How to Become an Insurance Agent: Ultimate Guide

Becoming an insurance agent can open many doors for developing new skills and earning significant income. But it is not an easy road, and several different kinds of insurance exist to sell. This article describes the ins and outs of becoming an agent, from deciding who to work with to what kinds of policies to sell in your home state or other places.

A career in insurance sales may not sound glamorous. But people need insurance to help protect their investments, assets and health. Insurance agents connect their customers with coverage to provide financial peace of mind. This alone can make it a rewarding career.

What about the financial rewards? Depending on the type of insurance coverage they sell, an agent can take home a lot of money. Different insurance companies provide special incentives for joining the company. Some even offer special commissions that continue to add up.

Like any lucrative career, becoming an insurance agent is not a cakewalk. It involves hard work, lots of studying, and a good amount of marketing savvy. Before looking into a career in insurance sales, consider the following details.

Insurance Agent Job Description and Duties

Insurance agents’ primary duties include contacting potential customers and selling them insurance coverage. This requires them to stay abreast of changes in the industry. It also means observing laws and regulations related to insurance. Daily, insurance agents do the following:

• Call potential clients to expand their customer base
• Interview clients to know more about their finances and discuss existing insurance coverage
• Explain the differences between various insurance policies and products
• Look at clients’ current insurance policies and suggest extra coverage or policy changes
• Handle policy renewals
• Maintain electronic and paper records of insurance coverage
• Customize insurance policies to meet clients’ needs

If this sounds exciting, the next step is to become an insurance agent. And that takes a little more effort than renting office space and putting up an open-for-business sign.

Complete an Associate’s or Bachelor’s Program (Optional)

Insurance agents do not need a college degree to sell policies. But most states require a high school diploma. Even though it may not be necessary to have an associate’s or bachelor’s degree, companies tend to prefer those with formal education.?

According to the U.S. Bureau of Labor Statistics, a business degree is helpful, as are public speaking, economics or finance courses. Many of these programs prepare aspiring insurance agents to answer policy questions and share their products with strangers.

Decide What Type of Insurance Agent You Want to Be

There are two significant types of insurance agents: captive insurance agents and independent insurance agents. Both agents can sell insurance. The difference lies in whose policies they sell.

Captive Agents

Captive insurance agents work exclusively for one insurance company. Insurance companies often refer to this type of agent as a “local agent” or “agency owner.” They can only sell policies from that company and are usually independent contractors, although some may be employers. Captive insurance agents receive commissions from the insurance company they sell for.

Most insurance agents are captive agents because the company handles much of the overhead for conducting business. The insurance company provides an office, lists of leads (prospective customers), administrative staff, training and motivational programs. They also usually use their significant marketing budgets to point prospects in the agent’s direction.

Captive agents benefit from the salary, commission and benefits they receive. But sometimes, it can be difficult to meet customer needs because the product they are shopping for does not exist. These agents must also meet sales quotas or volume levels, which may lead to them pushing insurance products that may not be in their customers’ best interest.

Independent Insurance Agents

Independent insurance agents have a little more flexibility because they can sell policies from several different insurance companies simultaneously. Many independent agents work for brokerages, but they may also own their businesses.?

Independent insurance agents often shop for insurance quotes from several companies simultaneously. This helps them find policies that meet their client’s exact needs. It also allows them to compare prices from different companies to find the best rate.

Becoming an independent insurance agent allows for better control when running a business. Independent agents who start their agencies dictate:

• Their business hours
• Staffing decisions
• Marketing strategies and budgets
• Company partnerships
• The different insurance companies they work with

While this independence allows for greater flexibility, there are trade-offs. They lose the guidance a parent company offers, and it can be difficult to prospect without a national company's substantial marketing budget. Finding start-up capital to rent office space, buy supplies and find leads is more challenging, too.

Choose a Specialty?

In addition to figuring out just what type of insurance agent they want to be, prospective sales professionals need to choose a specialty or, at the very least, determine the first type of coverage they want to sell.

