Becoming A Life Insurance Agent: How Long Does It Take?

Life insurance agents sell policies that help people provide for their loved ones after they're gone. It's a competitive industry with a high burnout rate – over 90% of new agents quit within a year. But for those who can handle the hustle, there's the potential to make good money. So, how do you become a life insurance agent? Well, it's not so much about academic credentials, but you do need to meet professional licensing requirements. This involves taking a pre-licensing course and passing an exam. The time it takes to get licensed depends on your pace and your location, but you can expect it to take anywhere from a few weeks to a few months.

Education requirements

To become a life insurance agent, you need to meet some education requirements. While the majority of life insurance companies have no formal education requirements, many prefer candidates with a bachelor's degree in a related field like business or marketing. A high school diploma or GED is a minimum requirement for becoming a life insurance agent. If you are still in high school, consider taking classes in business concepts, marketing, communications, and math.

Some states require you to take a pre-licensing class with a minimum number of hours before taking an exam, while other states only require passing the exam. The required hours of your course will vary by state. For example, California requires 20 hours of pre-license education for a life insurance license, while a joint life, accident, and health license mandate 40 hours.

There are a few states, such as Texas and Virginia, that do not require a pre-license education course, instead relying on the licensing exam to demonstrate your professional knowledge. However, even in these states, you will need to pass the state life insurance exam to become a licensed life insurance agent.

The licensing exams typically cover state insurance regulations, general insurance concepts and terms, specific policies applicable to life insurance, annuities, tax considerations, and requirements to maintain an insurance sales agent license. These exams can be challenging, covering a wide range of topics, and usually require preparation and study.

In addition to the state licensing exam, if you plan to sell variable-contract life insurance products or securities, you will need to obtain licenses through the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA). The Series 6, Series 63, and Series 7 licenses are common securities licenses for insurance agents, each requiring preparation, study, and passing a licensing exam.

While the specific education requirements vary by state and company, demonstrating a strong educational background and a commitment to learning the necessary skills can help you become a successful life insurance agent.

Licensing process

The licensing process to become a life insurance agent varies by state, but there are some general steps that you can follow. Here is a detailed guide on the licensing process:

• Complete Pre-License Education: Most states require you to complete a pre-licensing education course before pursuing your insurance license. This can be done online through a third-party financial education company, allowing you to study around your work and family commitments. The required hours vary by state; for example, California mandates 20 hours for a life insurance license and 40 hours for a joint life, accident, and health license. Some states, like Texas and Virginia, don't require pre-license education, but you will still need to pass the state exam.
• Complete a License Application Form: Once you have completed the required pre-license education hours, you can fill out the application form for your insurance sales license. Ensure that you fill out the form thoroughly and accurately, including any relevant information such as a criminal record. Leaving out such details may impact your approval.
• Get Fingerprinted and Complete a Background Check: Due to the sensitive nature of the work, states require fingerprinting and a background check. You can find instructions for scheduling your fingerprinting appointment on your state's insurance website. The fingerprinting fee is typically paid by the applicant and ranges from $35 to $75.
• Take the Licensing Exam: The state licensing exam can be stressful, but completing a pre-license education course will help you prepare. The exam covers topics such as state insurance regulations, general insurance concepts, specific policies related to life insurance, annuities, tax considerations, and maintaining your license. Check your state's website for specific exam content.
• Application Review and License Approval: After completing all the steps, your application will be reviewed, along with your background check. This process can take a few days to several weeks, depending on your state. Once approved, you will receive your life insurance sales agent license, which you can print and save for easy access.

The entire process to become a licensed life insurance agent can take one to three months or longer, especially if your state mandates extensive pre-license education. Additionally, if you plan to sell variable-contract life insurance products or securities, you will need to obtain licenses through the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

Exam topics

The topics covered in the life insurance licensing exam vary by state, but there are some common topics that you can expect to see on the exam. Here are some of the key areas that you should be prepared for:

• State insurance regulations: This includes understanding the specific rules and regulations that govern the insurance industry in your state.
• General insurance concepts and terms: You should be familiar with basic insurance terminology and concepts, such as underwriting, policies, premiums, and claims.
• Specific policies applicable to life insurance: This includes knowledge of the different types of life insurance policies, such as term life, whole life, and universal life insurance. You should also understand the process of setting up a policy, including completing applications and delivering policies to clients.
• Policy riders, provisions, options, and exclusions: Policy riders are additional benefits that can be added to a basic insurance policy. It is important to know the different types of riders and how they can enhance a client's coverage. Provisions refer to the specific terms and conditions outlined in an insurance policy, while exclusions are items or events that are not covered by the policy.
• Tax considerations and retirement: Understanding the tax implications of life insurance policies and how they fit into a client's overall financial plan, including retirement planning, is essential.
• Requirements to maintain a license: To maintain your insurance license, you must meet certain requirements, such as completing continuing education credits and adhering to ethical standards.

