If you are tired of having to trudge into work every morning, sitting in traffic backups, and having to schedule your life around the demands of work, you are not alone. Now is the perfect time to learn how to become an insurance agent.
You may be wondering, is an insurance career lucrative?
In the United States, insurance companies contribute 40% to the gross domestic product (GDP) of financial institutions. More than two million people work in the insurance industry. Premiums of $1.2 trillion make the U.S. insurance industry the largest in the world.
Your next question is likely “how much do insurance agents make?” In the United States, the average salary for insurance agents is $79,965 per year.
The type of insurance, region, and how many hours and training you put into moving your career forward impacts income. The country-wide salary range is $17,000 to $188,000 per year.
Ready to learn more about how to become an insurance agent? Keep reading for everything you know about getting started in this lucrative career.
1. Select the Type of Insurance You Want to Sell
There is a wide variety of types of insurance. One license does not cover them all. The first decision you must make is what type of insurance you want to sell.
- Life—policies and annuities for providing beneficiary funds upon the death of the insured
- Health—medical, disability, visual, dental, Medicare supplement, Medicare Advantage, Perscription Drug Plans, long-term care, end-of-life, funeral insurance
- Property and house—homeowner, commercial property, inland marine
- Casualty—auto, workers’ compensation, professional liability, crime coverage
- Variable—policies with an investment element, may also require a securities license
Once you decide the type of insurance you want to sell, review the requirements for becoming licensed.
2. General Requirements
Each type of insurance has basic requirements you must meet to obtain a license. The first requirement is being at least 18 years old to become licensed.
You will need to complete all requirements of your state regarding pre-licensing education. Once you have completed your training you will need to take and pass a state insurance licensing examination.
Some states also require you to pass a background check and undergo fingerprinting.
Even after you obtain your license, your state may have requirements for continuing education. Laws, requirements, and options change over time.
Even though you took life insurance sales training initially, the state will require you to show you are up-to-date on your education before they renew your license, especially in life insurance sales.
3. Select the State Where You Want to Sell Insurance
For example, you may live in Michigan, but reside close to the Michigan/Indiana, Michigan/Wisconsin, or Michigan/Ohio border. In this case, you may want to sell insurance in two or three states.
This is possible, but you must obtain separate licenses in each state. Because requirements vary, you need to check each state and follow their specific licensing requirements. The steps vary depending on whether you are requesting a new license or a renewal. Most states do have reciprocal agreements whereby you just apply for the license, pay the fee, then in a few days, you’ll be able to print out your non-resident license for the states you’ve applied to.
Many states have handbooks you can download to learn everything necessary to become an insurance agent in that state. Be aware there will likely be different requirements for different types of insurance agent licenses.
4. Pass Your State Exam and Apply to Insurance Agencies
Once you complete your educational requirements, schedule your state exam. After you get your insurance license you can begin contacting insurance companies about selling their product as a captive or independent agent.
As a captive agent, you will work for a specific insurance carrier. You will only be able to sell their insurance products.
The benefit is your employer will likely provide you with leads and may pay a salary beyond commissions. The downfall is you are again working for an employer. You will probably be subject to their scheduling and work hour requirements.
If you decide to become an independent insurance agent, you are self-employed. This allows you to sell insurance products from a wide variety of insurers.
As an independent insurance agent, you have the ability to set your own hours, earn larger commissions, and tailor your offerings to fit your client’s needs. You will be responsible for generating your own leads through networking or purchasing leads online.
5. Obtain E&O Insurance Coverage
Errors and Omissions Insurance (E&O) is professional liability insurance. It provides you with protection against lawsuits.
There is always a risk a client may claim you made a mistake when providing them with services. E&O insurance helps pay for court costs and settlements.
The most common E&O claims made are:
- Inadequate coverage
- Breach of duty
- Inadequate communication
- Inadequate documentation
This type of insurance is important in the event a client feels your services did not meet their expectations.
If there is an omission in their insurance that causes them financial harm, they may take legal action against you. This can happen even if the error is not your fault.
6. Become an Independent Life Association Member
As a member of the Independent Life Insurance Agent Association, you will receive all the help you need to grow your business and increase your success.
As a member of the organization you will receive:
- A free customer relationship management system (CRM)
- A free quoting tool for life insurance, annuities, and more
- Training and support
- Exclusive discounts
- Free software for working in the insurance industry
- Lead vendors to help you get started
- Support via messaging, telephone, and live chat
Once you establish your new business, the association provides instruction in promoting and closing sales.
You will receive support and learn techniques to increase sales, manage your client information, and more. You can even schedule one-on-one coaching sessions by appointment.
7. Additional Tips
You make the decision to learn how to sell life insurance or how to sell annuity insurance. Maybe you want to take your career further and learn how to become an insurance broker. Whatever your plan you need to get new clients and keep them.
Here are a few additional tips to help advance your career:
- Create sales goals and track them throughout the year
- Never miss networking opportunities
- Take every opportunity to learn from experienced agents
- Join an organization that will provide you will support, ongoing training, and more
- Find something in common with every potential client to put them at ease
- Stay current on market and insurance trends
- Listen to your client’s needs and show you understand them through the products you offer
You will also want to develop working relationships with professionals such as accountants, lawyers, and financial advisors who can answer client questions you are not knowledgeable about
Selling Annuity vs Life Insurance
When seeking training you may wonder about the difference between annuity insurance sales training and life insurance sales training.
The main difference between these policies is that a life insurance policy provides the insured person’s family with a lump sum financial payout when the insured person dies. It provides peace of mind that a person’s loved ones will receive financial assistance upon their death.
An annuity serves as an income safety net to the insured. It provides them with a guaranteed income prior to death.
Annuities provide the client peace of mind in knowing they have a boost to their retirement income. This is especially important for those who do not have a large number of investments or lack a pension.
Both annuities and life insurance policies have tax-deferred alternatives to traditional investments such as stocks and bonds.
The best plan is to advise your clients about diversity. This allows them to make sure both they and their loved ones have the financial support they need.
The Difference Between an Insurance Agent and Insurance Broker
Insurance agents and insurance brokers hold separate licenses. Both types of professionals can deal in one or several types of insurance.
An insurance agent sells the products of an insurance company to clients for a commission. They assist the client in selecting the best insurance for them and represent the insurance company in closing the transaction.
An insurance broker represents consumers who are seeking the best insurance policy. They provide the client with several options and recommend the policy that best meets their needs.
They do not represent an insurance company; they represent the client. The broker does not complete the insurance transaction. They hand the account over to the insurer to complete the contract. A broker will, however, charge the client a fee for the services provided.
The key differences are that agents are able to represent one or more insurance companies when they meet with clients. A broker can obtain price quotes from several insurers, but they must then contact the insurance provider to complete the contract.
How to Become an Insurance Agent Is Easy
You now understand the process of how to become an insurance agent. Entering this career is easy.
At Independent Live Insurance Agent Association we offer you all the coaching, guidance, training, and support you need to grow your insurance sales business.
Our program was designed by insurance agents to help you learn advanced sales and prospecting techniques. You will learn how to develop a larger, more profitable business, including how to attract more clients and close more deals.
Who wouldn’t want to save on startup costs and overhead through exclusive discounts, website design, software, and more? Click here to learn more about how we can help you forward your career.