holdings.
But the industry recovered once again. When the Depression was
over, Americans began to seek financial security. After World War II,
the United States enjoyed a flush of prosperity that lasted into the
1960s. Millions of Americans were able to retire and enjoy their
golden years living comfortably, traveling and pursuing their hobbies,
financed by Social Security, investment income, pensions, and
proceeds from the sale of their family homes.

We are living longer, so we must retire later; the

Social Security system is in trouble; employer bankrolled
retirement plans are becoming rarer. All of these factors
have contributed to the evolution of the life insurance
agent from mere salesperson to financial planner and
consultant, and to the formation of a vital and growing
industry that has $2 trillion invested in capital markets.

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WHERE YOU WILL WORK
LIFE INSURANCE AGENTS MAY BE employed directly by life insurance
carriers, but most work for independent life insurance agencies. Life
insurance agents may also be employed by the different types of
institutions that sell insurance, such as banks and securities brokers.
Independent agents are self-employed and operate as a small
business. About one-third of insurance sales agents are self-employed
independent contractors. Many insurance claims adjusters work from
home or telecommute, visiting their offices perhaps once a week.
In contrast, far fewer insurance claims appraisers, examiners, and
investigators are self-employed perhaps just one in 50. The vast
majority in these specialties are employed by insurance carriers to
prevent fraud, although agencies, brokerages, independent adjusting
firms, and claims processing outfits also hire them.
Insurance companies and agencies are located in suburban areas
and small towns, but the majority are in large cities. Practitioners in
this field work from offices, although they may travel short distances
to meet with clients.
About 70% of all salaried actuaries work in the insurance industry,
including pension funds. Most of them work in the large urban centers
where insurance carriers are headquartered. Underwriters, too, are
employed by insurers.

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THE WORK YOU WILL DO
Sales A life insurance salespersons job consists of three main
components, each of which involves a multitude of tasks: prospecting,
selling, and maintenance.
The purpose of prospecting is to add to the base of clients.
Individuals, corporations, credit unions, and other entities are just
prospects until they sign on to become clients. Selling is
self-explanatory, but perhaps trickier and more sophisticated than it
sounds. The third part involves maintaining relationships with current
clients as well as with promising prospects.
Locating and courting new clients is especially important for
agents who work on a commission-only basis. Cold calling is one way
to generate business. It simply means phoning prospects, usually from
a list that has been narrowed down by zip code, area code, or
telephone exchange so you can be sure youre approaching people
who live in your area. The purpose of a cold call is not to sell over the
telephone, but to set up an appointment. Sales professionals say that
within 15 seconds you have to give the prospect a reason not to hang
up on you, so your introduction must be both brief and compelling. If
the prospect does not want to meet, you can follow up with a
personal letter expressing your appreciation for the persons time and
your hope that you can work together in the future.
You can also purchase names, telephone numbers, and addresses
from list brokers that categorize people within a certain area
according to income, family makeup, or age. Based on this
information, you can make calls or send letters in which you address
what you presume to be each individuals personal life insurance
needs.
Speaking at public seminars on financial management or related
topics is another way life insurance salespeople can reach potential
clients. Presenting yourself as an expert before a group of people, and
then proving that you are one, is a great way to establish credibility
and trust.
Some salespeople and insurance carriers send out informative
newsletters that are mailed to their prospective client base as a
promotional tool. Following up on previous clients or prospects who
expressed interest but declined to buy is another prospecting
technique. Increasingly, consumers do online research when they are

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interested in buying an insurance policy. Many Web sites collect their
personal information and distribute it to salespeople who have signed
up for the service. This is a legitimate way to do business, and the
prospects are good leads since they already intend to buy insurance.
Selling, as a profession, can be so profitable and yet so difficult to
accomplish. There is an infinite array of written material, experts and
conferences that will reveal to you the one true secret to selling
success, for a price. But the basics are simple, and effective
salespeople of life insurance or anything else never forget them.
Opinions are formed within seconds of a meeting, so sales
professionals always keep in mind that one never gets a second
chance to make a first impression. Selling has always been about
relationships, and the effective salesperson is not only pleasant to be
around but sincere. When you say you have the prospective clients
best interests at heart, you must mean it.
Qualifying is an important step. It marks the beginning of the
questioning process that will proceed, if your sales efforts succeed,
until the prospect becomes a client. During this process, the
salesperson and the prospective client agree on the latters needs.
Qualification reveals to the salesperson the clients values, interests,
and goals and encourages the client to focus on these matters,
thereby becoming more open to the idea that what the salesperson is
offering is something that is in fact needed. These needs may range
from the purely pragmatic to the highly emotional, particularly when
discussing life insurance. The salesperson asks both close-ended
questions that have a simple answer (What is your current income?)
and open ended questions that do not (Where do you hope to be in
five years?).
Based on the information, the salesperson then makes
recommendations for the most appropriate coverage and financial
products. In addition, there is a growing tendency for one agent to sell
multiple lines of insurance, such as medical and health, property
(which protects the business of the insured party against direct
physical damage or loss of assets), and casualty (which protects the
insured party from liability resulting from injury or death to individuals
or from damage to property).
Typically, the next step in the sales process is the objection, when
the client tries to avoid buying the policy because its too expensive,
wants to consult with someone else first, or wants to shop around.
This delaying tactic is a reflection of human nature and not the skills of

