Becoming A Life Insurance Salesperson: Strategies For Success

Becoming a life insurance salesperson (also known as a life insurance agent) is a lucrative career choice that can be entered with minimal formal education. However, it is a tough field with a high burnout rate, and success requires dedication, hard work, and a passion for helping others.

Life insurance agents sell life insurance policies that suit the unique needs of their clients, helping them to create a financial safety net for their loved ones. Agents are usually paid via commission, which can provide an attractive income, but also means income is dependent on sales.

To become a life insurance agent, you will need to meet basic eligibility criteria, complete pre-licensing education, pass a licensing exam, and apply for your license. The specific requirements vary by state, so it's important to check the relevant state's insurance department or commission website for details.

Research the licensing requirements in your state

To sell life insurance, you need to be licensed by your state. The requirements for obtaining a license vary depending on the state, so it is important to research the specific requirements for your state. Here are some general steps and guidelines to help you get started on your path to becoming a licensed life insurance salesperson:

Step 1: Complete Pre-Licensing Education:

Before you can take the licensing exam, most states require you to complete a pre-licensing education course. This course will help you gain the necessary knowledge to pass the exam and prepare you for your career as a life insurance salesperson. The required number of hours for the 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 require 40 hours. There are also states like Texas and Virginia that do not mandate a pre-licensing course, instead relying on the exam to demonstrate your proficiency.

Step 2: Submit to a Background Check:

As selling life insurance involves handling sensitive information, most states will require you to undergo a background check as part of the licensing process. This typically includes fingerprinting, which is carried out by a third-party company for a fee. The background check ensures that you meet the basic eligibility requirements, such as being free of felony charges, having no outstanding federal or state taxes, and having no past-due child support payments.

Step 3: Complete the License Application:

Once you have fulfilled the pre-licensing education and background check requirements, you can proceed to fill out the application for your life insurance sales license. It is important to be thorough and accurate when completing the application. Any discrepancies, such as failing to disclose a criminal record, can impact your approval. Having a criminal record does not automatically disqualify you, but not disclosing it on your application will create issues. The application fee varies by state but typically includes a service charge and an exam fee.

Step 4: Take the Licensing Exam:

After your application has been processed, you can schedule your licensing exam. This exam will cover state insurance regulations, insurance concepts and terms, specific policies related to life insurance, annuities, tax considerations, and more. The format and content of the exam may differ depending on your state, so be sure to review the exam content outline provided by your state. The exam usually consists of 50 to 200 questions and must be completed within a few hours. Passing scores vary, but generally, you need to get at least 70% of the answers correct.

Step 5: Await Application Results:

Once you have completed the exam, your state's insurance department will review your application, background check, and exam results. This process can take a few days to several weeks, and they will notify you if there are any issues. If your application is approved, you will receive your license, which is typically valid for one to two years.

Complete pre-licensing education

To become a life insurance salesperson, you'll need to complete pre-licensing education. This involves taking a pre-licensing course to prepare for your state licensure exam. While some states, like Texas and Virginia, don't require pre-licensing courses, most states do mandate a certain number of credit hours of pre-licensing education. For example, California requires 20 hours of pre-license education for a life insurance license, and 40 hours for a joint life, accident, and health license.

Pre-licensing education covers a range of topics, including insurance industry regulations, different types of insurance policies, and insurance principles. You can take these courses online or in a classroom, and they are usually provided by third-party organisations. The cost of these courses is typically covered by your employer if you've already been hired, but otherwise, you will need to pay for them yourself.

Once you've completed your pre-licensing education, you'll need to pass a state licensure exam. This exam will cover state insurance regulations, insurance applications, types of policies, taxes and retirement, and more.

Pass the licensing exam

Passing the licensing exam is a crucial step in becoming a life insurance salesperson. The exam covers a range of topics, including state insurance regulations, insurance applications, policy riders and exclusions, taxes and retirement, and different types of policies. To prepare for the exam, you can enrol in an exam preparation course or study using online resources and books. Some topics that you should focus on include:

• State rules and regulations: Familiarise yourself with the insurance laws and regulations specific to the state where you plan to sell insurance. This is an important aspect of the exam and can vary from state to state.
• Insurance applications, underwriting, and policy delivery: Understand the process of completing and submitting insurance applications, including the role of underwriting and how policies are issued to clients.
• Policy riders, provisions, options, and exclusions: Gain a comprehensive understanding of the different components and variations in insurance policies.
• Taxes and retirement: Be knowledgeable about the tax implications of insurance policies and how they relate to retirement planning.
• Types of policies: Learn about the various types of life insurance policies available, such as whole life insurance, term life insurance, and universal life insurance.

Remember that the exam content may vary depending on your state, so it is essential to review the specific outline provided by your state. Additionally, completing a pre-licensing education course can provide you with the necessary tools and knowledge to approach the exam with confidence.

Apply for your license

Once you have passed your state licensure exam, the next step is to apply for your license. You can submit your application to the insurance regulation department in your state. Wait a few days after the test results have been released to allow the department to process the results.

• License application fee (around $50 but varies by state)
• Electronic fingerprint (some states require this for the background check)
• Valid test results

Exam results are typically valid for one or two years, depending on the state. This means you must apply for your life insurance license during this period. If you fail to do so, you will need to retake and pass the licensure test.

Your state's insurance department will review your license application and conduct the background check. The process can take anywhere from three to five weeks. If something comes up in the background check, the department may contact you to clarify. This can slow down the process.

The department will also inform you of the status of your application, usually via email.

Once you receive your insurance license, here are some important points to remember:

• Your life insurance license is valid for two years.
• Some licenses require 24 hours of continuing education (CE) to be eligible for renewal.
• CE must include three hours of ethics-related training.
• At least half of the CE credits must be taken in a classroom.

Consider additional licenses

Once you are a licensed life insurance agent, you may find that you need additional licenses. There are several reasons for this. Firstly, if you live in an area where you sell life insurance in more than one state, you will need a license for each state as each has its own licensing requirements. Secondly, if you decide to expand the types of insurance you sell beyond life insurance, you will likely need a separate license for each new type of insurance. Finally, if you sell variable-contract life insurance products or securities, you will need to be licensed by the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

The most common securities licenses for insurance agents are the Series 6 and 63 licenses. The Series 6 license requires passing a licensing exam and registering with a FINRA member firm, as well as passing the Securities Industry Essentials exam (SIE). The Series 63 exam covers state-specific securities regulations and policies. The Series 7 license is another securities license that allows you to sell a broader range of securities products as part of a life insurance plan. Like the Series 6 license, it requires passing the SIE and being sponsored by a FINRA-member organisation.

While you can work solely as a life insurance agent without these additional licenses, you will be limited in the types of life insurance you can offer your clients. For instance, mutual funds, variable annuities, and indexed life insurance require a FINRA Series 6 license to market and sell. Therefore, pursuing additional licenses can be a valuable step to enhance your career as a life insurance agent.

Frequently asked questions