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How to Become an Insurance Agent

How to Become an Insurance Agent

A career as an insurance broker or agent in the world of insurance may be appealing if you’re just beginning to figure out your place in the workforce. The insurance industry could also be ideal for seasoned professionals who wish to make a much-needed job change.

Whatever your reason may be, working as an insurance agent holds a lot of promise as you learn to manage insurance customers and provide them insurance coverage. But while being an insurance agent can be rewarding, you may be lost on how to become an insurance agent and where to begin to get your agent license.

This piece is your how-to guide to becoming an insurance agent. Following these steps will help with deciding where you want to take your insurance career, the requirements you must meet as an inspiring agent, and what to expect once you obtain your broker license.

What is an Insurance Agent?

An insurance agent is someone who sells insurance policies. Insurance agents are well-versed in the world of insurance, sometimes with a focus on one specific area, but many agents sell numerous types of insurances.

Insurance agents recommend policies and work with your needs in order to obtain the best insurance coverage for you. Agents may work for a national insurance provider or independently.

The differences in types of insurance agents will be explored in a later section. In general, insurance agents strive to analyze the insurance market and provide you with insurance policies that fit your lifestyle and budget.

What Are The Main Types of Insurance Agents?

As previously mentioned, there are two different types of insurance agents. Before diving into your state’s insurance agent requirements, you should analyze the types and make sure one of them fits what you are aiming for in a career in the insurance industry.

The two types of insurance agents are:

  1. Captive Insurance Agent - A captive agent is someone who works for only one insurance company. Captive insurance agents are hired by an insurance company, usually a national provider, and trained to sell their insurance policies. Captive insurance agents are still experts in the insurance industry, but specific knowledge leans toward the insurance policies their insurance agency offers. As a captive agent, you may be required to sign a non-compete agreement, solidifying your position with an insurance company for a certain period of time. You may also find that captive insurance agents commission rates are lower.
  2. Independent Insurance Agent - An independent agent, commonly referred to as an insurance broker, is someone who works for a variety of insurance companies and delivers customers numerous insurance quotes for the insurance coverage they request. Independent agents work more for their clients as opposed to a specific insurance company. Brokers are not tied down and work to analyze insurance policies from different insurance companies. But with this independence comes some issues in the marketing department and building a brand. You will not have the major nationwide insurance provider to back you up if you decide to become an insurance broker.

How to Become an Insurance Agent?

The process of becoming an insurance agent is a fairly straightforward one. As long as you meet your state’s requirements and put in the time to study insurance, becoming an insurance agent may be a breeze as achieving a successful career selling insurance policies may be as well.

Here is a step-by-step guide to obtaining your insurance agent license and getting started in the insurance industry:

1. Decide what type of insurance agent you want to be

It is best to start by analyzing your options for what type of insurance agent you can be. As was outlined above, there are two different ways you can go about selling insurance, each with its own sets of pros and cons.

A captive agent can have insurance training from a name-brand provider but is only educated on one insurance company’s policies. Not to mention the lower agents commissions that can stem from being a captive agent.

Meanwhile, independent agents have more flexibility and possess broader knowledge of insurance company policies and insurance rates. But they can be lacking in that support from a major insurance provider.

By establishing your pathway in the insurance industry now, you will have a greater sense of what kind of career as an insurance agent or broker you will eventually come into.

2. Pick an insurance product to sell

Some insurance agents specialize in selling one type of insurance while others have licenses for multiple insurances.

Deciding what kind of insurance you want to sell can affect what kind of license you must obtain and how many of them are required. In a very general sense, you will either be selling commercial insurance or personal insurance. But these are just categories. You will need specific licenses for what insurance policies you are selling.

Personal insurance refers to insurance policies pertaining to coverage for individuals. This can be homeowners insurance or auto insurance. Commercial insurance focuses on businesses with policies like general liability and errors and omissions coverage.

The specific types of licenses you must obtain to sell any of the aforementioned insurance policies will be covered in the next section.

