Insurance Leads Cost – Are Leads for Insurance Worth It?
We surveyed 20 unique insurance leads providers across various types of insurance leads and insurance products. The results show that the average insurance lead cost is $28.81 per lead. The truth is that insurance leads are not necessary to grow your insurance business. However, they are a valid way to acquire leads and new insurance sales at cost. In the short term insurance leads may be worth it for your insurance business, depending on your chosen provider. In the long term, once you have an established insurance business, the costs of buying insurance leads may not be worth the return on investment.
Insurance agencies have the lowest profit margins of any business industry, from 2% to 3% on average. Insurance companies may even lose money to acquire a new client in the first year or two years of the policy. However, the average customer stays with the same insurance provider for five years before changing, so you make money back over time. The issue with purchasing insurance leads over the long term is that the cost of insurance leads only goes up over time. Insurance leads go up in cost over time due to rising marketing and advertising costs and increasing competition within the insurance industry. This article explains exactly how to evaluate if buying leads delivers a return on investment (ROI) for you, no matter the situation. We cover the average pricing for leads depending on the financial advisor services you provide.
How Much Does Buying Insurance Leads Cost on a Monthly Basis?
According to the Insurance Information Institute, personal lines of insurance make up 49.8% of the net premiums written in the insurance industry. Commercial lines of insurance make up 50.2% of the net premiums written in the insurance industry. The most common types of personal insurance sold are life, health, homeowners, and auto insurance. The most common types of commercial insurance sold are general liability, commercial property, professional liability, and workers’ compensation. Let’s break this down based on the types of insurance sold and the average commissions made from selling each insurance:
Personal Lines of Insurance
How Much are Auto Insurance Leads?
To acquire one car insurance client on the low end of the close rate (8%), you would need to buy 12 insurance internet leads at a fee of $195.96 in total. On the low end, it would take you approximately 26.5 months to break even on purchasing 12 leads, and every month afterward is profit. On the high end of the close rate (12%) and commission (15%), you would need to purchase eight internet leads worth $130.64 in total. You would have to wait 5.9 months before breaking even on your leads cost expenses.
The average person stays with the same auto insurance company for five years before switching. The average car insurance agent makes $46,796 a year. To make $46,796 as a car insurance agent purchasing leads you would need to purchase 2,265 leads and expend total fees of $36,987.45 on the low end.
How Much Do Life Insurance Leads Cost?
To acquire one life insurance client on the low end of the close rate (8%), you would need to buy 12 leads for $305.28 in total. It would take approximately 6.8 years to break even on acquiring one new customer on the low end. On the high end of the close rate (12%), you would need to purchase eight leads worth $203.52 in total. You would have to wait 21.6 months before breaking even on the costly leads.
Most people keep life insurance for 20 to 30 years on average (an average of 25 years). Average life insurance agents make $65,059 a year before taxes. To make $65,059 a year before taxes as a life insurance agent purchasing leads, you must purchase 176.26 leads for $4,484.05 on the low end and wait 16.8 years. To make $65,059 a year before taxes on the high-end purchasing leads, you must purchase 138.27 leads for $3,517.77 and wait 23.2 years.
The average homeowner stays with the same home insurance company for three years before switching. Based on the data above, you would lose $400 per policy on the low-end purchasing leads, and on the high end, you would lose $96 per policy by purchasing leads.
To acquire one health insurance client on the low end of the close rate (8%), you would need to buy 12 leads for $202.92 in total. On the low-end health, insurance agents are making a positive return on investment (ROI) of $175.78 per client from purchasing leads. To acquire one health insurance client on the high end of the close rate (12%), you would need to buy eight leads for $135.28 in total. On the high end, health insurance agents make a positive return on investment (ROI) of $243.42 per client from purchasing leads.
Commercial Lines of Insurance
To acquire one workers’ compensation client on the low end of the close rate (8%) you would need to buy 12 leads for $1,950 total. Compensation agents would need to wait 25 months for low-end workers to break even. To acquire one workers’ compensation insurance client on the high end of the close rate (12%), you would need to buy eight leads for $1,300 in total. For high-end workers, compensation agents would need to wait 16.6 months to break even.
Where to Buy Life Insurance Leads?
What Makes an Insurance Lead Worth Buying?
Is Insurance Lead Generation Better Than Purchasing Insurance Leads?
Suppose you invest $42,500 a year in SEO. Over the next year, you generate 1,464 leads without investing another dime in SEO. In that case, your cost per lead is $29 compared to $402.40 per lead from PPC. The year after, your cost per lead is $14.51 per lead, and in the third year, your cost per lead is only $9.67. This is because your business’s revenue and traffic generated from SEO continue even after you stop investing in SEO. Unlike PPC, where the moment you stop spending money on PPC is the moment all revenue and traffic for your website grinds to a halt.