Becoming A Successful Independent Life Insurance Agent

Becoming an independent life insurance agent can be a lucrative career option for those who want a flexible lifestyle, enjoy helping people, and have a dynamic personality. Independent insurance agents have the freedom to work for themselves, choosing when and where they work, and have the potential to earn a high income. This career path is accessible to those with limited time or resources as it does not necessarily require a bachelor's degree. However, it is important to note that this career involves managing all aspects of the business, including seeking new clients, drafting insurance policies, and maintaining relationships. In this paragraph, we will explore the steps to becoming an independent life insurance agent, the responsibilities involved, and the benefits of choosing this career path.

Decide on the type of insurance you want to sell

As an independent life insurance agent, you can choose to sell either commercial insurance or personal insurance. This is an important decision to make as it will determine the type of clients you work with and the insurance policies you offer.

Commercial Insurance

Commercial insurance agents provide coverage to businesses, with policies including general liability insurance, commercial property insurance, and errors and omissions insurance. If you choose to go down this route, you will be working with companies rather than individuals, helping them find the right insurance policies to protect their businesses.

Personal Insurance

Personal lines of insurance, on the other hand, focus on providing coverage for individuals and families. Motor vehicle, homeowners, and life insurance are some of the policies that fall under this category. As a personal insurance agent, you will be helping your clients protect their personal assets and loved ones.

Factors to Consider

When deciding on the type of insurance you want to sell, it's important to consider your own background, skills, and interests. Do you have a business or sales background? Are you interested in working with companies or individuals? Do you have any connections in the business world or a strong personal network? Answering these questions can help guide your decision.

Additionally, it's worth noting that independent insurance agents have the flexibility to work with multiple insurance carriers and offer a range of policies. You are not limited to just one type of insurance and can choose to offer multiple lines of insurance to your clients. This allows you to customize your services and better meet the needs of your clients.

Remember to also research the licensing requirements for the type of insurance you choose, as these may vary depending on your state and the specific insurance line. Ensuring you meet all the necessary requirements will be crucial for starting your career as an independent life insurance agent.

Check your state's licensing requirements

To become an independent life insurance agent, you will need to check your state's licensing requirements. Each state has its own set of procedures for applying for a producer's license, and these requirements vary considerably from state to state.

Most states will require you to complete pre-licensing training courses, pass an exam, and submit to fingerprinting. Some states may also require a background check and a clean criminal record. You can expect to undertake a 20-hour pre-licensing course, either in a classroom or online, before sitting for the exam. The exam will be in a testing site and will be computer-based, lasting for two to three hours.

The requirements for licensing differ depending on whether you are a resident of the state or a non-resident. If you are already licensed in one state and plan to relocate, you will need to review the new state's requirements. Some states have licensing options to bundle certain lines of authority together, for example, a license to sell only life insurance, or a more comprehensive license covering health, accident, and life insurance.

It is important to be aware of the specific requirements of your state, as operating without a license can lead to penalties or legal action.

Take the insurance exam

To become an independent life insurance agent, you will need to pass a state licensing exam. The requirements for this exam vary by state, so be sure to check the specific requirements for your state. Some states require you to complete a pre-licensing course before taking the exam, while others require you to pass the exam before moving on with your application. The exam will test your knowledge of life insurance products, procedures, and state regulations.

Understand Your State's Requirements:

Each state has its own licensing requirements and process. Find out if your state requires pre-education or if you need to pass the exam before continuing with your application. Check the specific topics covered in your state's exam, as well as the number of questions, time limit, and format. This will help you tailor your study plan accordingly.

Develop a Study Schedule:

Create a study plan that takes into account your other commitments. Block out specific time slots each day to focus on your pre-education course modules or attend in-person classes. Resist the urge to rush and spend adequate time on the material, practice questions, and practice tests.

Practice, Practice, Practice:

Spend as much time as possible answering practice questions and taking mock exams. The more you practice, the better you will become at applying your knowledge. Take advantage of practice tests available online or as part of a study course. Treat these practices like the real exam, and use them to identify areas where you need further improvement.

Take Care of Yourself:

In the week leading up to your exam, maintain a healthy balance. Get plenty of rest, eat nutritious meals, and stay active. This will ensure you are in optimal shape, both physically and mentally, to take the test.

Know What to Expect on Exam Day:

On the day of the exam, arrive at the testing center early, typically around 30 minutes before the start time. Bring the required identification and any necessary documents, such as your pre-licensing education completion certificate. Leave valuables and prohibited items behind, as specified by your state's guidelines.

Focus on Your Goal:

During the exam, create a quiet, monitored testing environment for yourself. Complete any tutorials provided, and answer each question to the best of your ability. The exam will likely be in a multiple-choice format, testing your knowledge of insurance terminologies, numbers, and practical scenarios.

Remember, by taking the time to prepare thoroughly and following these steps, you will be well on your way to passing the insurance exam and becoming a licensed independent life insurance agent.

Submit your application and pass a background check

Once you've passed your state licensing exam, you can submit your application to the state licensing department. This is when you must also submit to a background check and turn in the necessary documents. Once your application is approved and you pass the background check, you can get your license and begin working as an independent life insurance agent.

The background check is a common requirement of state licensing boards, designed to prevent fraud and deceptive conduct. Many states also keep a record of applicants' fingerprints.

Some states may approve applicants with minor infractions on their records, such as traffic violations and other non-violent offences. However, most states require that applicants have no criminal record. It's always best to check with your state's licensing board to determine their specific requirements and expectations.

In addition to submitting your application and passing the background check, you may also need to apply for a license to sell each specific type of insurance product. This is a rare requirement, but it's important to be aware of it.

After you've received your license, you can then approach insurance companies to appoint you so that you can sell their products. You'll need to complete an application with each insurance company you want to work with. Once you've been granted an appointment and binding authority, you're legally allowed to sell their insurance products.

Get appointed by insurance companies

Once you have your licenses, you can start applying to insurance companies to carry their products. This is known as getting appointed by the company. To do this, you will need to complete an application with each insurance company you want to work with. You will only be legally allowed to sell their insurance products once you have been granted an appointment and binding authority.

There are several ways to secure access to insurance markets. The ideal option in the early stages is to secure direct appointments with insurance companies. However, you may also need to work with wholesalers and other indirect access points to insurers. To do this, you will need to prepare an appointment package, which includes copies of your agency license, producer licenses, E&O declarations page, bank accounts (trust and operating), flood certification (if applicable), and voided checks.

You can also gain access to insurance companies through Independent Market Solutions (IMS), a market access program that offers commercial and personal lines products with low-volume commitments and a pathway to direct appointments with several insurance companies. Another option is Big "I" Markets (BIM), a market access program that offers commercial and personal lines products with little to no volume commitments. Additionally, Big "I" Flood helps deliver an unparalleled flood program to members.

It's important to note that market aggregators provide assistance to new agents in setting up their first agency office and accessing otherwise unattainable markets and niche programs. In return, these networks usually ask agents to pay a percentage of the commission, a membership fee, or give up a small stake in the value of the book of business built through the aggregator. Therefore, it is crucial to carefully review the contractual relationship with these entities, especially regarding book ownership, commission or revenue sharing, and exit costs.

Frequently asked questions