Becoming An Insurance Professional: Steps To Success

If you're thinking about becoming an insurance agent, you'll be pleased to know that it's a career path that offers flexibility, diverse clients, and significant growth opportunities. The requirements to become an insurance agent vary by state, but they can often be completed much faster than other professions that require a license.

In the US, you'll need a high school diploma or GED, and you must be at least 18 years old. You'll also need to pass a background check and obtain a license for each type of insurance you plan to sell. While a degree isn't necessary, it can be beneficial, and many companies prefer candidates with a college education.

The process typically involves deciding on the type of insurance agent and insurance products, reviewing state licensing requirements, taking a pre-licensing course and exam, submitting your license application and background check, getting appointed by an insurance company, and then finding and maintaining clients.

It's a challenging career with a high earning potential, but it also comes with drawbacks, including unpredictable earnings, a high-pressure environment, and the difficulty of finding leads.

Decide on your insurance type

When deciding on your insurance type, it's important to understand the different types of insurance agents and the various insurance products they sell.

Types of Insurance Agents

Insurance agents can be broadly categorized as either Independent Agents or Captive Agents.

• Independent Agents represent multiple insurance companies and offer their clients policy quotes from various sources. They have greater flexibility in their product offerings but generally receive less training and support from insurance carriers. Independent agents must build their brand in the market and establish themselves independently.
• Captive Agents, on the other hand, work exclusively for a single insurance company, typically a large national provider. Captive agents receive extensive training and support from their company, but they can only sell that company's products and are often bound by non-compete agreements. Their commission rates may be lower due to the marketing support they receive.

Types of Insurance Products

The insurance industry offers a wide range of products catering to both commercial and personal needs.

Commercial Insurance

Commercial insurance agents focus on providing coverage to businesses. This includes:

• General liability insurance
• Commercial property insurance
• Errors and omissions coverage
• Workers' compensation insurance
• Business casualty insurance

Personal Insurance

Personal lines of insurance cater to the needs of individuals and families, offering coverage for:

• Motor vehicles
• Homes and property
• Life insurance
• Health insurance
• Disability insurance
• Long-term care insurance

Additionally, there are specialized insurance types, such as:

• Surplus line insurance, which covers unique or unusual risks not included in standard insurance, like daycare insurance or special event coverage.
• Variable products insurance, which includes investment-related insurance products and requires specific securities licenses to sell.

Choosing Your Insurance Type

When deciding on your insurance type, consider your interests, skills, and the type of clients you want to work with. Do you prefer working with businesses or individuals? Are you more interested in property and casualty insurance, or does health and life insurance appeal to you?

You can also choose to specialize in a specific type of insurance, such as life insurance or property insurance, or offer a combination of insurance types, such as property and casualty insurance, to cater to a broader range of clients.

Understanding the different insurance types and your own preferences will help you make an informed decision about the insurance type that aligns best with your career goals and interests.

Check your state's requirements

Each US state has its own requirements for insurance agent licensing, so it's important to check the specific rules for your state. Here are some general guidelines to give you an idea of what to expect:

Eligibility Requirements:

First, ensure you meet the basic eligibility criteria. While the requirements vary by state, in general, aspiring insurance agents must meet the following criteria:

• Be at least 18 years old (the minimum age to apply for a license in most states)
• Be free of any fraud or felony charges
• Not owe any federal or state income taxes
• Be able to pass a background check
• Have no past-due child support payments (in some states)

Pre-Licensing Education:

Complete the necessary pre-licensing education for your state and chosen line of authority. The number of hours and format (online or in-person) of pre-licensing education vary by state. Common specializations include:

• Life, Accident, and Health (LA&H)
• Life
• Health
• Property and Casualty
• Personal Lines

State Insurance Licensing Exam:

After completing your pre-licensing education, you must pass your state's insurance licensing exam. The exam will cover state insurance laws and insurance concepts specific to your chosen line of authority. The tests are usually in a multiple-choice format and must be completed within a set time limit.

License Application:

Once you've passed the exam, submit your license application and any required fees to your state's insurance regulation department. Some states may also require a background check, which may include fingerprinting. The processing time for license applications can vary, and you may need to wait a few days to a few weeks to receive your license.

Appointment with an Insurance Company:

To become an insurance sales agent, you must be appointed by an insurance company. Complete an application with each insurance company you plan to represent, and obtain the necessary appointments and binding authority, which will be recorded on your state insurance license.

