Haris Ashley
If you're considering a career as an insurance agent, you'll need to meet several requirements, including education, licensing, and training. While the specific criteria vary from state to state, there are some general steps you can take to prepare for this career path. First, you'll need to be at least 18 years old and have a high school diploma or GED. Most states require you to complete a pre-licensing course specific to your chosen line of authority, such as life, accident, and health insurance, before taking the state licensure exam. You'll then need to pass the state insurance licensing exam for your desired line of authority and complete a background check, which may include fingerprinting. While a college degree is not always necessary, it can be advantageous, particularly in fields related to financial services, business, or economics. With the right combination of education, licensing, and dedication to your clients, you can embark on a rewarding career as an insurance agent.
| Characteristics | Values |
|---|---|
| Education | A high school diploma or GED is the minimum requirement, but most companies prefer a college degree. |
| Licensing | A state license is required to sell insurance. Each state has different eligibility criteria, and you may need multiple licenses if selling different types of insurance. |
| Specialization | Choose a line to specialize in, such as life insurance, health insurance, property and casualty insurance, or a combination. |
| Training | Captive agents receive on-the-job training, while independent agents may face higher costs as small business owners. |
| Experience | Sales or insurance experience is advantageous. Starting as a captive agent can provide a pathway to becoming an independent agent. |
| Skills | Entrepreneurial spirit, self-motivation, and strong communication skills are important. |
| Income | The average salary for insurance agents is $79,938 per year, ranging from $18,000 to $186,000. |
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What You'll Learn
Check your state's eligibility criteria
The eligibility criteria for becoming an insurance agent vary from state to state. Each state has its own set of procedures for applying for a producer's license, so it's important to check the specific requirements for your state. Most states require insurance agents to obtain a license before they can sell insurance to the public. This license is typically obtained from the state's insurance department or a similar body, which regulates the insurance industry within that state.
To find out the relevant state body, you can search for the insurance licensing rules on your state's official website. These websites often provide handbooks and other resources that outline the steps to becoming a licensed insurance agent in that state. This includes information on any pre-licensing education or training requirements, the number of hours needed, and the associated costs, which can vary by state.
Some states may also have specific licensing options, such as the ability to bundle certain lines of authority together. For example, you might be able to obtain a license to sell only life insurance, or a more comprehensive license covering health, accident, and life insurance. It's important to understand the licensing process in your state, especially if you plan to relocate.
In addition to educational requirements, most states will require you to pass a state licensure exam. This exam may cover different topics depending on the line of authority you intend to practice, and the passing score may vary by state. Some states may also require a background check, which may include fingerprinting, as part of the licensing process.
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Complete pre-licensing education
To become an insurance agent, you'll need to complete prelicensing education for your line of authority, which is determined by the state in which you plan to practice. The number of hours you'll need to complete and the cost of prelicensing education vary by state.
Prelicensing courses are available online or in a classroom setting and are designed to prepare you for state licensure examinations. The subjects come with mandatory minimum hours, which vary depending on the specialisation you choose. For example, Life, Accident, and Health (LA&H) typically require 40 credit hours of prelicensing education.
After completing the required number of credit hours, you can take the state licensure exam. The tests are divided into LA&H and Property and Casualty (P&C). Each test consists of around 50 to 200 items and must be completed in two to three hours. You only need to take the exam for the line you plan to specialise in, but if you wish to practice in both, you must pass both tests. Passing scores vary by state, but generally, you need at least 70% to pass.
In addition to prelicensing education and passing the state exam, most states require that you take a minimum of 24 hours of continuing education credits during a two-year term to maintain your insurance license and keep your skills updated. These often include three hours of ethics training.
It's important to note that the requirements, qualifications, and fees for an insurance license vary by state and the type of insurance you wish to sell. Be sure to check with your state's department of insurance for specific rules and requirements.
