Selling P&C And Life Insurance: Can You Do Both?

If you're thinking about becoming an insurance salesperson, you might be wondering whether to focus on health insurance, property and casualty (P&C), or both. The choice is ultimately yours, but it's worth noting that having the required licenses to sell a range of insurance types can help you address more of your clients' needs and increase your income opportunities. For example, with a health and accident insurance license, you can sell products like medical, dental, vision, accident, disability income, and life insurance, while a P&C license enables you to sell products that protect your clients' property and business, such as home, car, and liability insurance. Obtaining multiple licenses will require additional effort and ongoing continuing education credits to maintain them, but it can also make you a single-source broker for your clients, helping to build stronger relationships.

What is the difference between P&C and life insurance?

Insurance companies provide guaranteed payments for unforeseen future events. The insured party pays a premium for this guarantee, and insurance companies also generate investment income by investing the cash premiums received in the financial markets.

The two main types of insurance are life insurance and property and casualty insurance (P&C). Life insurance covers the risk of the policyholder's death. The policy owner selects beneficiaries who will receive payments upon the policy owner's death in exchange for premiums paid to the insurance company. Life insurance policies last for decades and are subject to longevity risk and mortality risk. Longevity risk refers to the chance that life expectancies and actual survival rates exceed projections, resulting in greater-than-anticipated cash flow needs for insurance companies. To manage this risk, life insurance companies sell retirement products, which carry the inverse risk to longevity risk, known as mortality risk.

Property and casualty insurance, also known as general insurance, covers damages to property or a business. This includes auto insurance, home insurance, commercial insurance, and marine insurance. P&C insurance usually lasts for a few years and is subject to underwriting risk, which is the risk that income from policies may not be sufficient to cover claims. This risk is typically managed using reinsurance. P&C insurance also covers liability, protecting the policyholder if they are found legally responsible for an accident that causes injuries to another person or damage to another person's belongings or property.

In summary, the main differences between P&C and life insurance are the types of events covered, the associated risks, and the time horizon of the policies. P&C insurance covers damages to property or business and lasts for a short period, while life insurance covers the risk of the policyholder's death and spans decades.

What types of insurance are covered by a P&C license?

A Property and Casualty (P&C) license is one of the two most common insurance licenses that new insurance agents obtain. It allows you to sell insurance products that protect people and businesses from financial losses resulting from property damage, accidents, theft, bad weather conditions, and other events.

Auto Insurance

Auto insurance can include both property and casualty insurance. It covers expenses related to damage to the insured's vehicle and liability claims if the insured causes an accident. Most states require car owners to have auto insurance to cover costs related to medical expenses and/or car damage of another party in an accident.

Homeowner's Insurance

Homeowner's insurance typically includes both property and casualty insurance. The property insurance portion covers expenses related to damage to the structure of the home and its contents. The casualty insurance or liability portion covers claims if someone sustains an injury on the insured's property.

Commercial Property Insurance

This type of insurance helps protect small business owners by covering the owned or rented buildings, equipment, tools, and inventory they need to operate.

General Liability Insurance

General liability insurance protects individuals and businesses against claims of causing personal injuries or property damage to others. It is often included as part of a Business Owner's Policy (BOP).

Workers' Compensation Insurance

Workers' compensation insurance covers expenses related to medical bills and lost income if an employee sustains a work-related injury or illness. Most states require businesses with employees to carry this type of insurance.

Professional Liability Insurance

Also known as "errors and omissions" insurance, professional liability insurance protects businesses against claims of negligence, inaccurate advice, or mistakes in the professional services provided.

It is important to note that the exact types of insurance that a P&C license covers may vary by state, and insurance agents should ensure they meet their state's specific licensing requirements.

What types of insurance are covered by a life insurance license?

A life insurance license covers various types of insurance products that protect against the risk of the policyholder's death. This includes term life insurance and permanent life insurance, which are the two main categories of life insurance plans. Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years, while permanent life insurance offers lifelong protection. Within these categories, there are several types of life insurance policies:

Term Life Insurance:

• Level Term: The most common type, offering a consistent death benefit throughout the policy's term.
• Decreasing Term: Coverage decreases over time while premiums remain the same, often used for mortgage protection.
• Renewable Term: Allows the policyholder to renew for another period when the term ends, regardless of health status, but at a higher premium.
• Convertible Term: Enables the policyholder to exchange the term policy for a permanent plan during a specified conversion period.

