Life Insurance Advisor: Steps To Start Your Career

Becoming a life insurance advisor is a great career option for those who want to help others achieve their financial goals while also enjoying the flexibility of being their own boss and working at their own pace. A life insurance advisor is an intermediary who brings together the insurance company and the customer, advises clients on the right product, assists with filling up forms, and helps clients at the time of a claim. To become a life insurance advisor, you must be at least 18 years old and have passed your high school diploma or GED. You will also need to complete the necessary licensing requirements and pass a licensing exam. The process may vary depending on your location, so be sure to research the specific requirements for your state or country. In addition, you may need to undergo additional training and pass an examination to obtain your insurance broker license. As a life insurance advisor, you will earn a commission on the insurance policies you sell, with the opportunity to earn unlimited income through renewals and additional licenses.

Education requirements: You must be 18 and have a high school diploma or equivalent

To become a life insurance advisor, you must be 18 years old and have a high school diploma or equivalent educational qualification. This is a mandatory requirement as per the Insurance Act, 1938, read with the Insurance Laws (Amendment) Act, and the IRDAI (Appointment of Insurance Agents) Regulations, 2016.

In India, for instance, the minimum eligibility criterion to become a life advisor is to have completed the 12th standard or an equivalent examination. Similarly, in the US, a high school diploma or a GED is required to earn a life insurance license.

While a college degree is not necessary, some insurance companies may prefer candidates with a bachelor's degree in a related field such as business or marketing. Obtaining a degree can also help you develop important skills in business concepts, marketing, communications, and math, which are all useful for a career as a life insurance advisor.

In addition to meeting the minimum age and education requirements, aspiring life insurance advisors should also be prepared to complete certain training programs and licensing exams, which vary depending on the country and state/region-specific regulations.

Licensing: Research and complete the requirements for your state

To become a life insurance advisor, you must complete the necessary licensing requirements for your state. These requirements vary depending on your location, so it is important to research the specific rules and regulations that apply to your desired area of practice. Here is a step-by-step guide to help you navigate the process:

Step 1: Research Licensing Requirements

Each state has its own set of licensing requirements for life insurance advisors. To find out the specific requirements for your state, visit the website of your state's insurance department or commission. This will help you understand the necessary steps and any variations in the process. Some states may require you to take a pre-licensing class with a minimum number of hours before taking the licensing exam, while others may only require you to pass the exam. Additionally, the requirements may differ depending on whether you are seeking a license as a life insurance advisor or a combined life and health insurance advisor.

Step 2: Complete Prelicensing Education

Most states mandate a certain number of prelicensing education hours to be completed before you can take the licensing exam. The number of hours and the associated costs can vary by state. However, a few states do not have this requirement, so be sure to check with your state's insurance organization before starting the process. These prelicensing courses are typically offered by third-party organizations, and the cost may be covered by your employer if you have already been hired by an insurance company.

Step 3: Fulfill Background Check and Fingerprinting Requirements

In addition to prelicensing education, many states require background checks and fingerprinting as part of the licensing process. The background check process can vary by state, and some may include fingerprinting as a mandatory step. Be sure to review the specific requirements for your state to ensure you meet all the necessary criteria.

Step 4: Apply for a License

In some states, you may need to apply for a license before taking the licensing exam. The application process may involve submitting the necessary paperwork and paying the associated fees. Check with your state's guidelines to determine if this step is required and to understand the specific application procedures.

Step 5: Pass the Licensing Exam

After completing the prelicensing requirements, you will need to pass the state licensing exam. This exam will test your knowledge of insurance-related topics, including state rules and regulations, insurance applications, underwriting, policy riders, taxes, and types of policies. The exam format and content can vary by state, so it is important to familiarize yourself with the specific outline provided by your state's insurance department or commission. You may also consider taking an exam preparation course or utilizing study materials to increase your chances of passing.

