Life Insurance Agent: Licensing And Career Guide

A life insurance agent is a type of insurance professional who sells life insurance policies to people in their community to help them provide financial support for their loved ones after their death. To become a life insurance agent, one must obtain a license by completing pre-licensing education, passing a licensing exam, and meeting other application criteria. The requirements for obtaining a license vary by state, with some states requiring a certain number of hours of pre-licensing education and others relying solely on the licensing exam. Life insurance agents typically work on commission, which can provide a high income potential but also comes with the risk of not having a base salary or benefits. The career offers good job prospects and a great work atmosphere, but it can be challenging to break into and succeed in due to the competitive nature of the industry.

Licensing requirements

To become a licensed life insurance agent, you must meet certain licensing requirements, which vary depending on your location. Here is a step-by-step guide to help you navigate the process:

Step 1: Earn a High School Diploma or GED

To be eligible for a life insurance license, you need a high school diploma or its equivalent. While this is the minimum requirement, some insurance companies may prefer candidates with a bachelor's degree in a related field, such as business or marketing.

Step 2: Research Licensing Requirements in Your State

Step 3: Complete Licensing Requirements

Fulfill the licensing requirements for your state, which may include taking a pre-licensing course, undergoing a background check, and fingerprinting. Pre-licensing courses are typically offered by third-party organizations, and the required hours vary by state. For example, California mandates 20 hours of pre-license education for a life insurance license and 40 hours for a joint life, accident, and health license.

Step 4: Pass the Licensing Exam

After completing the necessary requirements, you'll need to pass a state licensing exam. This exam covers topics such as state insurance regulations, insurance concepts, specific policies related to life insurance, annuities, and tax considerations. The exam content can vary by state, so it's important to review the exam outline for your specific state.

Step 5: Apply for a License

Once you've passed the exam, complete the license application process. You can usually find the application through your state's Department of Financial Services, Department of Insurance, or State Corporation Commission. Some states require you to apply before taking the exam. Remember to be thorough and accurate in your application, as omitting information can impact your approval.

Step 6: Complete Fingerprinting and Background Check

As a life insurance agent handles sensitive information, states require fingerprinting and a background check. You can find instructions for scheduling your fingerprinting appointment through the same sources as the license application. The fingerprinting fee typically ranges from $35 to $75.

Step 7: Await Application Review and Receive License

After submitting your application, the review process can take a few days to several weeks. Once your application, background check, pre-license education (if required), and exam results are approved, you will receive your life insurance sales agent license. You can then print your license and start working as a licensed life insurance agent.

It's worth noting that additional licensing may be required if you plan to sell securities or variable-contract life insurance products. In such cases, licenses from the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) are necessary.

The role of a life insurance agent

A life insurance agent is a type of insurance professional who sells life insurance policies to people in their community. They help clients find a life insurance policy that fits their unique needs and assists in creating a financial safety net for their families in their absence.

Life insurance agents may sell other types of insurance if they have the appropriate license, or they may choose to focus solely on life insurance. They can work for an insurance agency or be self-employed, sometimes operating under the name of an insurance company but as the owner of their own business. Life insurance agents are often paid on commission, incentivising them to sell more insurance policies.

To sell life insurance, an agent must work within the confines of the law and sell life insurance policies through various networking and marketing methods. Life insurance agents are often active in their communities to increase sales. They may also reach out to leads through services or the company they work for, via email or cold calls. Once a life insurance policy is sold, the agent ensures that all the necessary paperwork is completed and submitted to the right place. Life insurance policies must go through an approval process from the company offering the policy, so agents may need to manage this process and communicate the status of the policy to their clients.

Life insurance agents must have a license to sell insurance, and the requirements for obtaining a license vary by state. In addition to passing a licensing exam, some states may require a certain level of education, such as a high school diploma or GED. Some states also mandate pre-licensing classes with a minimum number of hours before taking the exam, while others only require passing the exam. Obtaining a license typically involves completing an application, undergoing a background check and fingerprinting, and paying associated fees.

How to become a life insurance agent

A life insurance agent is a type of insurance professional who sells life insurance policies. They may sell other types of insurance if they have the appropriate license, or they may focus only on life insurance. A life insurance agent may work for an insurance agency or independently, sometimes under the name of an insurance company but as the owner of their own business.

Becoming a life insurance agent requires some preparation and professional knowledge. Here is a step-by-step guide on how to become a life insurance agent:

Step 1: Earn a high school diploma or GED

Life insurance agents need to have a high school diploma or a GED to earn their insurance license. Many insurance companies that hire agents may expect their employees to have a high school diploma or GED as a minimum. While in high school, classes relating to business concepts, marketing, communications, and maths may be most helpful. Some insurance companies look for candidates with a bachelor's degree in a related field, but this is not required to become a life insurance agent.

Step 2: Research licensing requirements

Licensing requirements vary depending on your location. Some states require life insurance agents to take a pre-licensing class with a minimum number of hours before taking an exam, while other states only require passing the exam. The requirements are also different if you are getting licensed as only a life insurance agent or if you want to be a licensed life and health insurance agent. It is important to research what license is best for you and how to get it. You can often find information on licensing requirements on your state's insurance department or commission's website.