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the salesperson. It is a judgment call whether to continue to try to
close the sale immediately or to be gracious, cut your losses, and move
on.
Maintaining relationships with current clients and keeping track of
changes in their lives that may warrant the purchase of a different
policy or financial product are critically important. For one thing, you
gave them the implicit or explicit promise that you would take care of
them, their families, and their businesses. Also, happy clients will
mention you by name, and word-of-mouth is the most effective form
of advertising (and its free!). When you contact a referral or a referred
party contacts you, you are way ahead of the game because you
already know the person is interested in buying life insurance from
you.
Actuarial It is customary for actuarial trainees to rotate among
different job assignments every 18 months or so. The purpose is to
provide a broad familiarity with various facets of actuarial work and
insurance operations such as underwriting, marketing, product
research and development, accounting, and data processing. Rotations
are determined according to the trainees experience, examination
level, and interests. Initially, tasks might include preparing data or
correspondence for project managers, and evolve to the supervision of
clerks, drafting of reports, and research. Senior actuaries may also
volunteer to rotate, informally and on an unscheduled basis, to keep
their skills sharp and re-familiarize themselves with different aspects of
the job.
Actuaries use mathematics knowledge and statistical techniques
to assemble and analyze data. They calculate probability and risk,
define complex problems, probe and scrutinize possible solutions, and
reach expert conclusions.
The projects they are engaged in include the design, development,
pricing, and putting into service of life insurance products that are
profitable, competitive with the products offered by rival companies,
and meet the needs of current and future policyholders. Actuaries
determine how much money an insurance carrier should invest, and
where, so that sufficient funds will be available when policyholders
claim them. They also forecast consumer demand for a new product or
in a new region.

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 Actuaries are often involved in long-term corporate planning,
making financial projections and providing tax advice. They take their
employers financial pulse by conducting studies comparing company
statistics regarding death and disease rates, corporate expenses, and
investment holdings with the industry average. They communicate
their findings and clarify technical matters to executives, other
members of the staff, including the sales force, government officials,
and even policyholders.
Advancement within the field depends in large part on success in
the actuarial examination process, as well as satisfactory performance
on the job. At Minnesota Life, the career path takes trainees through
the following succession of titles prior to being named actuary:
Assistant Actuarial Analyst, Actuarial Analyst, Senior Actuarial
Associate, Assistant Actuary, Associate Actuary. Usually, top-ranking
actuaries identify their status with the designation Fellow, Society of
Actuaries after their names. Actuaries may be promoted to
management or executive positions in other divisions of their
companies, such as pensions or underwriting.
Some actuaries with graduate degrees teach the next generation
of mathematicians and statisticians at colleges and universities. Others
become consultants and independent contractors.
Many actuaries present testimony as expert witnesses in court,
and can take continuing education courses to perfect their technique.
(It can even become a profitable sideline or an occupation in itself.) A
life insurance-related case may require an actuary to forecast the
lifetime earnings of a person who lost his life in an accident. Actuaries
are called upon to perform forward-looking calculations involving
probability and risk in all manner of cases. Testifying is a challenge
because the opposing attorney will try to discredit the actuarys
testimony and the actuary must defend the methodology in detail
without causing the judges and jurys eyes to glaze over.
Charles L. McClenahan writes in Actuarial Review, To those who
enjoy it, nothing measures up to the opportunity to defend a
well-grounded actuarial opinion against the onslaughts of an
alternative presented by another professional.