Permanent Life Insurance:

• Whole Life Insurance: Provides coverage for the entire life of the policyholder, with consistent premiums and death benefits. It includes a cash value component similar to a savings account.
• Universal Life Insurance: Offers flexibility by allowing adjustments to premiums and the death benefit. It has a cash value component that earns interest.
• Variable Universal Life Insurance: Allows the policyholder to invest the policy's cash value in separate accounts, providing flexible premiums and death benefit options.
• Indexed Universal Life Insurance: The policyholder can earn a fixed or equity-indexed rate of return on the cash value component.

In addition to these, there are other variations, such as single premium whole life, interest-sensitive whole life, and joint life insurance, which covers multiple individuals with benefits payable at the last insured's death.

Life insurance licenses also cover riders, which are add-ons to the base policy. Common riders include the accidental death benefit rider, waiver of premium rider, disability income rider, accelerated death benefit rider, and long-term care rider.

Can I sell P&C insurance from home?

Yes, you can sell property and casualty (P&C) insurance from home. This is also known as general insurance, and covers damage to property or business. It includes auto insurance, home insurance, commercial insurance, and marine insurance.

There are many advantages to working from home. You can save money by cutting out the traditional costs associated with selling insurance, such as leasing an office. Technology has simplified the underwriting and policy issuance process, making it easier to sell P&C insurance without needing to meet clients face-to-face.

• Set up a dedicated office space in a quiet area of your home, with a comfortable desk and high-speed internet. You will also need a fax machine, scanner, and video conferencing capabilities.
• Decide whether to work for a single company or multiple insurance carriers. Working for multiple carriers will give you more freedom and flexibility, but make sure you understand the policies, licensing, and certification requirements.
• Find out what level of support is available from insurance carriers. You may feel isolated working from home, so look for carriers that offer online chat features, telephone support, or other types of assistance.
• Stay educated on the type of coverage you are selling. The industry is constantly evolving, so engage in ongoing training to stay on top of emerging trends and changes to policies.
• Consider how you will meet with clients. Meeting at your home may not be professional or permitted by your HOA. You could travel to your client's home, or rent a shared office space or conference room for a more professional setting.
• Focus on marketing to attract your own clients. While your carrier may send leads, you will also need to proactively build a client list and encourage reviews and word-of-mouth advertising.

Selling P&C insurance from home can be a successful and lucrative career if you have the necessary technology, training, and marketing skills.

What are the pros and cons of selling both types of insurance?

Property and casualty (P&C) insurance and life insurance are two distinct types of insurance that offer different benefits and require separate licenses to sell. P&C insurance covers damage to a person's property or belongings, while life insurance provides financial protection for loved ones in the event of the policyholder's death. Here are some pros and cons of selling both types of insurance:

Pros of Selling P&C Insurance:

• Almost limitless opportunities as P&C insurance covers a wide range of assets that most people need by law, such as auto insurance and homeowners' insurance.
• As a P&C agent, you can build strong relationships with clients by offering a diverse range of products to meet their needs.
• Commissions are paid on total premium sold, so higher premiums can lead to higher profits even with fewer clients.
• P&C insurance can be a competitive market, but there are ways to stand out, such as focusing on quality service, simplifying product offerings, and building relationships with clients.

Cons of Selling P&C Insurance:

• High competition due to the essential nature of P&C insurance, leading to potential challenges in acquiring new clients.
• Premium rates can fluctuate, and seasons with higher premiums may not align with prime sales months, impacting sales performance.
• Unpredictable income due to fluctuations in premium rates and competition, which can make financial planning challenging.

Pros of Selling Life Insurance:

• Life insurance is a lucrative business, and agents can gain commissions on the plans they sell, providing an opportunity for significant earnings.
• Flexibility to choose your work schedule and work independently, allowing a balance between work and personal life.
• The ability to help clients, especially older individuals, by providing financial protection and potentially saving them thousands of dollars a year.
• Opportunities for growth and building long-lasting relationships with clients, as life insurance often covers individuals throughout their lives.

Cons of Selling Life Insurance:

• It can be emotionally challenging as it involves discussing death and financial planning for one's death.
• The need to constantly push oneself to succeed, as income is directly tied to sales performance and acquiring new clients.
• Limited paid time off and sick days, as independent agents typically do not receive these benefits.
• Potential tax implications on life settlement proceeds, which can impact the overall financial gain from selling life insurance policies.

Frequently asked questions