Step 3: Complete licensing requirements

Once you are aware of the licensing requirements in your area, you can complete them to get your license. This may include taking a class that covers a certain number of hours to meet a pre-licensing education requirement. These classes are usually offered by third-party organisations and are something that you or your employer may have to pay for.

You may also need to do a background check and fingerprinting if your state requires it for licensing. In some states, you need to apply for a license before taking your exam and receiving your license, but in other states, this isn't required. Whatever the requirements are in your state, make sure you have completed them to ensure you receive your license.

Step 4: Pass the licensing exam

Once you've completed all your other licensing requirements, you will need to pass a licensing exam. For some, an exam preparation course can be helpful, especially if your state has no educational requirements to become a licensed life insurance agent. You may also decide to prepare on your own with study materials found online or in a book. Some topics of a life insurance agent licensing exam include:

• State rules and regulations
• Insurance applications, underwriting, and delivering policies
• Policy riders and exclusions
• Taxes and retirement
• Types of policies

The contents of each exam often vary by state, particularly the state rules and regulations questions. You may be able to find information about what's on the licensing exam via your state's insurance department or commission website. Once you've passed your test, you may need to complete your licensing requirements by submitting paperwork to be officially licensed.

Step 5: Consider additional licenses

Once you are a licensed life insurance agent, you may decide that you need additional licenses. You may live in an area where you sell life insurance in more than one state, and since each state has its own licensing requirements, you will need a license to sell life insurance in each state.

You may also decide you want to sell other types of insurance in addition to life insurance, and those other insurance types 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 North American Securities Administrators Association (NASAA).

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

The challenges of being a life insurance agent

A life insurance agent sells life insurance policies to people in their community to help them provide financial support for their loved ones. The role of a life insurance agent includes finding a life insurance policy that fits their client's needs, as well as completing and submitting the necessary paperwork.

The life insurance industry is a challenging field to break into and succeed in. The burnout rate for life insurance agents is high, with more than 90% of new agents quitting within the first year. This is due to several factors, including the difficulty of finding prospects and the high rate of rejection.

One of the main challenges of being a life insurance agent is the pay structure. The majority of life insurance companies classify their agents as independent contractors, which means they are paid solely on commission. As a result, agents may work a full week without making any sales and, therefore, receive no paycheck. While a few companies offer a small base salary and benefits, these agents are typically held to rigid production quotas.

Finding potential customers is another significant challenge for life insurance agents. Even with the help of the internet, finding qualified leads can be difficult and time-consuming. Many insurance companies promise abundant leads to recruit new agents, but these leads are often nowhere near as plentiful as suggested. Agents who are provided with leads by their employers typically earn lower commissions, and these leads are more likely to be difficult sales.

Exclusive leads, which are leads that are sold to only one agent, can be very expensive. To break even on exclusive leads, an agent must have a very high close rate. As a result, many life insurance agents resort to cold-calling and door-knocking to find potential customers. These methods require perseverance and a thick skin, as rejection is a huge part of the job.

Life insurance is also a difficult product to sell. People are often reluctant to discuss or even acknowledge their own mortality, and the product offers no instant gratification. Creating a sense of urgency is crucial, as leaving an appointment without signed paperwork usually means losing the prospect forever.

The benefits of being a life insurance agent

Becoming a life insurance agent comes with a host of benefits, from easy entry into the profession to abundant job prospects and high earnings potential. Here are some advantages to becoming a life insurance agent:

Easy Access

Becoming a life insurance agent is relatively easy compared to other professions. The minimum educational requirement is a high school diploma or GED. While some states require a pre-licensing course and exam, these are generally not difficult to pass. This means that anyone with drive and determination can enter the profession without needing extensive qualifications.

Job Prospects

Life insurance sales jobs are abundant, and you can easily find them on online job search sites. With the expected job growth in the industry, there will likely be a continuous demand for life insurance agents. This makes it an attractive career option in terms of job security and opportunities.

High Earnings Potential

Life insurance offers some of the largest commissions in the insurance industry. The typical first-year commission for an auto insurance policy is 10% to 15% of the premium, while life insurance often pays 100% or more. This means that a policy with a $100 monthly premium would earn you $1,200 in commission in the first year. Some companies even advance their agents six to 12 months of commission on a sold policy, providing an attractive upfront earnings potential.

Passive Income

One of the most significant benefits of being a successful life insurance agent is the potential for passive income. In addition to the initial high commissions, you will continue to earn renewal commissions on the same policy for as long as it is in force. For example, a whole life policy purchased by a 30-year-old and kept until they are 90 years old would pay you commissions for 60 years. This means that over time, you can build up a substantial passive income stream, even if you stop selling new policies.

Flexibility and Independence

Life insurance agents often work independently, giving them the flexibility to work on their own terms. They can choose to work for an insurance agency or start their own business, allowing them to be their own boss. This independence also means they can set their own work hours and have control over their work-life balance.

Helping Families

While selling life insurance can be challenging, it is also rewarding. Life insurance agents help families plan for their financial security and protect their loved ones in the event of a tragedy. They provide peace of mind and ensure that families can maintain their financial stability even in the face of loss.

In summary, becoming a life insurance agent offers numerous benefits, including easy entry into the profession, abundant job prospects, high earnings potential, passive income opportunities, flexibility, and the satisfaction of helping families secure their financial future.

Frequently asked questions