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Underwriting With their innate business sense and analytical ability
enhanced by sophisticated computer applications, underwriters assess
the ways in which emerging issues affect long-term risks associated
with life insurance. They work with actuaries to establish premium
rates and write policies. They evaluate insurance applications from
both individuals and groups, along with supplemental materials such
as medical records, and accept or reject the applicants. If they decide
to issue the policy, they determine the appropriate cost of the
premium.
When insurance plans were simpler and carriers were less profit
oriented, salespeople were able to approve or deny applications. This
is no longer the case, so now underwriters occasionally accompany
agents on sales calls to make presentations to prospects or to make
the evaluations and provide the information the salesperson is no
longer equipped to do. The underwriter is the key link between the
carrier and the agent.
Claims Claims adjusters, appraisers, examiners, and investigators
serve as a liaison between the insurer and the public with the mission
of resolving claims equitably and promptly. They review causes of
death, investigate accidents, consult with police officers, physicians, or
other professionals; and interview witnesses and claimants. They
prepare reports, including photographs and statements of witnesses
or experts, to help them evaluate the claim. They also determine what
exactly is covered by the insurance policy at issue and the amount the
claimant is to be paid. They may authorize payments, negotiate
settlements, resolve billing-related disputes, or testify in court if a
claim is contested.

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 LIFE INSURANCE PROFESSIONALS TELL
YOU ABOUT THEIR CAREERS

I Provide Insurance Consulting

Services for Clients in the Miami
Beach Area Our firm helps clients prepare a
personally tailored insurance plan that meets their needs. We
work with their attorneys, accountants, brokers, and others to
help them keep what they have, protect their families, and
prepare for the future. Were independent agents, so we represent
a range of carriers of not just life insurance, but also health,
disability, and long-term care. We also assist with estate and
retirement planning.
One of the key responsibilities in my position is helping clients
figure out how much life insurance they need and whether its
smart to treat it as an investment. Usually, it is not. There are
better and more economical ways to pay for a childs education
and to plan financially for retirement. I would discourage single
people with no dependents from buying a life insurance policy.
Although anybody with an income and a dream needs to make a
financial plan, it doesnt necessarily have to include life insurance.
Children dont need life insurance unless they support the family,
and I am disdainful of carriers that use fear to try to persuade
parents they should buy such a policy. A better way to protect
your child is to take out more life insurance on yourself.
The amount of life insurance a person requires depends on
how much money they need to replace and for what period of
time. For example, someone with young children generally needs
roughly nine times their annual salary to cover the childrens
upbringing. It is my job to help clients make calculations of this
nature.
Life insurance is a foundation piece in wealth management. A
financial/investment strategy is shaped like a pyramid. At the base
you have your savings accounts, checking accounts, health
insurance, and life insurance. These are resources you can count
on if something bad happens, rainy day money.

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 The next step upward toward risk includes mutual funds and
annuities. Annuities are like reverse life insurance policies. In life
insurance, you give us money over a period of time and if you die,
your family gets a big check. With an annuity, you give us a big
check and we pay you back over your lifetime. Its purpose is to
provide retirement income so people dont outlive their assets.
There are two types of annuities: Deferred annuities have been
popular for about 20 years; immediate annuities became very
popular recently.
At the top of the pyramid are the very risky investments:
commodities, collectibles, and artwork.
The best education for this career, in my opinion, comes from
the life insurance industry itself, not from college. I myself have an
undergraduate degree in psychology. Kids come out of school with
degrees in finance, degrees in insurance, and they dont have a
handle on reality. All they know is theory. To prepare for this
career, I recommend taking the continuing education courses that
lead to designations like Life Underwriter Training Council Fellow
LUTCF, Chartered Financial Consultant ChFC, both offered at The
American College in Bryn Mawr, Pennsylvania, and Certified Life
Underwriter. The National Association of Insurance and Financial
Advisors also offers sales and skills training.
I have earned the ChFC and LUTCF professional designations. I
have taken courses leading to the Certified Financial Planner CFP
designation, but I dont intend to sit for the CFP examination
because I dont agree with their philosophy. They push fee-based
planning, where the consultant gets paid by both the client and
the financial institution, and I know from experience there is a way
to do business in this field without making the client write a
check.
Im independent, so I have my pick of just about anybodys
products. I believe this is in the best interest of the client. The
client is who you have to keep happy, not the financial institution.
If you have a successful business it doesnt matter how youre
compensated, fee-based or commission-only.

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 I Am an Independent Life Insurance
Agent in Charleston, West Virginia I got into the
life insurance industry back in 1995. I have a BS degree in
agriculture and horticulture. I got tired of working for the
government and wanted to try a career in sales.
I currently use a lead-generation program by which customers
send in a card saying that they are interested in a small life
insurance policy for burial purposes. I locate their addresses and
go visit them. I first let them talk and they will tell me what their
desires and needs are. After a needs analysis I make a proposal to
them, keeping in mind how much they can afford at the present
time. Nobody wins if an agent sells a customer a policy with a
premium that they cannot afford. The policy will lapse.
Financial planning and wealth management play a big part in
todays life insurance sales. Long term care, disability income,
Medicare supplement, and retirement income are just as
important.
I would advise anyone getting into this business to stay
focused, make plenty of friends, be mentally strong, and dont
give up. This is a great business, but very hard.

