Finding A Life Insurance Agent: The Ultimate Guide

Life insurance policies can be complex, so it's important to find an insurance agent who is qualified to help you choose the right policy for your needs. A life insurance agent is a paid representative of an insurance company, which means their first duty is to the company and not to you. However, there are many excellent life insurance advisors out there. Here are some tips on how to find the right one for you.

Captive vs independent agents

When looking for a life insurance agent, it is important to understand the difference between captive and independent agents.

Captive Agents

Captive agents represent and sell insurance products for a single insurance company. They are typically under contract with that insurance carrier and are paid a salary plus commission on the policies sold. One of the main benefits of this approach is receiving regular income, along with the support of the insurance company's broader marketing strategy. Captive agents have an in-depth knowledge of their parent company's insurance products but are limited to selling only those products. In some cases, they may offer policies from other companies if their primary company does not offer the specific type of policy requested or the client does not qualify for their company's policies.

Independent Agents

On the other hand, independent agents work with multiple insurance companies and have access to a wider range of insurance products. They are appointed with and sell policies from multiple insurance carriers, giving them greater flexibility to meet their clients' needs. Independent agents have the advantage of being able to seek out the best policies for their clients' specific requirements. However, they may not have specialised knowledge about a particular company's products.

Choosing Between Captive and Independent Agents

Both captive and independent agents have their advantages and disadvantages. Captive agents benefit from the stability and resources of working for a single company, while independent agents enjoy greater flexibility and can offer their clients a wider range of options. When choosing between the two, consider your own needs and preferences. If you know which company or policy you want, a captive agent may be a good choice. But if you want to explore a variety of options from different companies, an independent agent or a life insurance broker would be more suitable.

Qualifications and licensing

Education

To become a life insurance agent, you'll need a high school diploma or GED. While a college degree is not required, some insurance companies may look for candidates with a bachelor's degree in a related field like business or marketing. Taking high school classes in business concepts, marketing, communications, and math can also be beneficial.

Licensing Requirements

The licensing requirements for life insurance agents vary by state, so it's important to research the specific requirements for the area you want to work in. You can usually find this information on your state's insurance department or commission's website. Some states mandate pre-licensing education, while others only require passing an exam. For example, California requires a 20-hour pre-licensing course specific to life insurance, plus an additional 12-hour course on ethics and the state insurance code.

Complete Licensing Requirements

After researching the requirements, you can proceed to complete them. This may include taking pre-licensing classes, undergoing a background check, and fingerprinting, depending on your state's mandates.

Pass the Licensing Exam

Once you've fulfilled the other licensing requirements, you'll need to pass a state licensing exam. This exam will test your knowledge of insurance regulations, insurance concepts and terms, specific policies, annuities, tax considerations, and more. Preparing for the exam with a pre-license education course or exam preparation course is highly recommended.

Additional Licenses

As a life insurance agent, you may eventually decide to expand your practice by obtaining additional licenses. This could include licenses to sell insurance in multiple states or offer various types of insurance beyond life insurance. If you plan to sell variable-contract life insurance products or securities, you will need licenses from the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).

Experience and specialisations

Experience is key when it comes to choosing a life insurance agent. You should look for an agent who has been in the business for at least three to five years. If they have less experience than this, they should at least have a relationship with a more seasoned agent who can provide support and guidance.

In addition to experience, relevant expertise is also crucial. Life insurance agents should have a strong baseline of product knowledge, competence, and a commitment to continuing their education in the field of life insurance. This ensures that they fully understand the policies they are selling and can provide you with suitable recommendations.

When choosing a life insurance agent, it's important to understand the difference between captive and independent agents. Captive agents primarily represent one specific insurance company and will generally only recommend policies from that company. On the other hand, independent agents represent multiple insurance companies and can offer a wider range of policies.

Life insurance agents can have various specialisations, and you should choose one whose expertise aligns with your needs. For example, life insurance agents may specialise in life insurance policies, annuities, health insurance policies, or property and casualty insurance.

When evaluating an agent's expertise, consider checking their licensing and credentials. In the United States, agents are required to be licensed by the individual state in which they operate. You can usually check an agent's license status online through your state's insurance department website. This will also allow you to see if there have been any complaints filed against the agent.

Additionally, life insurance agents may hold various professional designations that indicate their commitment to the profession and ethical business practices. One of the most common designations is the Chartered Life Underwriter (CLU) credential. Other designations to look for include the Certified Financial Planner (CFP) or Certified Insurance Counselor (CIC) certifications.

Communication and customer service

A good agent will provide helpful advice that is tailored to your specific circumstances. They should outline the best price, coverage amount, and policy for your financial situation. For example, if you are over 60 or have chronic health issues, a no-exam life insurance policy may be recommended.

It is also important that the agent is transparent and honest about the limitations, penalties, or fees associated with the policy. They should not pressure you into making a decision but instead work with you until you feel confident and ready to commit.

Additionally, consider whether the agent is licensed and in good standing with the relevant insurance department in your state. You can often check this information online. Checking for any complaints filed against the agent can also be a good indicator of their customer service and professionalism.

Personal needs and preferences

When choosing a life insurance agent, it is important to consider your personal needs and preferences. Here are some factors to keep in mind:

• Financial situation and goals: A good agent will understand your financial situation, including your income, tax brackets, other financial assets and obligations, as well as your personal situation, such as your age, marital status, dependents, and health status. They will also help you choose a policy that aligns with your financial goals.
• Risk tolerance: Your risk tolerance, or comfort level with financial risks, will impact the type of coverage you choose and your premium payments. A higher risk tolerance may lead to higher premiums but could result in a greater return on your investment over time.
• Family needs and life changes: Consider your family's current and future needs, including any anticipated changes such as marriage, having children, or retirement. Life insurance needs can change over time due to factors like income fluctuations, marital status, and family size.
• Discounts and incentives: Explore potential discounts, incentives, features, and benefits offered by different companies to reduce your life insurance rates. Many insurers offer discounts based on factors like age or occupation.
• Policy options and flexibility: Depending on your circumstances, you may benefit from a certain type of policy, such as term life, whole life, or universal life insurance. Consider whether you prefer the flexibility of working with an independent agent who represents multiple companies or the specialised knowledge of a captive agent who represents a single company.
• Customer service and support: Choose an agent who is responsive and accessible. You want someone who will be available to answer your questions and assist with policy updates or claims as needed.
• Communication and transparency: A good agent should be clear, transparent, and patient, ensuring you understand all your options without feeling pressured.
• Trust and comfort: Ultimately, trust your instincts and select an agent with whom you feel comfortable and confident. Building a relationship with a trusted agent ensures that your life insurance coverage protects your and your family's financial future.

Frequently asked questions