Which of these life insurance sales contracts sound better to you?

  1. You get 100% first-year commission on the products you sell, and you’re on your own for prospecting, or
  2. You get 60% first-year commission on the products you sell, but your upline provides you with free leads.

Many new agents pick door number two – prospecting is scary, and free leads sound like a great deal. So what if you’re taking a hit on your commissions? 60% of something is better than 100% of nothing, right?

Not so fast! Those “free leads” actually come with a pretty hefty price tag. Let’s take a look at how the numbers work out in the real world.

Let’s say that you’re prospecting for your own business, and you decide to work some aged internet leads. You buy 5000 leads at $0.35/each (using your members-only discount through the ILIAA, of course) for a total cost of $1750. Let’s be conservative and say that you close 0.4% of those leads, and the average monthly premium is $30. At 100% commission, that’s 20 deals at $360 first-year commission each – a return of $7200 for your initial investment of $1750, which is a little better than 4:1 ROI. After our lead costs, the profit comes to $5450 – nice!

If you’d gotten those same leads for “free” on a 60% commission rate, you’d make $4320. That’s $1130 less than you’d have made if you’d paid for the leads yourself in the first place!

Of course, this is just an example. The exact numbers may change from contract to contract, but the end result is always the same: there’s just no such thing as a free lunch. If you’re generating your own leads, you will just about always see a higher ROI in the long run than you’ll see when getting “free” leads from your upline.

There’s another potential downside to getting your leads from your upline: you have less control over your lead flow than you would have if you were generating the leads yourself. Leads can be “cherry picked” and sent to top producers, leaving the new agents with nothing but B-leads to work. If you’ve ever worked with an upline who provided awesome leads that seemed to dry up after a few weeks, you know this feeling. Worse, if you’re dependent on your upline and the relationship goes sour, you’ll be stuck finding new contracts and a new way to fill your pipeline if you decide to leave. Keep your contracts and your lead flow separate – you’ll make more money and have more control over your business.