I Am an Actuary for a Life Insurance

Company Actuaries are mathematicians who
assess the financial implications of future events that are likely,
but not certain, to occur. Probability is the actuarys
stock-in-trade. In statistics, probability is expressed as a ratio that
conveys the likelihood of something happening in my case,
average mortality rates, or the likelihood of somebody dying at a
particular time. From this information, I calculate the amount of
money the company must keep in reserve so it can pay
policyholders and claimants as well as annuities and pensions.
There is both routine work and special projects. The projects I
have worked on over the years have included annuity product
design and pricing, corporate valuation, disability projections, and
helping to develop a reinsurance business from the ground up.
Reinsurance is insurance taken out by an insurance company from
another insurance company to protect from heavy losses resulting

17
from some catastrophic occurrence. Just like any type of
insurance, reinsurance allows risk to be distributed among many
parties. Reinsurance plays a role in managing loss from natural
disasters and man-made tragedies like terrorist attacks.
There are a lot of things to recommend this career. If you love
statistics and logic puzzles, youll love your job as an actuary. Its
not about just solving problems, its also about figuring out how
the problem should be solved. Your technical skills are valued, but
so are your ideas. The earnings are great.
I dont think there is as much opportunity in the life insurance
business as there used to be for actuaries, but the great thing
about it is that the skills travel well. If you cant get a job in life
insurance, youll definitely get a job in the medical, health, or
property and casualty insurance industries. And if not insurance,
then there are growing opportunities in the financial services
(banking, securities, commodities), data processing and computer
services, health services, management consulting, and even in the
Social Security Administration. Also, a lot of actuaries are opening
up their own consulting practices.
I think a lot of actuaries will agree that the worst part of the
job is the exam process. We appreciate the need for it, and we like
knowing how much of a raise well get when we pass. But its a lot
of studying and a lot of pressure.

I Am the President of a Life

Insurance and Financial Consulting
Firm in Madison, Wisconsin I have a
communication arts degree in radio, television, and film. My
father was in the radio business. Initially I thought I would either
become a sportscaster or go into advertising sales because I
always had a sales attitude.
The majority of my time is spent reviewing clients positions,
which I do daily. My business is split 70% in fixed annuities and life
insurance and 30% in securities such as real estate investment
trusts, mutual funds, stocks, and bonds.

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 We have a batch of clients whose holdings require closer
attention than most. I review their position, go see people, talk to
them, so most of my time is spent working with clients, reviewing
their financial situations and introducing them to new investment
ideas they might want to try.
We do some prospecting, but most of our new clients are
referrals, which is a great testimonial to the satisfaction of our
current clients. And this is the hard part: Once you get to a point
when you dont need any new clients, once youre that successful,
thats when the clients start coming to you.
I think it is important to have a college degree because it
shows an employer you can establish a long-term goal, and this is
what you will have to do for your clients. But when my firm is
hiring a young person, were not necessarily concerned with your
grade point average. We want to know if you attended college, if
you graduated, but were more concerned about your interests
and activities. You need something to be excited about in your life.
People who are enthusiastic about some outside interest are a
natural to work in this business and are bound to be successful in
it. You cant hurt yourself by getting a business degree, but it is
obviously not necessary; I dont have one.
I can get a really good feel for who is going to like this work.
This is truly the key: You have to like dealing with people, dealing
with money, taking risks, and the thought of being your own boss.
Be sure you want to work with people and help them. If it scares
you to death to walk up to a stranger and introduce yourself, this
is not the job for you. You definitely need social skills. And you
need resilience because you will absolutely get knocked down a lot
at first. But then you develop confidence and when you exude
confidence, clients have confidence in you. If you cant deal with
ups and downs, dont do it.
I belong to the Million Dollar Roundtable, which represents
the top 6% of all life insurance and annuity producers. You will
want to aspire to belong to that group. What you will learn from
them will make you extremely successful in this business. Im
heading to the annual conference soon. There will be 7,000
people there, half from the Pacific Rim. Its a phenomenal
organization.

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 The best part of my job is that I work with different people all
the time, different personalities. I get to play a round of golf with
a client, and thats work! I enjoy helping people figure out where
theyre going.
What I dont like is feeling bad when things go awry with
investments. I always do my best, but I hate to disappoint. And
dealing with corporate bureaucracy or dealing with large
insurance companies is a nightmare.
I would tell high school students that if they pursue this
career for even six months, what they learn during that period will
guarantee they will never have financial problems of their own in
the future. If my business shut down tomorrow I would never have
to worry about money. I know I could go anywhere and do
something and succeed. That is a very powerful lesson.

