Getting A Life Insurance License: Is It Worth The Effort?

Getting a life insurance license is a multi-step process that can be challenging, but the requirements are broadly similar across states. The process typically involves meeting basic eligibility requirements, such as being at least 18 years old and free of felony or fraud charges, followed by completing pre-licensing education and passing a state insurance licensing exam. The exam covers a broad range of topics, and while it is difficult, with a good understanding of the material, candidates have a good chance of passing. After passing the exam, individuals must apply for their license and may be subject to a background check. The entire process can take between two and eight weeks.

Eligibility requirements

The eligibility requirements to obtain a life insurance license vary depending on the state. However, there are some general criteria that aspiring life insurance agents and brokers must meet. These include:

• Being at least 18 years old, the minimum age to apply for a license in most states
• Being free of any fraud or felony charges
• Not owing any federal or state income taxes
• Being able to pass a background check

Some states may also require that insurance agents and brokers do not have past-due child support to be eligible for a license. In addition, a high school diploma or its equivalent is typically required to take the life insurance exam.

It is important to note that each state has its own insurance regulation department, and the specific requirements may differ. Therefore, it is advisable to check with the state's insurance organization or department for detailed information on eligibility requirements.

Pre-licensing education

Veterans of the insurance industry with certain industry designations may be exempt from pre-licensing education. For example, those with a Chartered Life Underwriter (CLU) designation only need to take the Life & Health Laws and Regulations test.

State insurance exam

The process of getting a life insurance license can be challenging, but the requirements are broadly similar across states. Here is a detailed guide to the state insurance exam component of the process.

The state insurance exam is a mandatory component of the life insurance licensing process. Each state has its own exam, so the tests and requirements vary, but the overarching topics covered and the passing scores are similar across states. The exam is not easy, but with a good understanding of the topics, you have a good chance of passing.

The exam covers specific topics, which are weighted according to their importance. The topics you are most likely to be tested on include:

• Life insurance general knowledge
• Life insurance policies
• Policy riders and options in life insurance coverage
• Life insurance tax issues
• Annuity policy tax issues

If you are taking a combined life and health insurance exam, there will be additional health insurance topics, such as health insurance general knowledge, dental, individual and group policies, special needs individual insurance, Health Maintenance Organizations (HMOs), and health insurance tax issues.

The exam consists of between 105 and 150 multiple-choice questions, and you will have two to three hours to complete it. It is computer-based and proctored, meaning you will be in a classroom setting with a supervisor. The passing score is 70% for all states, and the average exam-taker should expect to spend around 35 to 40 hours studying.

To prepare for the exam, it is recommended that you first check your state's requirements and get the exam outline. Having a study plan and following the state exam outline will help you stay focused and ensure you cover all the relevant topics. Review courses, reading, and practice exams can all help you prepare. Knowing the exam centre process in advance can also help to calm your nerves.

Other Requirements

In addition to passing the state insurance exam, there are several other requirements you must meet to obtain a life insurance license. These include:

• Completing any prelicensing education required by your state. The number of hours and the cost vary by state, and some states do not require prelicensing education.
• Being at least 18 years old.
• Passing a background check, which may include fingerprinting.
• Having a high school diploma or equivalent.
• Meeting specific state exam requirements, such as completing a specified amount of prelicensing education hours.
• Registering for the exam and paying the associated fee.
• Applying for the license after passing the exam, which may include submitting an application form and paying a licensing fee.

Background check

To obtain a life insurance license, you must pass an exam and meet other requirements, including a background check. While the specifics of the background check vary by state, it is a mandatory part of the licensing process in most states.

The background check process for a life insurance license typically involves fingerprinting and a basic state-level background check. This includes running the applicant's name through state databases to check for any pending litigation or criminal history. Some states may also require a federal-level background check. The background check may also involve checking the applicant's education and work experience.

The background check is an important part of the licensing process as it helps to ensure that only trustworthy and qualified individuals are licensed to sell insurance and handle sensitive financial information. The check also helps to protect consumers by identifying any potential red flags or concerns about an applicant's character or history.

The requirements and procedures for the background check can vary depending on the state in which the license is being sought. Some states may exempt non-resident licensees from the background check process, while others may require fingerprinting from a specific vendor or provider. It is important for applicants to be aware of the specific requirements and procedures for the state in which they are seeking licensure.

In addition to the state-level background check, insurance carriers, agencies, or managing general agent (MGA) organizations typically conduct their own background checks on new agents as part of their onboarding process. This helps to ensure that the agent meets the organization's standards and reduces the organization's financial liability.

Application process

The application process for a life insurance license can be completed in a few weeks, but it may take up to eight weeks depending on your pace. Here is a detailed breakdown of the steps involved:

Step 1: Meet Basic Eligibility Requirements:

• Age: You must be at least 18 years old, which is the minimum age to apply for a license in most states.
• Background Check: Ensure you can pass a background check, as some states may also require fingerprinting.
• Criminal Record: Be free of any fraud or felony charges.
• Financial Standing: Ensure you don't owe any federal or state income taxes and don't have past-due child support.

Step 2: Complete Pre-Licensing Coursework:

• Enroll in a pre-licensing course to prepare for the state licensure examinations. You can choose between online courses or a traditional classroom setup.
• Complete the mandatory minimum hours for the coursework, which covers topics such as insurance industry regulations and insurance principles.
• Consider taking health insurance courses to branch out and sell health insurance policies in addition to life insurance.

Step 3: Pass the State Insurance Licensure Exam:

• After completing your pre-licensing coursework, register and take the state licensure exam. For a life insurance license, you will typically need to pass the Life, Accident, & Health (LA&H) test.
• The exam can have between 50 and 200 questions and must be completed in two to three hours. It is proctored, meaning it is supervised.
• The passing score is typically 70%, but this may vary depending on the state.
• The test results are valid for two years, so you must apply for your license within that timeframe.
• The cost of each exam attempt can range from $40 to $150, depending on the location.

Step 4: Apply for Your Life Insurance License:

• After passing the exam, submit your license application to your state's department of insurance regulation. Wait at least 48 hours after passing the exam before applying.
• Fill out the application form online and pay the corresponding licensing fee, which varies by state.
• The insurance regulation department will review your application, and there is no set timeframe for this process. They may contact you to clarify any issues that arise during the background check.
• Find out if your application has been approved through the department's website. Once approved, you can request a copy of your license, which may need to be downloaded and printed.

Frequently asked questions