What is an insurance agent and how to become one? Read on to find out.
Beginning a career in the insurance business can be an ideal chance for both young and more experienced professionals. Contingent upon the area of accentuation, it is a field that considers adaptability and a program with various intriguing customers. The requirements to become an insurance agent differ from one state to another. However they can frequently be finished a lot quicker than other different jobs that require a license. Continue reading this article to find out how to become an insurance agent. Let us begin!
What is an insurance agent?
An insurance agent is a salesman who sells insurance policies. Insurance agents are licensed by their state and are at any rate designated by one insurance organization to offer insurance items to buyers. Agents are liable for coming up with policies to boost and promote various sorts of insurance, for assessing the necessities of a business or individual and proposing insurance policies that meet their standard and for creating connections to grow a strong base of customers. They assume an essential part in guaranteeing that their client’s family is shielded from capricious monetary misfortune later on.
Most agents ordinarily work in a specific sort of insurance, like health, property, disability, casualty or long term care. Numerous insurance agents likewise enhance their pay by offering monetary planning administrations to customers who are thinking of retirement or setting up their own venture or pension plans. There are two kinds of insurance agents: independent and captive. Independent insurance agents are frequently selected with a few insurance offices and can normally offer a more extensive assortment of insurance items as compared to captive agents. Captive insurance agents are delegated solely with one insurance organization and can just sell the items offered by that office.
How to become an insurance agent?
If selling insurance policies is something that you like, then you definitely must have thought about how to become an insurance agent. On the off chance that you think that you are capable enough to dive into the world of insurance sales, continue to read this article. Consider the following steps to learn about how to become an insurance agent or broker.
Earn a bachelor’s degree
Although having a high school diploma is actually the only prerequisite to become an insurance agent, most organizations are generally more partial to individuals who have an undergraduate degree. Young individuals who aspire to become insurance agents ought to think about taking courses in business, finance or economics to be more compelling in selling insurance as a product. They may likewise need to study psychology or marketing to turn out to be better at advancing their insurance items and selling them. A few schools and colleges offer courses in insurance or risk management that teach students about some different insurance theories, security investigation and the essential standards of risk management. If you have a major in risk management and insurance or a major in business while studying some courses about risk management, then it will be especially helpful for you in the event that you want to become an underwriter.
Decide what kind of insurance agent you want to be
There are two different types of insurance agents. You will need to figure out which type of insurance agent you want to be when you begin your insurance agent business. The two types of insurance agents are: captive and independent.
- Captive insurance agent: When talking about captive insurance agents, you should know that they only work with one company. This company is usually quite huge and popular, and provides insurance to individuals all over the nation. In addition to this, the company also trains the agent to make sure that he/she can prove to be assets to the company. In return, the agent can only sell the company’s products. A non-compete agreement which restricts agents to only one company for a certain time period is signed by the majority of the captive insurance agents. Moreover, commission rates can also be low depending on the marketing support given to the agent by the carrier.
- Independent insurance agent: Insurance broker is another name given to an independent insurance agent. This type of an agent is someone who works with more than one insurance company and offers policy quotes from multiple companies to clients. In this way, they can find the best policies and their expenses. Furthermore, independent agents have more flexibility in their work space and the products they can sell. However, despite this, they do not get enough training and support from the company they work in as compared to captive agents. Instead of relying on market support, agents must build a name for themselves which can make their road to becoming an independent insurance agent more difficult.
Figure out which insurance products you will sell
Insurance policies can be both commercial and personal. Once, you have figured out what type of insurance agent you want to be, you should then decide which insurance policies you will sell. Personal insurance policies mainly provide coverage for individuals and families, including car insurance, home insurance, and life insurance. On the other hand, commercial insurance agents offer coverage to different companies and businesses. Their policies range from General liability insurance and property insurance to omissions coverage.
Review your state’s licensing requirements
Prior to starting the procedure of getting licensed, you must know which products you will be selling so that you get the appropriate license according to it. The names of the licenses that you decide to get differ from one state to another. The two most common license types are:
- Property and casualty license, for agents who opt for serving clients in need of car, home, and business insurance.
- Life, health, and accident license, for those agents who opt for providing services to individuals who require insurance related to life events, such as life insurance, accidents, or health insurance.
If you choose to opt for a profession as a insurance agent, you will have to get a license (or maybe even multiple licenses) in order to work. You can get all the details regarding getting a license from your state licensing department or the organization you end up representing. When talking about getting a license, one question that arises is: why do insurance agents need a license? The answer to this is that in order to complete their sales and talk about insurance products, agents need to have a license. Moreover, you must remember that there are certain requirements for you to get a license. Every state has its own unique licensing requirements. It is important to have a license or else you will end up having to face legal actions and penalties.