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Pass your state's licensing exam
To pass your state's licensing exam, you must first identify the insurance license you want to obtain and then find your state's licensing requirements. Each state has different eligibility criteria, and the exam content will be tailored to the license type. Twenty-five out of the fifty states in the US use the Pearson VUE insurance licensing exam. The tests are divided into LA&H (Life, Accident, and Health) and P&C (Property and Casualty). You will only be required to take the exam for the line that you plan on specializing in. However, if you wish to practice in both, you must pass both tests. The passing scores vary in each state, but generally, you must get at least 70% of the answers correct to pass.
Some states require insurance pre-licensing, which must be completed before a candidate can qualify to take the licensing exam. Pre-licensing courses can be taken online or in a classroom setting and provide you with the information you need to know for the exam. You can then use practice exams and questions to challenge the knowledge you've acquired.
After completing your pre-licensing coursework, you can schedule your exam. Many states suggest scheduling your exam four to six weeks in advance. During this time, you can prepare by creating a study plan, completing an insurance exam preparation course, and targeting tricky subjects with flashcards. You can also simulate the state's timed exam with practice exams.
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Get a background check
To become an insurance agent, you'll need to pass a background check as part of the licensing process. The specifics of this check vary from state to state, with some states requiring fingerprinting and others implementing the 'Ban the Box' movement, which removes questions about criminal history from the initial application. However, most states require criminal background checks, and you may be disqualified if you have a criminal record, especially for crimes of moral turpitude like fraud or dishonesty. This is because insurance agents are fiduciaries, handling customers' money, and are expected to be trustworthy.
To initiate the background check process, you'll need to schedule an appointment with IdentoGO to obtain electronic fingerprint images. This step will help verify your identity and ensure that your background check is comprehensive and accurate.
It's important to note that the insurance company or carrier is primarily responsible for performing due diligence and investigating your background for past indicators of unprofessional conduct. This is true regardless of whether you are a captive agent working for a single company or an independent agent representing multiple insurers.
While the background check is a crucial aspect of becoming an insurance agent, it is just one part of the licensing process. Each state has its own eligibility criteria, and you'll need to meet the minimum age requirement, typically 18 years old, and complete pre-licensing education or training specific to your chosen line of authority.
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Decide which insurance types to sell
When it comes to deciding which types of insurance to sell, there are a few key considerations to make. Firstly, it's important to understand the different categories of insurance agents based on the types of insurance they sell. Here are the most common types of insurance sold by agents:
Life Insurance
Life insurance agents specialize in selling life insurance policies that provide financial benefits to beneficiaries upon the death of the insured person. This is a common type of insurance sold by agents, and it involves helping individuals and companies obtain life insurance policies and annuities.
Health Insurance
Health insurance is another prevalent type of insurance sold by agents. Agents in this field assist individuals and businesses in finding health insurance plans that fit within their budgets. Specializing in health insurance with a focus on emerging concepts like Direct Primary Care (DPC) can be a lucrative niche market, enhancing your expertise and providing tailored solutions to meet specific consumer needs.
Property and Casualty Insurance
Property and casualty insurance agents sell products that protect against damage, loss, or liability related to property, including cars, homes, and businesses. This type of insurance often includes auto insurance, homeowners insurance, and renters insurance.
Accident and Health Insurance
This specialization combines accident insurance with health insurance, allowing agents to sell life, health, and accident coverage. It typically requires additional education and a separate license.
It's worth noting that you don't necessarily have to choose just one line of authority. Combining certain lines, such as property and casualty insurance, is possible. However, each state may have specific requirements for prelicensing education and licensing exams for each line of authority. Therefore, it's essential to check with your state's department of insurance for specific rules and requirements.
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Frequently asked questions
You will need to pass a licensing test to become a verified insurance agent. The type of license you require depends on the type of insurance you want to sell. For example, in Texas, a General lines – life, accident, and health license allows you to sell life and health insurance, while a General lines – property and casualty license covers home, auto, and commercial insurance.
It is recommended that you enroll in a prep course to help you prepare for the exam. You can also create a study schedule and plan, practice relaxation techniques, and interact with other students who are preparing for the exam.
It is recommended that you study for a minimum of 35-40 hours. It is best to start studying no more than 3-4 weeks before your exam.
You will need to get a background check, apply for your license, and pay the associated fee. You will also need to get your electronic fingerprints taken.