Most insurance agents sell several types of coverage to cast a wider net, but the most common insurance policies sold include:

• Property and casualty coverage: This insurance protects people, businesses and property from monetary loss. It covers automobiles, fire, theft and other types of property damage. Business casualty insurance includes workers’ compensation, product liability and medical malpractice.
• Life insurance: These policies pay beneficiaries when policyholders die. Life insurance agents can also sell annuities, which provide income after retirement.
• Health and long-term care insurance: These policies primarily focus on covering the costs of medical care or assisted-living services for seniors. Most of the time, agents in this field specialize in Medicare Supplement or Medicare Advantage coverage. They may also sell dental coverage and short- or long-term disability insurance.

An insurance agent may choose to focus on one area, or they may sell multiple products as generalists. In addition, more and more agents offer clients financial planning services.

Complete State Pre-Licensure Requirements

Regardless of the type of insurance a person wants to sell, they must complete specific state pre-licensure requirements. Most new insurance agents learn their job responsibilities by shadowing other agents or through training programs. This allows new agents to learn how to conduct business and introduces them to the basics of customer interactions.

Both state and federal governments regulate insurance. This means requirements for becoming an agent vary by state.

Pursuing a career in insurance means becoming familiar with state laws, license requirements and other regulations before the prospective agent can sell a policy.?

One of the best ways to become familiar with any state’s insurance rules is to visit their insurance department. The National Association of Insurance Commissioners (NAIC) provides a comprehensive list of each state’s governing body for insurance.

Pass the State Insurance Licensing Exam

Each state’s licensing exam differs, too. The best way to learn how to prepare for the licensing exam and to apply for a license is to check out the resources available at the National Insurance Producer Registry.?

Whether an insurance agent wants to renew their license in their home state or wishes to sell coverage in a different state, this resource offers everything they need. It even provides a way to review the continuing education requirements to keep current as an agent.

Apply to Insurance Agencies

After obtaining a license to sell insurance in one or multiple states, the next step is to apply to insurance agencies. This is an excellent way for new agents to learn the ins and outs of the industry. Knowing the differences between captive and independent agent life will help determine the next steps. Depending on the type of insurance an agent sells, they may choose to work as an agent at a brokerage.

Remember: Some companies allow insurance agents to take their book of business when they start a solo company. Others require a transfer to another agent or the company itself.?

How Long Does It Take to Become an Insurance Agent?

The amount of time it takes to become an agent depends on several factors. Some carriers who employ new agents offer free or discounted materials to study for licensing exams. This means it could take a few weeks to get started. The biggest hurdle is studying for the licensing exams and deciding what kind of coverage to sell.?

How Much Does an Insurance License Cost?

Each examinee must pay associated fees for both the license and the exam itself. These fees vary by state. NIPR’s resources can help determine the test cost. The amounts may vary based on whether a person is a state resident where they want to sell coverage and the type of license they wish to pursue.

Benefits of Becoming an Insurance Agent

In addition to helping friends and neighbors protect their most valuable assets, becoming an insurance agent offers several other benefits. Many insurance agents – especially the ones who own their businesses – are active in the community, sponsoring local sports teams and other charitable efforts.

Insurance is a highly sustainable field because it is a product that is not going away. Opportunities are set to grow by 2028 because an estimated 50 percent of the insurance agent workforce retires.

Finally, selling insurance offers an opportunity for passive income as policy renewals and commissions on life insurance and Medicare Supplement coverage continue to pay well after an agent sells the policy.

How to Find Insurance Agent Jobs

Because the industry is almost always growing, insurance companies constantly recruit new agents from all walks of life. One of the best ways to seek a job as an insurance agent is to visit the company you have already purchased coverage from and learn what options are available.

Key Takeaways

• Selling insurance can be a rewarding career with lots of growth and income potential.
• Insurance agents can exclusively sell policies for one company or partner with several carriers at one time.
• New insurance agents must obtain a license and become familiar with rules and regulations.
• Insurance license costs and requirements differ from state to state.

(Reporting by NPD)