Take an insurance license exam
A pre-licensing class is needed as a prerequisite before taking an insurance license exam. These exams can be taken online or even in person. Together with a one-day class to 20-40 hours of online training, the requirements for getting a license differ from one state to another.. Once you have fulfilled all requirements according to your state, you’ll need to set a fixed time for your official licensing exam. Usually, it is a foreign company that ends up being the examiner. On the scheduled date and time of the exam, you need to go online in order to take the test. Furthermore, you may also be required to provide some evidence that you have completed training class prior to taking the exam.
One question that arises is: what can you expect during your insurance license exam? If you have successfully completed the pre-exam and have prepared well for the insurance license exam too, then you will not find it difficult at all. You will have to go to your examination center and you will be placed at a computer. The license exam is formatted as multiple choice questions and once you complete the test, you will instantly know if you have passed or not. In case you have failed, you can reschedule the test anytime you want to.
You will generally get around 80 – 160 questions in your test (note that the number of questions also differ from state to state). Some states require you to take four exams in total while others require two. Insurance exams in all states follow the guidelines given below:
- Proctored – This test is conducted in a professional testing center with a proctor supervising you
- Timed – You typically have almost two hours per exam
- Multiple-choice – These exams give you a question and four possible responses to select from
- Closed-book – You will be prohibited from bringing any study material to the testing center.
Submit your licensing application and background check
Upon clearing your state insurance license exam, you are required to provide all necessary documents to your state licensing department. You can easily fill these applications online. Remember that licensing applications have a fee attached to them, usually ranging from about $30 – $200. There are a few states which perform a background check, which may involve fingerprints. You typically have to pay a fee of $30 for this. For any further questions, you can visit your state’s license page. You’ll be able to legally discuss and sell insurance policies after you are officially licensed.
Get appointed with an insurance company to sell products
In order to have the power and authority to sell a company’s insurance products, you must first be appointed by that said company. In order to do this you must first finish an application for every insurance company you want to sell products for and be granted an appointment and restricted authority. This is then documented on your state insurance license.
Find and maintain clients
Once you get your license, you might be wondering as to what you should do next. Naturally, you would want to start dealing with clients. Most agents start by writing their own insurance and try to sell it to their friends and family. This helps them get a hang of things and be comfortable with their new work. Starting to market your agency at this point is also not a bad idea. Furthermore, you might also want to be a part of the local chamber of commerce, create a website and market your business through online means, or try to find out some good local advertising options. Majority of the options are readily accessible, and many will need some trial and error until you figure what works best for you.
Protect your business
As a new insurance agent, you should also ensure that the company you work for is protected with commercial insurance. There are different types of insurance coverage to consider:
- General liability insurance
- Errors and omissions
- Workers’ compensation
How long does it take to become an insurance agent?
Have you ever thought about exactly how long it takes for an individual to become an insurance agent? It takes only a couple of weeks for a lot of people to become an insurance agent. If you decide to take an online course for which you need to study for a specific number of hours, then your capability to complete it will mainly determine your licensing time. In addition to this, you may also even have to wait for a week or two for your license to be issued. This typically happens after you have completed your exams and after thorough background checks have been made. Due to the fact that there are multiple steps to becoming an insurance agent, let us divide this into different parts:
- Getting your insurance licenses – Three to six weeks
- Finding an insurance agent job – Two or more weeks
- Getting your FINRA licenses (optional) – Four to eight weeks
Note that these numbers are just a rough estimation. It may take more (or less) time to get your insurance license. Moreover, you may take way more than two weeks to find a job that is perfect for you. Make sure to give yourself enough time to figure out what works best for you.
How much does it cost to become an insurance agent?
It is very important to know the cost of becoming an insurance agent. Remember that every state has its own rules and regulation when it comes to the license application process. By giving a fee that varies from about $30 to $200, you can fill out the application through online means as well. You must ensure that you have seen all the step by step details of your state. This is because some states need you to fill out the application before your exam, and some need you to fill it out after. A background check is performed by all the states while they review your application. Moreover, some states may even need your fingerprint data to carry out the background check. Usually, it is a third party who conducts the background check and carries a fee of around $30.
This cost will greatly differ from one state to another. Visit your state’s license page to see in detail the guidelines for your state. Given below is an example of the average fees in a certain state:
- Pre-license Education (Life & Health License) – $330
- Pre-license Education (Property & Casualty License) – $330
- Insurance Exam Fee (Life & Health License) – $62 per attempt
- Insurance Exam Fee (Property & Casualty License) – $62 per attempt
- Fingerprinting Fee – $31
- License Application Fee (All lines) – $100
- Grand Total – $915
There is a high chance that the company that hires you will also repay you this amount. Therefore, make sure to ask about this when you are applying for a job.
Requirements to become an insurance agent
There are not many requirements to become an insurance agent as compared to other jobs. Apart from the fact that you need to have a license, you also need to have a good and clean background, excellent communication skills because you will be dealing with all sorts of people, and the desire and ability to learn more.
