Becoming An Insurance Agent: Steps To Success

Becoming an insurance agent is a great way to forward your career. It offers significant growth opportunities and can be an excellent choice for launching your career or making a meaningful change. However, the requirements to become a licensed insurance agent vary depending on the state you live in and the area you plan to service. For example, in California, you need to complete 52 hours of study, including 12 hours of Ethics and the California Insurance Code, and pass the licensure exam, which includes 75 to 150 questions. You also need to provide your fingerprints for a background check and apply for your license online.

Decide on the type of insurance you want to sell

When deciding on the type of insurance you want to sell, it's important to consider your interests, the demands of the market, and the potential challenges and rewards of each specialisation.

The two primary types of insurance salespeople are insurance agents and insurance brokers. Insurance agents sell policies as a representative of an insurance provider, while brokers oversee transactions but represent the customer.

Insurance agents can be further divided into two types: captive agents and independent agents. Captive agents work exclusively for a single insurance company and sell only that company's policies. Independent agents, on the other hand, manage their own business and represent multiple insurance companies, creating custom packages for clients by combining policies from different providers.

As an insurance salesperson, you can choose to specialise in one type of insurance or sell a range of different types. The most common types of insurance sold by agents include:

• Life insurance: Life insurance agents sell policies that provide financial benefits to beneficiaries upon the death of the insured. This type of insurance can be emotionally demanding, as it requires discussing topics related to death. However, it can also be financially rewarding, offering substantial commissions and the opportunity to build meaningful relationships with clients.
• Health insurance: Health insurance agents help individuals and businesses find plans within their budgets. This type of insurance can be complicated to navigate for consumers, so agents who can provide clear guidance will be valuable. Commissions for health insurance products typically range from 7-22%.
• Property and casualty insurance: This type of insurance covers damage or loss to property, such as homes, belongings, and businesses. It is in high demand due to the necessity of coverage in everyday life, leading to frequent policy renewals and updates. While consumers tend to seek out low premiums, the high demand can result in substantial commissions over time.
• Auto insurance: Auto insurance yields agents commissions of around 10-15%. It falls under the broader category of casualty insurance, which also includes workers' compensation, crime coverage, and professional liability policies.
• Commercial insurance: Commercial insurance agents focus on providing coverage to businesses, including general liability insurance, commercial property insurance, and errors and omissions coverage. Commercial insurance policies often have high overall values, leading to higher earnings for agents. However, these policies can be quite complex, requiring agents to have an in-depth understanding of the products they are selling.
• Supplemental insurance: Supplemental insurance covers critical illness, disability, and other specific areas.
• Final expense insurance: Final expense insurance is a type of whole life insurance that covers funeral expenses. This can be a delicate topic to broach with clients but is a vital type of coverage, especially for older individuals.

Remember that the ideal type of insurance to sell may depend on personal factors, such as your previous industry experience. It's also a good idea to try out a few different types of insurance to see which you perform best in.

Understand the general requirements

To become an insurance agent, you must be at least 18 years old. You must also complete pre-licensing education for your line of authority, which is determined by each state. The number of hours of education and the cost of this will vary by state. For example, in California, you need to complete 52 hours of study, including 12 hours of Ethics and the California Insurance Code.

You must then pass the state insurance licensing exam for your line or lines of authority. These exams are generally between 80-160 questions, and you will need to take an exam for each line of insurance you wish to attain. Again, the cost of these exams varies by state, from around $40 per attempt to over $150.

You will also need to pass a background check, which may include fingerprinting, and, in some states, you will need to complete continuing education to keep or renew your license.

Research agencies

Once you've decided on the type of insurance agent you want to be and the type of insurance you want to sell, it's time to research agencies to work for. Many agencies have additional requirements for candidates or agents that you'll need to be aware of if you want to work for them. Some agencies will even hire you before you have a license, and they may have specific processes for this.

When looking for a job, make sure that you only apply to companies that have received favourable reviews by rating agencies like Moody's and Standard & Poor's. You can also check out the National Insurance Producer Registry (NIPR) for state-specific licensing requirements and fees.