Continuing Education:

To maintain your insurance license, most states require you to complete a minimum number of continuing education credits during a specified period. These credits help keep your skills and knowledge up to date and may include ethics training.

Get licensed

The requirements to become a licensed insurance agent vary by state, but they can often be completed much faster than other professions that require a license. While a high school diploma is the only educational requirement, most companies prefer candidates with a college degree.

Eligibility Requirements

Each state has different eligibility criteria, but in general, aspiring insurance agents must:

• Be at least 18 years old (the minimum age to apply for a license in most states)
• Be free of any fraud or felony charges
• Not owe any federal or state income taxes
• Be able to pass a background check
• Not have any past-due child support payments (in some states)

Pre-Licensing Coursework

To become an insurance agent, you need to complete a pre-licensing course to prepare for the state licensure exam. This involves choosing a line to specialize in. The most common specializations are:

• Life, accident, and health (LA&H)
• Life
• Health
• Property and casualty
• Personal lines

You can take pre-licensing courses online or in a classroom, with mandatory minimum hours of study ranging from 20 to 90 credit hours.

State Licensure Exam

After completing the pre-licensing coursework, you can take the state licensure exam. The tests are divided into LA&H and P&C, and you only need to take the exam for the line you plan to specialize in. However, if you wish to practice in both, you must pass both tests. The passing scores vary by state, but typically, you need at least 70% to pass.

Submit Your License Application

Once you pass the test, you can apply for an insurance license by submitting your application and paying the license fee to your state's insurance regulation department. The license fee varies depending on the state and the specialization. After submitting your application, you may need to wait at least 48 hours for the department to process the results.

Background Check

Some states require a background check, which may include fingerprinting, as part of the licensing process. If something comes up on your background check, it could slow down the approval process as the department may contact you for clarification.

Apply for jobs

Once you have your insurance agent license, you can start applying for jobs. The first step is to decide what kind of insurance agent you want to be – captive or independent. Captive agents work for a single insurance company and sell only that company's products, while independent agents work with multiple companies and can offer clients a wider range of policies.

You can then start researching agencies and insurance companies that you want to work for. Many have additional requirements for candidates, so it's important to be aware of these. Some agencies may hire you before you have a license, and they may have specific processes in place for this.

When you're ready to apply, spend time perfecting your resume and collecting letters of recommendation. You should also ask professors, former employers, or other mentors to act as references for you.

You can use job search websites to find insurance agent roles. It's a good idea to apply to multiple companies to increase your chances of finding an open position and getting hired.

Maintain your license

Maintaining your insurance license is crucial for a successful career as an insurance agent. Here are the key steps to ensure your license remains active and in good standing:

Understand the Renewal Process:

Know when and how to renew your license. The insurance license renewal process is state-specific, and each state has its own rules and regulations. Check with your state's Department of Insurance or Department of Financial Services to understand their requirements. Set reminders for yourself to ensure you don't miss any deadlines.

Complete Continuing Education:

All states require insurance license holders to fulfil a minimum number of continuing education (CE) hours to maintain their professional knowledge. These classes can be held online or in-person, and they cover various topics such as insurance claims, ethics, client services, and tax updates. The number of required CE hours varies by state and the type of insurance you are licensed to sell. For example, California agents licensed in property, casualty, personal lines, life, or health insurance must complete 24 CE hours, while those licensed in limited lines automobile insurance need only 20 hours. It's recommended to finish your CE hours at least 60 days before your renewal application to avoid unnecessary delays.

Stay Up to Date with State Requirements:

Insurance license renewal requirements can change over time, so it's important to stay informed about any updates or changes in your state's regulations. Check your state's website or contact their insurance licensing department for the most current information.

Meet Deadlines:

Renew your license before the expiration date. Your insurance license expiration date is often based on your birthday, and renewal requirements are typically due on that date. Some states allow early renewal (up to 180 days in advance), which is recommended to avoid missing the deadline due to unforeseen circumstances. If you don't renew before the expiration, some states offer a grace period, but your license will be inactive during that time, meaning you cannot sell insurance.

Pay Renewal Fees:

Some states charge a renewal fee, which can range from $50 to $100, while others may have additional application or processing fees. Check with your state to understand the cost structure and any associated fees.

Frequently asked questions