A career in the world of insurance may be appealing if you’re just beginning to figure out your place in the workforce. It 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 customers and provide them coverage. But while it can be rewarding, you may be lost on where to begin to get your 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 license.
What is an Insurance Agent?
An insurance agent is someone who sells insurance policies. They 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 coverage for you. Agents may work for a national 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 market and provide you with policies that fit your lifestyle and budget.
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.
The two types of insurance agents are:
- Captive Insurance Agent - A captive agent is someone who works for only one company. They are hired by an insurance company, usually a national provider, and trained to sell their policies. They are still experts on insurance, but specific knowledge leans towards the policies their employer offers. As a captive agent, you may be required to sign a non-compete agreement, solidifying your position with a company for a certain period of time. You may also find that commission rates are lower.
- Independent Insurance Agent - An independent agent, commonly referred to as an insurance broker, is someone who works for a variety of companies and delivers customers numerous quotes for the coverage they request. Independent agents work more for their clients as opposed to a specific insurance company. They are not tied down and work to analyze policies from different 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.
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, it may be a breeze to achieve a successful career selling policies. Outlined below is a step-by-step guide to obtaining your license and getting started in the world of insurance.
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 training from a name-brand provider but is only educated on one insurance company’s policies. Not to mention the lower commissions that can stem from being a captive agent. Meanwhile, independent agents have more flexibility and possess broader knowledge of company policies and rates. But they can be lacking in that support from a major provider. By establishing your pathway now, you will have a greater sense of what kind of career 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. Deciding what kind of insurance you want to sell can affect what kind of license you 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 refers to 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 license(s) 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 - This is for selling homeowners insurance and commercial property.
- Life Insurance - This will be required for agents wishing to sell providing beneficiary annuities upon the policyholder’s death.
- Health Insurance - This is for agents selling medical, Medicare supplements, long-term care policies, and disability.
- Casualty Insurance - This license covers auto, crime, workers compensation, and liability policies.
- Personal Lines Insurance - Selling individuals auto, homeowners, and renters insurance strictly. It will also apply to those selling boat, motorcycle, and snowmobile policies.
- Variable Products Insurance - This 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 - For selling coverage for unique situations with specific risks that are not covered under other 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 class 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 classes. The time required can vary, usually ranging from 20-40 hours. Some even may be 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 test 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. If you didn’t, 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 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 a license. This can involve fingerprinting and other personal information. Once everything is approved, you will be officially licensed.
6. Finding a job with an insurance company
You should be appointed by an insurance company prior to selling 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 training that working from home may not allow for. If you are a captive agent, you should apply for positions with an insurance provider and from there receive that authority necessary to sell insurance policies. Being appointed by a company will be recorded on your state insurance license.
7. Start your insurance career
Once you have a license and get more established, you should start building your client base and getting a feel for pitching coverage to others. It could be helpful to consult friends and family to get an idea of the system and selling coverage. Depending on if you are running your own agency, you could start marketing by setting up a website for your company. Clients will be key to your business, so make sure to have a customer-orientated mindset.
Do You Need a Degree to Become an Insurance Agent?
Typically, no. The minimum education requirement for becoming an insurance agent is a high school diploma or GED. However, many 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 a 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 career.
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