Becoming An Independent Health And Life Insurance Agent

Becoming an independent insurance agent can be a great career choice for those who want a flexible lifestyle, the ability to work independently, and the opportunity to earn a high income. Independent insurance agents, also known as insurance brokers, offer insurance policies from multiple companies, allowing them to provide clients with competitive prices and terms. To become an independent agent in the health and life insurance sectors, there are several steps you need to follow. First, you'll need at least a high school diploma or GED, although a bachelor's degree in a related field can improve your long-term career prospects. Next, complete an insurance study course and pass the required examination to obtain your license. Stay up-to-date with changes in legislation and the industry, as ongoing learning is crucial in this field. Build your client base and market yourself effectively to both insurance companies and prospective clients. Finally, insure yourself with appropriate policies such as general liability insurance and errors and omissions coverage to protect your business from financial risks.

Decide on the type of insurance agent you want to be

Before you embark on your journey to becoming an independent insurance agent, it's important to understand the different types of insurance agents and choose the path that aligns with your interests and goals. Here are some options to consider:

Captive Agent

Captive agents represent and sell products from a single insurance company. They are considered employees of that company and are typically provided with office space, training, and administrative support. Captive agents are limited to selling only the products and services offered by their carrier. For example, if the carrier only offers business lines, the agent cannot sell any personal lines of insurance. They may mention policies from other carriers, but they are not allowed to sell them, even if those policies offer better coverage at a lower price. Examples of companies that use captive agents include State Farm, Allstate, and Geico.

Independent Agent

Independent agents, also known as insurance brokers, are the opposite of captive agents. They represent multiple insurance carriers and are not bound to selling products from just one company. They act as middlemen between insurance buyers and sellers, facilitating transactions by approaching different insurance companies and working with them under legal contracts called "appointments." These contracts specify the policies they can sell and their compensation rate. Examples of companies that use independent agents include Nationwide, Safeco, and Travelers.

Independent agents receive commissions from the policies they sell and are not considered employees of any specific insurance company. They have the freedom to work independently, set their own schedules, and offer clients a range of options from various carriers. This flexibility allows them to customise their marketing approach and meet clients in cafes, restaurants, or other locations that suit the client's needs.

Life-Only Agent

Life-only agents are authorised to transact insurance for risks related to human lives, benefits of endowment and annuities, death benefits, and dismemberment by accident. They also provide benefits for disability income. Life-only agents sell all these products and can offer riders (additional benefits) to their clients.

Accident and Health Agent

Accident and Health Agents are authorised to sell coverage for sickness, bodily injury, accidental death, and benefits for disability income. They may also sell long-term care policies and Medicare supplements.

Life and Accident and Health Agent

Life and Accident and Health Agents combine the roles of Life-Only and Accident and Health Agents. They are authorised to transact insurance for risks related to human lives, benefits of endowment, annuities, death benefits, dismemberment, and accidental death. Additionally, they provide health and medical benefits for sickness, bodily injury, disability income, long-term care policies, and Medicare supplements.

When deciding on the type of insurance agent you want to be, consider your career goals, the level of independence you desire, and the specific products you are interested in selling. Research the pros and cons of each option and choose the path that best aligns with your interests and long-term objectives.

Choose the type of insurance product you want to sell

As an independent insurance agent, you can choose to sell commercial insurance or personal insurance. This is an important decision as it will define your career and influence your earnings. Here are the key differences between the two:

• Commercial Insurance: Commercial insurance agents provide coverage to businesses, including general liability insurance, commercial property insurance, and errors and omissions insurance. This type of insurance is essential for business owners and operators, and it has high market demand and profitability.
• Personal Insurance: Personal lines of insurance focus on providing coverage for individuals and families. This includes motor vehicle insurance, homeowners insurance, life insurance, health insurance, and income protection. Personal insurance agents help clients with essential coverage for their personal assets and well-being.

When deciding which type of insurance to sell, consider your academic background, gut instinct, and comfort level with the different options. You can also choose to diversify your offerings by selling multiple types of insurance to attract a broader clientele.