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PERSONAL QUALIFICATIONS YOU WILL NEED
ALL LIFE INSURANCE PROFESSIONALS MUST ADHERE TO THE HIGHEST ETHICAL
standards at all times. Insurance professionals are entrusted with
peoples livelihoods, families, and futures. All business dealings must
be handled with the utmost integrity.
Initiative, the ability to work independently, and motivation to
succeed will take you far in this career. You should have leadership
qualities and be able to take charge and make things happen.
Analytical skills are important, as is computer savvy. You will have to
deal with many others on a regular basis, including clients, claimants,
and colleagues, so interpersonal and communications skills are
necessary. This means being able to listen as well as express yourself
orally and in writing. You should also enjoy helping others. Licensing
and certification are required for many jobs, so you have to be willing
to continue your education throughout your career.
Actuaries must be particularly avid students who excel in math
and computers. They have polished technical skills and probing minds,
and enjoy solving sophisticated problems and playing strategy games.
A head for business is also important.

Underwriting is a position of great

responsibility that calls for an inquisitive mind,
self-discipline, a detail-oriented nature, and good
judgment. Claims investigators must possess
investigative skills and practice diplomacy.

Sales representatives must be exceptionally self-motivated and

confident, and their interpersonal skills must be of the highest order.
Their very ability to make a living depends directly on their success in
fostering and managing relationships with clients. Presentation,
negotiating, and conflict-resolution skills are always needed in sales
situations. Sales reps must also be adaptable and able to think quickly
so they can offer creative life insurance and financial management
alternatives on the spot to clients who do not accept their first ideas.
It is also critical that they can explain complex financial and policy
information in simple terms without appearing to condescend.

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ATTRACTIVE FEATURES
DEPENDING UPON YOUR INCLINATIONS AND ASPIRATIONS, OCCUPATIONS IN LIFE
insurance can offer you an entrepreneurial adventure or a rock-solid
career choice with job security and a steadily increasing income.
On the entrepreneurial end of the spectrum are independent
insurance agents. They are essentially small business owners, often
home-based, with all the advantages and personal fulfillment that
business ownership implies. They can keep their own hours sleep in
and work late if they are night owls, take time off to attend an
opening game or childs school play.
As is true of virtually everyone who is self-employed, the
independent agents earnings are directly related to the individuals
drive, initiative, expertise, determination, ingenuity, and ability. The
more you put out, the more you will take in. You control your success;
you steer your own career.
Life insurance agents are respected professionals who generally
enjoy strong ties with their communities and play a meaningful,
positive role in their clients lives. It is a source of great satisfaction to
know you are instrumental in protecting people from loss, achieving
financial freedom, and making their dreams come true. You enjoy your
clients trust and appreciation. Underwriters in particular make
important decisions with far-reaching implications and impact.
This work can be challenging and demanding, but being able to
meet these challenges and demands is gratifying.
If you are employed by one of the large life insurers, you will
probably experience substantial support for your personal career
development, including extensive training programs, all designed to
help you realize your potential. Benefits can be generous after all,
insurance is one of the standard items in a compensation package!
A career as an actuary brings another set of rewards. As an
actuary, you enjoy the benefits and prestige of a professional title
without having to go to graduate school. You are in charge of your
career because advancement is based strictly on merit. How far and
how fast you ascend the ladder of success is largely up to you.
Actuaries possess many transferable skills. They enjoy learning, are
goal-oriented and self-motivated, possess good business sense and
problem solving abilities, and are high achievers. These are skills
eagerly sought by employers, so it is not difficult to switch careers.

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 But you may not want to, ever. Career satisfaction is high and it is
a well regarded profession in the perspectives of outsiders, as well.
Actuarial work is consistently ranked in one of the top 10 places in
respected occupations. The criteria in these surveys include
employment outlook, environment, income, physical demands,
security, and stress.

