Paul Sanchez
Becoming a non-standard insurance agent, or an independent insurance agent, is an attractive prospect for those starting out in their careers or seeking a change. Independent insurance agents have the freedom to offer multiple types of insurance policies from several insurance carriers, such as life insurance, auto insurance, and property insurance. They can also sell insurance through non-standard companies, providing coverage for unique risks. The process of becoming an independent insurance agent involves meeting basic requirements, such as being at least 18 years old, completing pre-licensing education, passing state licensing exams, and undergoing background checks. While a college degree is not required, some insurers provide internships and training programs, and certain degrees can provide useful insights into the insurance industry. Independent insurance agents enjoy the flexibility to set their work schedules and the potential for high earnings, making it a rewarding career choice.
| Characteristics | Values |
|---|---|
| Education | A high school diploma or GED equivalent is the minimum requirement. A bachelor's degree is desirable, especially in a relevant field such as financial services, business administration, economics, or marketing. |
| Licensing | A license is required to sell insurance and is issued by the state. The type of insurance sold determines the license needed. |
| Exams | A state insurance licensing exam must be passed. The SIE exam is required before attempting to get a Series 6 or Series 63 license. |
| Age | The minimum age to become an insurance agent is 18 years old. |
| Background check | A background check is required, and some states may require fingerprinting. |
| Continuing education | Continuing education is necessary to keep or renew a license. |
| Work hours | Insurance agents often work outside the standard 9-5, and independent agents can set their own work schedules. |
| Income | Income is commission-based and unlimited, but this can make it difficult to predict earnings. Captive agents have a more stable and consistent income. |
| Independence | Independent agents represent multiple insurance companies and have the freedom to offer multiple types of insurance policies. Captive agents work exclusively for one insurance company. |
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What You'll Learn
Education and licensing requirements
To become a non-standard insurance agent, you will need to meet certain educational and licensing requirements. These requirements vary depending on the state in which you plan to practice and the area you plan to service.
Educational Requirements
A college degree is not required to become a non-standard insurance agent. However, some companies and agencies may prefer candidates with a degree, as it can provide a solid foundation for a career in insurance. Relevant fields of study include financial services, business administration, economics, accounting, marketing, and business law. Psychology, sociology, and communications courses can also help develop the skills needed to succeed in this career.
The only strict educational requirement for aspiring insurance agents is a high school diploma or its equivalent. Obtaining a degree is optional, but it can be advantageous in gaining essential knowledge and skills for a career in insurance.
Licensing Requirements
To sell insurance policies, you must obtain a license from your state's insurance regulation department. Each state has different licensing requirements, but the general steps include:
- Completing a pre-licensing course specific to your chosen line of authority (e.g., life insurance, health insurance, property insurance, etc.)
- Passing the state insurance licensing exam for your chosen line(s) of authority
- Passing a background check, which may include fingerprinting
- Maintaining your license through continuing education
Some states may have additional requirements, such as a minimum age of 18 years and no past-due child support. It is important to review the specific requirements of your state by visiting the state insurance webpage or consulting official handbooks.
Additional Considerations
If you plan to work as an independent insurance agent, you must get appointed to sell a carrier's policies. This involves researching and evaluating carriers that align with your practice, applying for an appointment, and obtaining binding authority. Once approved, you can start selling policies for those carriers.
Additionally, if you intend to sell life insurance or other retirement products tied to the stock market, you will need securities licensing in addition to your state insurance license. This typically involves obtaining Series 6 and Series 63 licenses or, alternatively, a Series 7 license, which allows for a broader line of securities products.
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Career options and salaries
To become a non-standard insurance agent, you must first decide on the type of insurance agent you want to be. You can either be an independent agent, who represents multiple insurance companies, or a captive agent, who works for just one insurance company.
Career options
As an independent insurance agent, you can offer multiple types of insurance policies, such as life insurance, auto insurance, and personal lines insurance. You can also choose to specialise in one type of insurance. Alternatively, as a captive agent, you will be obligated to sell the insurance policies of a single insurer.
Salary
The salary of an insurance agent can vary depending on experience, responsibility, performance, tenure, and geographic area. The median annual wage for insurance sales agents was $60,370 in May 2024. However, this does not include pay for self-employed workers, agricultural workers, or workers in private households. The lowest salary for a non-licensed insurance agent in the United States is $108,046 per year, while the estimated total pay is $144,061 per year, with an average salary of $81,378 per year.
Insurance agents are often paid in one of three ways: salary only, salary plus commission, or salary plus bonus. Commissions are the most common form of compensation, especially for experienced agents. The amount of commission depends on the type and amount of insurance sold and whether it is a new policy or a renewal. Bonuses are usually given when sales goals are met. Some agents are paid a fee for their services, rather than a commission, and some are paid on a commission-only basis.
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Specialisations
The first step to becoming an insurance agent is to decide which type of insurance you want to sell. This is referred to as your "line of authority".
The most common types of insurance are:
- Life insurance: selling policies and annuities related to providing for a beneficiary upon the death of the insured.
- Health insurance: selling medical, disability, Medicare supplement, and long-term care policies.
- Property insurance: selling homeowner, commercial property, and inland marine policies.
