Life Insurance Licenses: Felony Impact Explained

Getting a life insurance license with a felony record is challenging but not impossible. While some felonies permanently bar individuals from applying for an insurance license, others require a waiting period before applying. The type of felony and the time since conviction play a crucial role in determining eligibility. Some states have specific regulations, and it's important to research the requirements for your state. Honesty and disclosure are essential when applying for a license, as insurance companies value trustworthiness and integrity in their agents.

What is a life insurance agent?

A life insurance agent is a licensed professional who sells insurance policies to clients on behalf of one or more insurance companies. Agents work on behalf of the insurance company, while brokers work for the consumer.

Life insurance agents can be captive or non-captive. Captive agents work with one insurer, while non-captive agents work with multiple insurers. Agents typically receive a commission from the insurance company, which is a percentage of the premiums on the policies they sell. This commission is already built into the premium, so there is no extra cost to the consumer.

To become a life insurance agent, you must take an accredited course, pass a state-administered licensing exam, and complete continuing education requirements for licensing renewal. While there are generally no formal education requirements, a strong background in sales can be beneficial for getting hired.

Life insurance agents face many challenges, including constant hustling, networking, and rejection. They must be resilient, self-motivated, and able to handle difficult customers. However, the career can be lucrative, offering the potential for significant income, especially for those who are hardworking and persistent.

What are the requirements to become a life insurance agent?

To become a life insurance agent, you must meet certain requirements, including education, licensing, and background checks. Here is a detailed overview of the requirements:

Education

While a high school diploma or GED is the minimum educational requirement for obtaining a life insurance license, some insurance companies may prefer candidates with a bachelor's degree in a related field such as business or marketing. Taking relevant classes in high school, such as business concepts, marketing, communications, and math, can also be advantageous.

Licensing

Obtaining a life insurance license is a crucial step in becoming an agent. The requirements for licensing vary by state, so it is essential to research the specific mandates of your state. Some states mandate pre-licensing education, such as a certain number of hours of coursework, while others only require passing a licensing exam. The licensing exam covers various topics, including state insurance regulations, insurance concepts, policies, annuities, taxes, and more.

Background Checks and Fingerprinting

Due to the fiduciary nature of the role, life insurance agents are often required to undergo background checks and fingerprinting as part of the licensing process. Background checks may include criminal history, and certain convictions, especially those involving financial crimes or moral turpitude, may disqualify applicants from obtaining a license. Fingerprinting is typically done through a third-party company, and the associated fees are usually paid by the applicant.

Additional Licenses

Life insurance agents may also consider obtaining additional licenses to expand their practice. This could include licenses to sell insurance in multiple states or offer various types of insurance beyond life insurance. For instance, if you plan to sell variable-contract life insurance products or securities, you will need additional licenses from the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

Personal Attributes

While not a formal requirement, possessing certain personal attributes and skills can increase your chances of success as a life insurance agent. This includes a strong background in sales, a resilient and tenacious attitude, good communication skills, and the ability to handle rejection.

In summary, becoming a life insurance agent entails meeting educational requirements, obtaining the necessary licenses, undergoing background checks, and possessing the right skills and attributes for the role. By fulfilling these requirements, you can embark on a career as a life insurance agent, helping individuals and families secure their financial future.

Is a license required to be a life insurance agent?

Yes, a license is required to be a life insurance agent in the US. Each state has its own insurance agent licensing requirements, which include background checks and/or fingerprinting.

In the state of New York, for example, a life insurance agent or broker is licensed to sell, solicit, or negotiate life insurance annuities and/or accident and health insurance. To qualify for a license, the candidate must complete a prelicensing education course totaling no less than 40 hours of instruction for the life, accident & health authority, or not less than 20 hours for either life-only or accident & health-only authority. They must also pass a licensing exam within two years of applying for the license.

In California, there are separate licenses for Life Agents and Accident and Health or Sickness Agents. To obtain a license, candidates must complete a 20-hour product-specific prelicensing course and a 12-hour prelicensing course on code and ethics (32 hours in total). They must also pass a licensing exam.