UNATTRACTIVE FEATURES
INSURANCE COMPANIES ARE IN THE BUSINESS OF RISK, AND WHILE IT IS THEIR
purpose to identify and minimize risk, it can be a stressful atmosphere.
If an underwriter is too conservative in risk assessment, the insurance
carrier might lose business to rivals; too liberal, and the company
might be forced to pay extravagant claims.
Independent life insurance agents face all the headaches that
business ownership implies. When you are an employee, you
essentially get paid for just showing up (although you wont be an
employee for long if thats all you ever do.) When you work for
yourself, you earn money only when you perform. That often means
little time off for the first couple years of your practice. You also dont
receive the benefits that go along with working for a corporation, and
you have to perform all the paperwork and administrative tasks
yourself, at least initially.
Independent life insurance agents often work on a fee-based
compensation system, which means they charge clients and also
receive commissions from the insurance carrier whose policies they
sell. Some industry observers believe fee-based compensation is not in
the best interest of the client, so this practice is sometimes frowned
upon.
Insurance professionals often work long hours, and they may have
to show up for appointments during evenings and weekends to
accommodate clients schedules. They may also work outside of
regular business hours to catch up on paperwork or track down a lead
on a prospective new client. Underwriters in particular may be
required to work longer hours due to corporate downsizing in the
insurance business. Insurance investigators may experience
resentment, hostility, or indignation from claimants who are anxious
that the investigators interference may mean they will not get the
cash they are counting on.

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EDUCATION AND TRAINING YOU WILL NEED
THERE ARE MANY DIFFERENT SCHOOLING OPTIONS FROM WHICH TO CHOOSE IF
you are planning on a career in life insurance. Your degree may be in a
subject as industry-specific as actuarial science or in a subject that
simply lights the fires of your imagination. While a certain curriculum
may be recommended to prepare for a particular career path in this
industry, none of it is written in stone. By all means, study something
that excites you. What you learn in school will be less meaningful or
valuable to your success in this industry than what you learn on the
job.
All occupations in the life insurance field involve
employer-supported training programs, continuing education, and
professional designations. But dont think this means you should write
college off altogether; while its true you can get a job as a sales
representative and even a highly paid actuary without a college
diploma, those four years will teach you life lessons like living
independently and thinking for yourself and foster relationships that
will serve you for the rest of your life.
Life insurance carriers and agencies sometimes prefer to hire
salespeople who have studied finance, business administration,
accounting, or marketing. But classes in economics, psychology, and
sociology can also help sales reps understand the complicated
relationship between people and their money. This can make them
better salespeople, contributing meaningfully to the firms profits
while helping clients meet their financial goals. If you are determined
to acquire a degree in insurance, Culverhouse College of Commerce
and Business Administration at the University of Alabama
(www.cba.ua.edu) offers a major course of study in Insurance and Risk
Management. Many MBA programs offer a concentration in insurance,
and Florida State University (www.fsu.edu) even supports a doctoral
concentration in the Department of Risk Management/Insurance.
Internships are a way for a company to recruit and hire talent and
can play an invaluable part in a sales agents development and
training. Most large insurers offer them, and they are usually open to
college juniors and seniors, graduate students, and students of
two-year academic programs with substantial work experience. Be
sure to check the requirements of the internships that interest you
when you are a freshman or sophomore.

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 MetLifes sales internship program teaches participants about
financial products and services, provides instruction on prospecting,
selling and underwriting, and even pays for state life insurance licenses
so interns can sell products. Interns work in a local sales office
side-by-side with veteran financial services representatives who act as
mentors. The time commitment is 20 hours a week and compensation
is on a commission basis. Here is their Web site for more information:
www.metlife.com
Once you are hired, it is highly likely that your employer will
provide not only in-house training but also some kind of tuition
assistance for the pursuit of industry-related education outside the
company. For instance, Minnesota Life (www.minnesotamutual.com/)
pays all exam fees and study materials for programs offered by the Life
Office Management Association, which confers a basic understanding
of life insurance and life company operations; and the Chartered Life
Underwriter/Chartered Financial Consultant program, which provides
more detailed information about life insurance and sales. Professional
designations Minnesota Life supports include Certified Financial
Planner, Certified Pension Consultant, and Chartered Financial Analyst.
To more completely embrace the role of comprehensive financial
planner, many life insurance representatives and brokers are pursuing
credentials that allow them to sell products like stocks, bonds, and
mutual funds. The National Association of Securities Dealers
administers an examination that qualifies salespeople as securities
representatives.
Actuaries spend so much of their careers studying for exams that
it seems redundant to pursue the discipline in college. That said, the
University of Iowa (www.stat.uiowa.edu/) offers actuarial science as a
major course of study leading to a bachelor of science; so do two
other univerisities:

Indiana University Northwest

Website: www.iun.edu/math/majoract.htm

University of Central Florida

Website:
www.ucf.edu/catalog/current/UCF_Degree_Programs/dp_act.htm

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 There are about 100 other colleges with similar programs. At
some schools, the math or statistics departments allow students to
declare a concentration in actuarial science. The Society of Actuaries
features a listing of academic programs on its website at
www.soa.org.
Actuarial internships are similar in purpose and structure to those
for sales representatives. New York Life Insurance Companys
internships combine actuarial classes with relevant work experience.
Classroom topics include computers (Excel, APL programming, PTS
computer modeling) and presentations from New York Life employees.
Interns work alongside practicing actuaries on various projects,
analyzing and solving problems and making decisions. There are
summer and winter internships; in the summer, Fridays are half-days
and all employees are permitted to don business casual dress
otherwise formal business attire is required. There is also a full-time
actuarial trainee program. Here is their Web address:
www.newyorklife.com/
The Society of Actuaries administers actuarial examinations for the
life and health insurance industries, among others. The first several
exams evaluate the test-takers proficiency in such branches of
mathematics as calculus, probability, and statistics. They also serve as a
self-assessment of the individuals suitability for this career. Later
exams cover subjects like pensions, individual life and annuities,
investments, and finance. Prospective actuaries can begin the
examination process while they are in college with the assistance of
self-study guides. If they wait until they have a job, however, the
support from their employer will be significant the company will
cover costs and fees related to the exam, give time off for study,
provide review classes and study facilities, and throw parties for you
when you pass. Employees who pass the exams advance to the
associate level, generally within three to five years, and the fellowship
level roughly three years after that.
Liberty Mutual Group (www.libertymutual.com) seeks candidates
for underwriting positions who possess a bachelors degree in
economics, business administration, finance, math, insurance, or
liberal arts (an extremely broad discipline that includes literature,
languages, history, philosophy, and sciences); and for claims positions,
the only requirement is a college diploma.

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 For life insurance underwriters, continuing education is also
necessary for advancement. They typically seek the Chartered Life
Underwriter (CLU) designation. Additionally, the Academy of Life
Underwriting is an organization that educates the home office
underwriter with examinations, seminars, a Web site, and a journal.
Many states rquire life insurance claims adjusters, appraisers,
examiners, and investigators to be licensed. Licensure may also involve
continuing education to keep abreast of court decisions, regulatory
developments, and new drugs and medical procedures. In addition,
examiners may choose to earn the Associate, Life and Health Claims or
Fellow, Life and Health Claims designation from the International
Claim Association.

WHAT YOU WILL EARN

THE FINANCIAL REWARDS OF A CAREER IN LIFE INSURANCE CAN BE CONSIDERABLE,
and many employers particularly large insurance carriers offer a
stunning array of benefits and perquisites (also known as perks).
Insurance companies spend a lot of money, time, and effort recruiting
and training the finest young people they can attract, and they have
no intention of letting such an investment walk out the door.
Actuarial and sales positions garner the highest earnings, and in
both cases the salaries are hard-won. Salespeoples incomes depend
largely on commissions, the level of which directly reflects their
abilities, work ethic, and drive. Actuaries incomes depend largely on
how far they have advanced in the examination process, which also
reflects their abilities, work ethic, and drive. One big difference is that
actuaries who pass a certain exam may take comfort in the knowledge
that they will soon be earning a certain salary; nobody who works on
commissions from sales ever knows exactly what any given years
income will be.
The average entry level salary for an actuarial position at a life
insurance carrier depending on the size and location of the employer
is in the neighborhood of $45,000. According to a recent salary
survey by D.W. Simpson & Company (www.dwsimpson.com), an
actuarial recruiting firm, actuaries in the fields of life and health
insurance who have achieved the associate designation from the
Society of Actuaries receive a salary of up to $75,000 after two and a
half years of employment, and over $200,000 after 14 years.

27
 Those who have received the fellowship designation make
between $100,000 and $250,000-plus, depending on length of
employment. Some employers award cash bonuses for the
achievement of a professional designation.
The median annual earnings for salaried life insurance agents are
roughly $45,000. With commissions, a successful salesperson can
expect to bring in $75,000 to $100,000 per year. Performance bonuses
can add significantly to earnings.
For life insurance underwriters, median annual earnings are
approximately $45,000; but effective and experienced underwriting
professionals can earn more than $80,000.
Claims adjusters, examiners, and investigators employed by life
insurance companies usually earn about $45,000, but salaries can
exceed $75,000.
The benefits offered by insurance companies can include generous
tuition reimbursement, work/life balance support programs, lunchtime
seminars on life management topics, subsidized recreational and social
gatherings, unpaid leave, volunteer and community support programs,
matching gift programs, retirement and pension plans, profit sharing,
long-term and short-term disability coverage, various health and
medical care options, up to five weeks paid vacation per year, and
more.