Step 6: Complete Any Additional Licensing Requirements

Once you have passed the licensing exam, there may be additional steps required to obtain your license. This could include submitting any remaining paperwork or fulfilling any outstanding requirements. Make sure to review the licensing process for your state thoroughly to ensure you have completed all the necessary steps.

Step 7: Consider Additional Licenses

As you establish yourself as a life insurance advisor, you may find it beneficial to obtain additional licenses. This could be relevant if you plan to sell insurance in multiple states or offer a wider range of insurance products. Each state has its own licensing requirements, so you will need a separate license to sell life insurance in different states. Additionally, selling other types of insurance, such as variable-contract life insurance products or securities, may require licenses from organizations like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

Exam: Pass the licensing exam

To pass the licensing exam and become a life insurance advisor, you must first meet the basic requirements. In the US, this means you must be at least 18 years old and have passed your high school diploma or GED. In the Philippines, you must pass the insurance exam administered by the Insurance Commission.

In the US, you must then complete the licensing requirements, which vary by state. For example, in Texas, you must pass the Texas licensing exam before applying for a license. In other states, you may need to take a pre-licensing class with a minimum number of hours before taking the exam.

The exam itself will test your knowledge of state rules and regulations, insurance applications, underwriting, policy riders and exclusions, taxes and retirement, and types of policies. In the Philippines, the exam is multiple choice and focuses on the definition of life insurance, services of life insurance, and basic life insurance terms.

To prepare for the exam, you can take a pre-licensing education course, which is required in many states. You can also take practice tests, which are highly recommended.

Additional licenses: Consider getting licensed to sell insurance in multiple states or offer other types of insurance

Once you are a licensed life insurance advisor, you may decide to expand your practice by obtaining additional licenses. There are a few reasons you might want to do this.

Firstly, you may live in an area where you sell life insurance in multiple states, and since each state has its own licensing requirements, you will need a license to sell life insurance in each state individually.

Secondly, you may decide you want to sell other types of insurance in addition to life insurance, and those other types of insurance likely require a separate license. Finally, if you sell variable-contract life insurance products or securities, you may need to be licensed by the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

When you are first starting as a life insurance advisor, you may not be entirely sure what licenses will be most effective for your career. Since obtaining each license requires time and money, for many advisors, it makes sense to wait and see what they need once they start working.

The traditional way of becoming a licensed insurance advisor is to register with a particular insurance company, undergo a specified insurance training, and sit for an examination. However, a new type of license for insurance advisors, created by the IRDAI in 2015, is the Point of Sale Person (PoSP) license. As a PoSP, you can sell policies from multiple insurance companies, across both life and non-life categories, and provide a complete solution to your prospective client with a bouquet of products.

Training: Attend an insurance training course and take the exam

To become a life insurance advisor, you will need to attend an insurance training course and pass an exam. This is a requirement in many states and is also mandatory if you want to sell insurance across state lines.

The first step is to research the licensing requirements in your state. Some states require a pre-licensing class with a minimum number of hours, while others only require you to pass an exam. The requirements also differ depending on whether you want to be a life insurance advisor or a life and health insurance advisor. It is important to do your research to decide what license is best for you and how to obtain it.

Once you are aware of the licensing requirements in your state, you can complete the necessary steps to get your license. This may include taking a class that covers a certain number of hours to meet the pre-licensing education requirement. These classes are usually offered by third-party organisations, and your employer may cover the cost.

In addition to the class, you may also need to undergo a background check and fingerprinting, depending on your state's requirements. In some states, you need to apply for a license before taking your exam, while in others, you can apply after passing the exam. Make sure to verify that you have completed all the necessary requirements to receive your license.

After completing the training and any other necessary requirements, you will need to pass a licensing exam. This exam will cover topics such as state rules and regulations, insurance applications, underwriting, policy riders and exclusions, taxes and retirement, and types of policies. The contents of the exam may vary by state, especially the questions on state rules and regulations. There are exam preparation courses available, as well as study materials that you can find online or in books.

Once you have passed the exam, you may need to complete your licensing requirements by submitting any necessary paperwork to be officially licensed.

Frequently asked questions