Most states require criminal background checks and may request a full set of fingerprints before an insurance license is issued. Some states make exceptions for convictions regarding traffic citations, DUI, DWI, driving without a license, reckless driving, or driving with a suspended or revoked license. However, applicants must disclose any previous convictions, including any that are believed to have been expunged, deferred, or are currently pending.

While it is possible to obtain an insurance license with a criminal conviction, it depends on the state and the hiring company. Most states have regulations that specifically disqualify persons with convictions involving crimes of moral turpitude, such as fraud, dishonesty, or breach of trust.

What felonies disqualify you from becoming a life insurance agent?

While it is possible to qualify for an insurance license with a felony conviction, certain felonies will disqualify you from becoming a licensed life insurance agent.

Felonies that will disqualify you from becoming a life insurance agent

If you have committed any of the following felonies, you will be permanently barred from applying for a life insurance license:

• First-degree felony
• Capital felony
• Felony involving money laundering
• Felony involving fraud
• Felony involving embezzlement
• Felony directly related to financial services

Other felonies that will impact your application

For other types of felonies, there is a mandatory waiting period before you can apply for a life insurance license. The waiting period depends on the type of felony and the state you are applying in.

For felonies involving crimes of moral turpitude that are not specifically included in the permanent bar, there is typically a 15-year disqualification period. For other felonies that are not permanently barred, there is usually a seven-year disqualification period.

Additional considerations

It is important to note that each state has its own licensing requirements for insurance agents, and some states may have additional disqualifying factors. It is always best to contact the insurance company you plan to work for and the state's Department of Insurance for specific guidance on licensing requirements and any potential disqualifying factors.

Furthermore, even if you are able to obtain a life insurance license with a felony, it is important to be honest and disclose your criminal history on the license application. Failure to do so may result in the denial of your application or legal consequences.

What are the steps to regain qualification?

If you have a felony conviction, you may be able to qualify for an insurance license, but it depends on the state and the hiring company. Most states disqualify persons with convictions involving crimes of moral turpitude, such as fraud, dishonesty, or breach of trust. Additionally, certain felonies, such as money laundering, counterfeiting, and embezzlement, may permanently bar you from licensure.

If you are seeking to regain qualification, here are the steps you can take:

Check State-Specific Requirements:

Each state has its own insurance agent licensing requirements, so it is important to familiarize yourself with the regulations in your state. Contact your state's Department of Insurance to understand the specific requirements and any waiting periods that may apply.

Complete any Waiting Periods:

Depending on the type of felony and the state, you may need to complete a mandatory waiting period before applying for a license. For example, felonies involving crimes of moral turpitude that are not permanently barred typically have a 15-year disqualification period. Other felonies may have a seven-year disqualification period.

Demonstrate Rehabilitation:

After completing any required waiting periods, you will need to demonstrate that you have been rehabilitated and do not pose a risk to customers. This may involve showing evidence of positive lifestyle changes, completing rehabilitation programs, or engaging in volunteer work.

Enroll in a Pre-Licensing Education Course:

Although this is not a mandatory requirement in all states, completing a pre-licensing education course can improve your chances of obtaining a license. These courses provide you with the knowledge and skills necessary to succeed as an insurance agent. Check with your state to see if there are any specific education requirements you need to meet.

Pass the State Insurance Exam:

Once you've completed any necessary education requirements, you'll need to pass the relevant state insurance exam. This exam typically consists of two components: one on general insurance and the other on state-specific knowledge.

Complete a Fingerprint and Background Check:

In almost all states, you will need to submit your fingerprints for a state and federal background check. Be upfront about any felonies or misdemeanors during this process, as trying to conceal them will likely damage your application prospects.

Submit Your Insurance License Application:

Finally, submit your application to your state's Department of Insurance, typically through the National Insurance Producer Registry (NIPR). Be prepared to pay any associated fees, which can range from $20 to $150 depending on the state and the lines of authority you're applying for.

Remember, regaining qualification for an insurance license with a felony conviction may be challenging, but it is possible in certain circumstances. Be sure to carefully review the requirements in your state and seek guidance from an independent agent or insurance professional if needed.

Frequently asked questions