- Casualty insurance: selling auto, workers' compensation, crime coverage, and professional liability policies.
- Surplus line insurance: selling coverage for unique or unusual situations with risks that aren’t covered by standard insurance, such as daycare insurance, oil drilling rigs insurance, and special events.
You can also choose to specialise in commercial or personal insurance. Commercial insurance covers businesses and includes general liability insurance, errors and omissions, and commercial property insurance. Personal insurance focuses on coverage for families and individuals and can include auto insurance, life insurance, and home insurance.
If you become an independent insurance agent, you can offer multiple types of insurance policies, including life insurance, auto insurance, and personal lines insurance. Alternatively, you can choose to specialise in one type of insurance.
If you decide to become a life insurance agent or financial advisor, you will need securities licensing on top of your state's insurance license. You will need a Series 6 or Series 63 license to sell life insurance or other retirement products tied to the stock market. Some agents choose to get a Series 7 license, which allows them to sell a broader line of securities products, but this exam is one of the most difficult.
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Pros and cons
Pros of becoming a non-standard insurance agent:
Non-standard insurance agents sell coverage for high-risk drivers who are unable to obtain a standard car insurance policy. This includes new drivers, those with poor driving histories, foreign drivers, and those with lapses in coverage.
Some advantages of becoming a non-standard insurance agent include:
- Filling a market gap: Non-standard insurance agents provide coverage for clients who may be deemed too high-risk by standard insurance companies, allowing you to serve a unique and often underserved market.
- Flexibility: Non-admitted insurance products offer more flexibility in terms of coverage options and policy limits, allowing you to tailor policies to your clients' specific needs.
- Higher guarantees: In some cases, non-admitted insurance products can provide higher guarantees than admitted products, as state guarantee funds may place caps on payouts per claim.
- Innovation: Surplus lines in non-admitted insurance can be a proving ground for product innovation, allowing you to offer cutting-edge policies to your clients.
- Competitive rates: Non-standard insurance companies may offer more competitive rates than standard insurers, especially for high-risk drivers.
Cons of becoming a non-standard insurance agent:
Some potential disadvantages to consider include:
- Higher premiums: Non-admitted insurance products often come with higher premiums due to the increased risk associated with insuring high-risk drivers. These higher premiums may be a deterrent to potential clients.
- Difficulty in comparing: There is more variability in non-admitted insurance products, making it challenging for clients to compare pricing and coverages between different providers.
- Regulatory complexities: Non-admitted insurance products are regulated by the state's surplus lines office, which may involve additional complexities and requirements compared to admitted insurance products.
- Limited carrier options: Non-standard insurance is typically offered by smaller or regional providers, which may limit the number of carrier options available to agents and their clients.
Additional considerations:
It is important to note that the requirements and licensing processes for becoming an insurance agent, including in the non-standard market, can vary by state. Be sure to check the specific regulations and requirements for your state.
Additionally, as a non-standard insurance agent, you may need to obtain additional licenses or certifications, such as a securities license, depending on the types of products you plan to offer.
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Day-to-day responsibilities
To become a non-standard insurance agent, you will need to be an independent agent, as captive agents work exclusively for one insurance company. Here is a detailed overview of the day-to-day responsibilities of an independent insurance agent:
- Selling insurance policies: As an independent insurance agent, you will be selling insurance policies to clients. This involves understanding the needs of your clients and offering them the best policy options from a range of insurance carriers.
- Negotiating between clients and insurance companies: Independent agents act as intermediaries between potential insurance buyers and insurers. They must negotiate and communicate with both parties to ensure the client's needs are met and maintain a good relationship with the insurance companies they represent.
- Marketing and finding potential clients: To be successful, independent agents need to actively identify and secure clients through marketing strategies such as prospecting, networking, and cold calling.
- Building and maintaining client relationships: It is essential to focus on building and maintaining relationships with clients to ensure repeat business and positive word-of-mouth.
- Staying compliant and managing risks: Independent agents must ensure they stay compliant with regulations and manage risks associated with E&O claims, where clients can hold them liable for inadequate coverage advice or errors.
- Continuing education: To keep or renew their license, independent agents must undertake continuing education to stay up-to-date with industry developments.
- Flexibility in work hours and location: Independent agents often have the flexibility to work outside the standard 9-to-5 and can also work from home. However, this may also involve working long hours to meet targets and quotas.
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Frequently asked questions
The requirements to become an independent insurance agent vary across states. However, in general, aspiring insurance agents must be at least 18 years old, complete pre-licensing education, pass a state insurance licensing exam, pass a background check, and complete continuing education to keep or renew their license.
Independent insurance agents have the freedom to offer multiple types of insurance policies from several insurance carriers. They can set their work schedule and work from home. They can also offer clients more favourable prices and terms.
The type of insurance you sell depends on your comfort level and educational background. You can choose between commercial insurance and personal insurance. Commercial insurance covers businesses, while personal insurance covers families and individuals.
First, decide on the type of insurance you want to sell. Then, research and evaluate which carriers are a good fit for your practice. Next, apply for an appointment and binding authority. Once approved, create a plan to earn and retain business.