Furthermore, in order to be an insurance agent, you’ll at least need a high school diploma or GED as well as an insurance license from your state. You must pass the licensing exam that you take. Remember that the subtleties of this exam vary from state to state. You will need a license for each type of insurance you sell. Therefore, this requires you to have multiple licenses if you want to sell many different kinds of insurance. For example, if you intend to sell both health and life insurance, you’ll need two different licenses.
You do not need a bachelor’s degree to get an insurance license or to sell insurance. However, different companies have different requirements on the basis of the job. Therefore, in some cases individuals with a bachelor’s degree are preferred. If you want to start your own insurance agency, it is quite beneficial if you already have some knowledge of how to run a business. Having a degree in business or finance might help.
How hard is it to become an insurance agent?
It is not difficult to become an insurance agent especially when compared to most other jobs related to finance. You can gauge its difficulty level through the fact that an undergraduate degree is not a requirement to become an insurance agent. All you need is your high school diploma. In some states you are required to take a licensing course and pass an exam. However, in all honesty, these exams are also very easy that even a fifth grader can do them.
Do insurance agents make good money?
The answer to this is yes. Insurance agents do make good money and also have a high earning potential from the beginning which increases as they gain experience. Thus making it a great option as a secondary career especially for the young generation.
How much does an insurance agent make?
The national average salary for an insurance agent in the United States is $79,965 annually with the salary ranging between $17,000 and $188,000 annually. Note that salary rates always differ on the basis of your profession and the region you live in. An insurance agent’s salary is typically made up of a base salary in addition to commissions and/or bonuses. Independent insurance agents are generally only paid the commission, whereas captive insurance agents are usually offered a base salary and smaller commissions or bonuses.
Insurance agent salary by state
You must remember that the salary of insurance agents varies from state to state. Here is a list of the top ten states with the highest average salaries for insurance agents:
Minnesota $91,199 per year
Maine $92,024 per year
Alaska $92,514 per year
Kansas $93,235 per year
Vermont $93,371 per year
North Dakota $93,719 per year
Nebraska $94,002 per year
Utah $94,369 per year
Iowa $95,010 per year
South Dakota $97,188 per year
Benefits of being an insurance agent
Being an insurance agent is something that is a great option for all kinds of people, regardless of how old you are. For younger individuals, it is a great way to increase their network and to have a more flexible workplace. Those who are old leverage the network that they already have and use it to increase their savings. Here are some benefits of becoming an insurance agent:
- Potentially unlimited salary – In most companies, your salary also includes the commission on your sales. Therefore, the more you sell, the more you will earn. It all depends on your level of hard work!
- Not many requirements – All you need is a license and a high school diploma to become an insurance agent.
- Flexibility – Insurance agents have a flexible timetable. They are not restricted to follow a 9 to 5 pattern.
- Leverage – You can leverage other people’s work and your own, if you plan to own an insurance agency one day. If you have a sales method that your team likes, you can scale it up as many times as you want to!
- Networking – You can meet influential people and increase your network if you are an insurance agent.
- Helping people – Being an insurance agent is also quite rewarding as you help a lot of people. As an insurance agent, you have an impact on people and their lives and can also give them a peace of mind.
These are just a couple of examples of the advantages of being an insurance agent. If you stay in this profession for a long time, you can enjoy even more benefits.
Disadvantages of being an insurance agent
Given below are some cons of becoming an insurance agent:
Build up client base – It is not an easy job to find customers and build your clientele. There are a lot of different types of people you will meet. You will have to make unsuccessful calls, build an online presence, travel, meet people,and do a lot more in order to look for potential clients. Despite doing all this hard work, there is no surety that the customer will buy from you. Moreover, building a clientele also takes up a lot of time and you might have to work more than the standard office hours. In addition to this, you may even have to sacrifice your weekends sometimes to meet up with potential clients.
Stress and pressure to sell – No matter what company you work in, there is a lot of stress and pressure to perform well if you are an insurance agent. Failure to meet the sales target means that it can adversely affect your commissions and you will end up making less money. In addition to this, the insurance industry is highly tough and competitive. You need to make sure that you have some edge over your colleagues to excel. If you cannot handle immense pressure, then this might not be the job for you.
Keep up with changing regulations – There is a list of rules and regulations set by the government and the insurance regulator. It is highly important for you to follow those rules. However, these regulations are constantly changing and it might be very difficult to keep up with them especially if you are not fully prepared. You need to always be on top of your game if you want to impress your clients and ensure that they continue to take up on your services. Make sure to keep yourself up to date with all the insurance related news so that you are not overwhelmed if the regulations change.
Now that you have read this article, you know all about how to become an insurance agent. Being an insurance agent is very rewarding and there is a high potential for you to excel and grow in this field. All you need to do is put in some hard work and you will be making money in no time. However, before you jump into this field, make sure to do your thorough research to figure out what works best for you and then make a wise decision accordingly!