In addition to these common topics, the exam may also cover state-specific information, such as the state statutes, rules, and regulations related to the insurance industry in your state. It is important to review the specific exam content outline for your state to ensure that you are prepared for any state-specific topics that may be included.

The life insurance licensing exam is designed to test your knowledge and understanding of the insurance industry, with a focus on life insurance products and regulations. By familiarizing yourself with these key exam topics and tailoring your studies accordingly, you can increase your chances of passing the exam and becoming a licensed life insurance agent.

To enhance your preparation, consider enrolling in a pre-license education course or utilizing exam preparation resources, such as study guides and practice tests. These tools can help you gain a comprehensive understanding of the material and boost your confidence as you work towards achieving your career goals in the life insurance field.

Additional licenses

Additional Licensing Requirements

If you plan to sell variable-contract life insurance products or securities, you will need to obtain additional licenses. The Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) are in charge of licensing in these situations.

The Series 6 and 63 licenses are the most common securities licenses for insurance agents. The Series 6 license requires that you pass a licensing exam and be registered with a FINRA member firm before testing. You will also need to take and pass a prerequisite test, the Securities Industry Essentials exam (SIE), although you can do this without being sponsored by a firm. The Series 63 exam covers more state-specific securities regulations and policies.

The Series 7 license is another securities license that will allow you to market and sell an even wider range of securities products as part of a life insurance plan. Like the Series 6, you will need to take and pass the SIE first and be sponsored by a FINRA-member organization. All licensing exams require preparation and study. The 125-question Series 7 exam is no exception.

While you can work as a life insurance agent without these licenses, you will be limited in the types of life insurance you can offer to clients. Mutual funds, variable annuities, and indexed life insurance all require a FINRA Series 6 license to market and sell. Pursuing your Series 6, 63, or Series 7 licenses will be a valuable step when you start working with life insurance policies.

If you live in an area where you sell life insurance in multiple states, you will need to obtain a license for each state. Each state has its own licensing requirements, so you will need to ensure you are compliant with the regulations of each state in which you plan to sell insurance.

If you decide you want to sell other types of insurance in addition to life insurance, you will likely need a separate license. If you plan to sell various types of insurance, it is important to research the licensing requirements for each type of insurance you want to offer. Obtaining the necessary licenses will ensure that you are compliant with the law and can legally sell different types of insurance to your clients.

Career prospects

The career prospects for life insurance agents are promising, with a high demand for insurance agents and lucrative financial opportunities. However, it is a challenging career path with a high burnout rate due to the constant hustle, networking, and rejection. Here is what you need to know about the career prospects in this field:

High Demand and Vacancies:

According to the Bureau of Labor Statistics, the demand for insurance sales agents is expected to grow by 10% by 2028, which is double the expected growth rate of other professions in the US. This means there will be constant vacancies and a need for new hires.

Lucrative Financial Opportunities:

Life insurance agents can earn attractive incomes, especially through commissions. Commissions in the life insurance industry are typically higher than in other insurance sectors. Agents can earn a percentage of the insurance sales they make, and this can lead to significant earnings. For example, a life insurance agent selling one or two policies per week at a 90%/5% commission level could make $50,000 to $100,000 in their first year.

Challenging Career Path:

While the financial rewards can be substantial, it is important to note that being a life insurance agent is a challenging career. The job often involves cold calling, door-knocking, and a lot of rejection. The burnout rate is high, with more than 90% of new agents quitting within the first year. Most life insurance companies offer commission-based pay with no base salary, which can make it difficult for new agents to establish themselves.

Building a Client Base:

Finding potential customers and converting them into sales is a significant challenge for life insurance agents. It requires a strong sales background, excellent communication skills, and the ability to handle rejection. Networking and building a solid client base are crucial for success.

Long-Term Rewards:

For those who can persevere through the tough early years, the rewards can be significant in the long term. Life insurance agents who establish themselves can build a solid book of business through referrals and word-of-mouth, leading to a stable and financially rewarding career.

Career Development:

Life insurance agents can also expand their practice by obtaining additional licenses. They can choose to sell insurance in multiple states or offer various types of insurance beyond life insurance, such as health, property, and casualty insurance. Obtaining these additional licenses requires further education, exams, and meeting state-specific requirements.

In summary, the career prospects for life insurance agents offer a mix of challenges and opportunities. While it can be a demanding and unforgiving career path, those who succeed can enjoy financial rewards and long-term stability.

Frequently asked questions