You can also use a site like InsuranceJobs.com to find and apply for jobs from leading insurance organisations.

It's important not to feel pressured to take the first position that comes along because working for the wrong company can both burn you out and haunt you for the rest of your insurance career. Ideally, you want to work for a well-known company with a good reputation among consumers, other agents, and insurance rating agencies.

A good place to start is by visiting the insurance company rating websites for AM Best, Moody's, or Standard & Poor's. From there, you can build a list of companies with ratings of "A" or higher in your state. These companies will likely offer the most secure products at reasonable prices, with an emphasis on compensating and keeping quality agents.

Due to the high turnover rate of insurance agents, most companies prominently post their job listings by geographical area, making them easily searchable for you. When you find a company in your area that seems to fit your personality, apply for the position and make sure you follow the company's instructions.

Pass your state exam

Passing your state exam is a crucial step in becoming a licensed insurance agent. Here are some tips to help you prepare for and pass the exam:

Know the Exam Format

The insurance license exam is a timed, proctored, multiple-choice test, typically consisting of around 50 to 180 questions. The exam is usually administered by third-party testing companies such as Pearson VUE or Prometric, and you will be taking the test in a standardized testing facility on a computer with a proctor present. The exam consists of two parts: general insurance knowledge and state-specific knowledge. Each state's exam will vary depending on their specific rules and regulations.

Understand the Exam Content

The exam covers a range of topics, including general insurance terms, life insurance basics, life insurance policies, provisions, options, riders, annuities, state regulations, and tax code. Familiarize yourself with the content outline provided by your state or look for an education course that covers the relevant topics.

Create a Study Plan

Developing a study schedule that considers your professional and personal commitments is essential. Dedicate specific blocks of time each day to complete your pre-license education course modules or attend an in-person course. Spend a couple of hours each day on your pre-license education, with additional time for practice questions and practice tests. Give yourself at least a week to study, and don't rush through the material.

Take Practice Exams

Practice exams are an excellent way to prepare for the real thing. Treat these practice exams like the actual exam by creating a quiet testing environment, setting a timer, and closing your study notes. This will help you identify areas where you need further review.

Stay Organized and Well-Prepared

On the day of the exam, arrive at the testing center at least 30 minutes early. Bring the required identification and any necessary completion certificates. Leave bulky items and personal electronics behind, as these are not allowed in the testing room.

Test-Taking Strategies

During the exam, read the last sentence of each question first to understand what it's asking. Predict your answer before looking at the choices, and read all the options before selecting your final answer. Eliminate answers you are sure are wrong, and trust your intuition when choosing between the remaining options. Remember that you have plenty of time, so don't rush and carefully consider each question.

Manage Test Anxiety

If you experience test anxiety, establish a consistent pre-test routine, learn relaxation techniques, and get plenty of rest and exercise leading up to the exam. Eat a healthy meal before the test and stay hydrated. Remember that understudying is a common cause of testing anxiety, so ensure you have prepared thoroughly.

Apply at insurance agencies

Once you've passed your state exam, you can start applying at insurance agencies.

Research agencies

Before applying, research the agencies you want to work for. Many agencies have additional requirements for candidates or agents that you'll need to be aware of. Some agencies will hire you before you have a license, and they may have specific processes for you to follow.

Apply

When you're ready to apply, you can use an online job search site to find open insurance agent positions. You can make a standard copy of your resume and then customize it for each position you apply for. Try to include keywords from the job listing in your resume to help it perform well in applicant tracking systems.

Use your cover letter to emphasize your insurance agent skills and explain any gaps in your resume. Before interviews, choose a professional outfit and practice answering insurance agent questions. Preparing for an interview can help you appear more confident and help you demonstrate your skills.

Network

If you're looking for an insurance agent position, consider contacting previous colleagues, managers, friends, and other professional contacts. They may know about an open role and can be a great supplement to an online job search.

Frequently asked questions