3. Complete your state’s insurance requirements

After deciding what insurance products you want to sell, it is time to look into obtaining the proper license. Specific names for licenses may vary from state to state, but what they cover is generally the same across the board.

The common types of insurance licenses are:
  • Property Insurance - A property insurance license is for selling homeowners insurance and commercial property.
  • Life Insurance - A life insurance course and certificate will be required for agents wishing to sell providing beneficiary annuities upon the policyholder’s death.
  • Health Insurance - Health insurance license is for agents selling medical, Medicare supplements, long-term care policies, and disability insurance.
  • Casualty Insurance - A casualty insurance license covers auto, crime, workers compensation, and liability insurance policies.
  • Personal Lines Insurance - A personal lines insurance license is needed for selling individuals car insurance, homeowners insurance, and renters insurance strictly. It will also apply to those selling boat, motorcycle, and snowmobile insurance policies.
  • Variable Products Insurance - A variable products insurance license is for selling insurance policies with an investment component. In order to obtain this selling license, you will need certain security licenses.
  • Surplus Line Insurance - A surplus line insurance certificate is what an insurance agent needs for selling coverage for unique situations with specific risks that are not covered under other insurance policies. This could include daycare insurance or oil drilling rigs insurance. It can also provide coverage for state fairs and amusement parks.

Requirements for the different types of insurance licenses will vary depending on the state you live in. You will want to consult your state’s department of insurance to see the full scale of mandates. Typically, all states require you to complete a course on insurance and pass an exam.

Keep in mind that you will need to obtain licenses for all the types of insurance you plan to sell. If you want to sell both health insurance and homeowners insurance, you will need the correlating licenses.

4. Take the licensing exam

In order to be an insurance agent, most states will require you to complete pre-licensing course classes. The time required can vary, usually ranging from 20-40 hours. Some courses even may consist of a one-day class. Courses can usually be taken either online or in person.

Following completion of these classes, you will have to take the licensing exam. Going to take the examination is relatively simple. They are conducted by an outside company. The exam is usually multiple-choice and conducted on a computer.

After completion, you will immediately receive your results and certificate. If you didn’t pass the examination, you could always reschedule to take the exam again.

5. Submit the application to the state

Upon passing the licensing exam and gathering proof that you meet the various requirements, you will submit your insurance agent application to the state you wish to sell insurance in.

Some states may require you to participate in a background check before they give you an insurance agent or broker license. The background check can involve fingerprinting and other personal information. Once everything is approved, you will be officially a licensed insurance agent or insurance broker.

6. Finding a job with an insurance company

You should be appointed by an insurance company prior to selling insurance products. This can apply no matter what route you go with.

If you’d like to take the insurance broker route, being in an office with other agents can be very useful and will help you receive brokers training that working from home may not allow for.

If you are a captive insurance agent, you should apply for positions with an insurance provider and from there receive the authority necessary to sell insurance policies. Being appointed by an insurance company as one of their insurance agents will be recorded on your state insurance license.

7. Start your insurance agent or broker career

Once you have an agent or broker license and get more established, you should start building your insurance client base and getting a feel for pitching insurance coverage to others. It could be helpful to consult friends and family to get an idea of the insurance system and selling insurance coverage.

Depending on if you are running your own insurance agency, you could start marketing yourself as an insurance broker or agent by setting up a website for your insurance company. Clients will be key to your insurance business, so make sure to have a customer-orientated mindset.

Do You Need a Degree to Become an Insurance Agent?

Typically, no college degree is necessary to become an insurance agent.

The minimum education requirement for becoming an insurance agent is a high school diploma or GED. However, many insurance companies may prefer that their agents have a bachelor’s degree.

For this reason, it could be helpful to look into classes focused on business, finance, or economics. Some colleges may also offer classes in insurance or risk management. Studying marketing or even psychology could be helpful to better understand the customer mindset so you can learn the best way to sell someone on an insurance policy.

While a high school diploma will be sufficient, obtaining a bachelor’s degree in one of the discussed fields can be increasingly useful for your insurance broker or agent career.

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