Additionally, keep in mind that the licensing requirements vary depending on the type of insurance you choose to sell. Make sure to review your state's specific requirements before making your decision.

Review your state's licensing requirements

To become an independent insurance agent, you will need to review your state's licensing requirements. Each state has its own set of procedures for applying for a producer's license, and these requirements vary depending on the type of insurance, or "line of authority", that you intend to sell. While the exact procedures vary, many states require applicants to complete pre-licensing training courses, pass an exam, and submit to fingerprinting.

In the state of Georgia, for example, there are several types of insurance that you can be licensed to sell, including credit, life, casualty, property, accident and sickness, and travel. The requirements, qualifications, and fees for a license vary by type. To sell life, accident, and sickness insurance in Georgia, you must complete a 40-hour prelicensing course and pass an examination. For a license to sell property and casualty insurance, you must complete a 40-hour prelicensing course and pass an examination for both property and casualty.

In Alabama, insurance agents must complete 20 hours of pre-exam training for life, health, property, casualty, and personal lines. In contrast, Arizona requires no pre-exam training hours, but applicants must provide two forms of identification at the exam.

It is important to note that requirements for becoming a producer also differ depending on whether you are a resident of the state in which you are applying, a resident of a different state, or already licensed but planning to relocate to a new state. Therefore, it is essential to carefully review the resident and non-resident requirements for your specific state.

Take an insurance exam

To become an independent insurance agent, you'll need to pass a licensing exam. The requirements to become an insurance agent vary by state, so it's important to check the specific rules for your state. However, here is a general guide to taking the insurance exam:

Prepare for the Exam:

First, you'll need to complete any pre-exam licensing requirements stipulated by your state. This may include a pre-licensing course, which can typically be taken online or in person. The length of these courses varies from one day to 20-40 hours of training. It is highly recommended that you take a study course to prepare for the exam, even if it is not required by your state. You can also take practice exams to get a sense of the exam format and content.

Register for the Exam:

Once you've fulfilled the necessary pre-exam requirements, you'll need to register for the official licensing exam. This exam is usually held at a testing site where you will be placed at a computer. The date and time will be scheduled in advance, and you will need to bring any required documentation, such as proof of completed training classes.

What to Expect on the Exam Day:

On the day of the exam, arrive at the testing site at your scheduled time. You will be placed at a computer to take the test, which is typically in a multiple-choice format. The exam usually lasts for two to three hours. The content of the exam will depend on your state but will generally cover insurance terminology, numbers, and practical scenarios. You will typically need a score of over 70 to pass the exam, and you will find out your results immediately after submitting the test. If you don't pass on your first attempt, you can reschedule and try again.

After the Exam:

Once you've passed your exam, you'll need to submit all the necessary documents to your state licensing department, including any required background checks and fingerprints. After acquiring your license, you can legally discuss and sell insurance. The next steps will involve getting appointed by insurance companies and building your client base.

Submit your license application

Once you've passed your state insurance license exam, it's time to submit your license application. This process can vary slightly depending on your state, so be sure to check the specific requirements for your location. Here are the general steps to follow:

• Submit the required documents: After passing the exam, gather all the necessary documents, including proof of exam completion, and submit them to your state licensing department. This department may be known as the state's insurance licensing department or the state's department of insurance.
• Complete a background check: Some states require a background check as part of the licensing process. This may involve providing fingerprints, which can be done electronically through a service like IdentoGO.
• Pay the application fee: There is typically an application fee associated with obtaining your insurance license. In Texas, for example, the fee is $50. However, this may vary by state, so check with your state's licensing department. Military service members, veterans, or their family members may be exempt from this fee in certain states.
• Wait for license issuance: After submitting your application, there may be a waiting period of about one to two weeks before your license is issued. During this time, your state's licensing department will review your application and verify that you have met all the necessary requirements.
• Receive your license: Once your application has been approved, you will receive your insurance license. Congratulations! You are now legally authorized to discuss and sell insurance policies as an independent agent.

It's important to note that licenses may have expiration dates, and continuing education requirements must be met to maintain your license. Be sure to stay up to date with any continuing education credits or other requirements needed to keep your license active.

Frequently asked questions