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OUTLOOK FOR THIS CAREER
LIFE IN SUR ANCE IS RE CES SION RESISTANT IN THE ABSENCE OF A
cataclysmic economic depression, it is considered a necessity rather
than a discretionary purchase. This industry is much less affected by
economic conditions than others are. But in all cases, a broad
knowledge of insurance will ensure your chances of sustained
employment, since you can take your skills and knowledge elsewhere.
According to the Web site of the Wharton Business School at the
University of Pennsylvania, which offers an MBA in insurance and risk
management and actuarial sciences, The growth in the number of
firms providing personal financial planning has increased the demand
for persons with education in the use of life insurance and related
mechanisms in capital accumulation and estate conservation.
Insurance sales agents and brokers who are qualified to sell annuities,
securities, and other financial products will be in the best position to
succeed. Of course, traditional securities brokers and bankers will pose
a competitive threat in this area.
In an effort to control costs, many insurers are trimming their
sales staffs and relying instead on independent agents. Meanwhile,
the typical independent agency is offering more and more
opportunities for young people to hold management positions and
even achieve part ownership in the business.
Although consumers are turning to the Internet to find out about
life insurance and related items, they will still want to sit down with a
living, breathing human being before they buy anything. Savvy agents
will not be threatened by technology but rather will use the Internet to
market their services and reach potential clients.
Underwriting is a stable profession and even less vulnerable to
economic downturns than other positions in the life insurance
industry. Despite computer software that makes the underwriters job
easier, declines in employment rates are not anticipated. The same is
true for claims adjusters, appraisers, examiners, and investigators.
Actuaries will always be in demand, if not necessarily in the life
insurance field. If the job openings in life insurance have declined
when you begin looking for work, you can find a job in health,
property, or casualty insurance; management consulting; public
relations; securities and commodities; the government; information
technology; or academia.

29
GETTING STARTED
WHILE YOURE STILL IN COLLEGE, ASK YOUR CAREER-PLANNING COUNSELOR TO
help you locate one of the many internships offered by major life
insurance carriers. Internships present tremendous opportunities on
many levels. The experience will be invaluable, whether you decide to
go into this field or not. It will make you an attractive candidate for a
full-time position; indeed, recruitment is the primary purpose of the
internship programs in this industry. It will be fun many are
headquartered in the nations most exciting cities and insurance
companies consider recreation and social activity an important agenda
item. And most internships are paying positions.
If you dont go to work for the company you interned for, or if you
dont intern, its easy enough to get in touch with life insurance
companies. Just locate their Web addresses at your local library, or use
a search engine to access their Web sites. Most of them have a careers
link that tells you about job openings, trainee programs, and
application procedures.
Whether you embody the entrepreneurial spirit or crave job
security, if you enjoy learning and helping others, would like to be part
of a respected profession with the highest ethical standards, and dont
mind the occasional challenge, consider a career in life insurance.
Good luck!

ASSOCIATIONS AND
ORGANIZATIONS
n Academy of Life Underwriting
www.alu-web.org
n American Academy of Actuaries
www.actuary.org/
n American Council of Life Insurance
www.acli.com
n BeAnActuary.org
www.actuary.org/index.htm
n Financial Planning Association
www.fpanet.org

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n Independent Insurance Agents and Brokers of America
www.iiaa.org
n Insurance Information Institute
www.iii.org
n Insurance Vocational Education Student Training (InVEST)
www.investprogram.org/
n International Claim Association
www.claim.org
n Life and Health Insurance Foundation for Education
www.life-line.org
n Life Insurance Marketing & Research Association
International
www.limra.com/
n Life Insurers Council
www.loma.org/IndexPage-LIC
.asp
n Life Office Management Association
www.loma.org/
n Life Underwriter Training Council
www.lutc.org/
n Million Dollar Round Table
www.mdrt.org/
n National Alliance for Insurance Education and Research
www.scic.com/
n National Association of Insurance and Financial Advisors
www.naifa.org/sh_index.html
n National Association of Life Underwriters National
Association of Securities Dealers
www.nasd.com/
n Professional Insurance Agents
www.piaonline.org/

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 n Registered Professional Adjusters
www.rpa-adjuster.com/
n Society of Actuaries
www.soa.org

PERIODICALS
n Contingencies
www.contingencies.org/
n Journal of Financial planning
www.fpanet.org/journal
n On the Risk
www.alu-web.org/otr/index.htm
n PIA Magazine
www.piaonline.org/publications.shtml
n The Actuary
www.soa.org/bookstore/actuary.html
n The Future Actuary
www.soa.org

COYRIGHT 2007 Institute For Career Research CHICAGO

CAREERS INTERNET DATABASE www.careers-internet.org

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