How to Become an Insurance Agent
If you believe you would find personal satisfaction in helping to protect the well-being and security of the public, you may find a career as an insurance agent highly fulfilling. With a relatively easy entry into the field, the ability to choose your own work environment and high earning potential, a career as an insurance agent offers a number of benefits. Learning about the core responsibilities and educational preferences for insurance agents is a great first step as you explore whether a career as an insurance agent is a good option for you. In this article, we discuss what insurance agents do, the two different kinds of agents, their average salary and how you can become one. We also answer a few of the most frequently asked questions about this career.
What does an insurance agent do?
An insurance agent is a salesperson who sells insurance policies. Agents are responsible for developing strategies to promote different types of insurance, for evaluating the needs of a business or individual and proposing insurance plans that meet their criteria and for developing relationships to grow a base of clients. Most agents usually specialize in a certain type of insurance, such as health, property, disability, casualty or long-term care.
Many insurance agents also diversify their income by offering financial planning services to clients who are preparing for retirement or may set up investment or pension plans.
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Types of insurance agents
There are two different kinds of insurance agents:
Captive agents: These agents sell insurance for one specific company. The advantage of being this type of agent is brand recognition to the public and the simplicity of the back-office. Because they work for a single carrier, they can streamline their processes and develop in-depth underwriting knowledge. The challenge can arise if the company does not have competitive rates.
Independent agents: Independent agents sell insurance for different companies and can look for different rates at different companies to compare options. This type of agent is often referred to as a broker, and they represent the client, not the carrier. The challenge for this type of agent is that they often are small business owners with limited resources.
Average salary for insurance agents
The average salary for insurance agents is $79,938 per year, with a salary that ranges from $18,000 to $186,000 per year. The salary for insurance agents varies depending on the industry in which the agent is working and their geographic location. Agents who work for direct health and medical insurance carriers tend to make more than other agents.
Insurance agent requirements
To be an insurance agent, you'll need a minimum of a high school diploma or GED as well as an insurance license from your state. Licensing requirements vary from state to stay but you are generally required to take a course and pass your state's licensing exam. You will need a license for each type of license you sell, so you may need to obtain multiple licenses if you want to sell many different kinds of insurance. For example, if you intend to sell both health and life insurance, you'll need two different licenses.
How to become an insurance agent
Here are the basic steps you can take to become an insurance agent:
1. Earn a bachelor's degree
While a high school diploma is technically the only requirement for an insurance sales agent, most companies prefer that insurance agents hold a college degree. Aspiring insurance agents should consider taking courses in business, economics or finance to be more effective in selling insurance as a product. They may also want to study marketing or psychology to become better at promoting their insurance products and selling them. Some colleges and universities offer courses in insurance or risk management that teach students insurance theory, security analysis and the basic principles of risk management. A major in risk management and insurance or business with a concentration in risk management is particularly useful if you want to become an underwriter.
Related: Learn About Being an Underwriter
2. Complete requirements for licensure
Every state has its own requirements for obtaining licensing, although you are generally required to have a license for each category in which you plan to sell policies. You may be required to complete classroom training or conduct a self-study and obtain a minimum number of hours. You may also be required to give fingerprints and submit information for a background check.
3. Obtaining licensure
Every state will require you to pass a licensing exam that verifies your knowledge of state insurance laws and insurance concepts that are specific to the category of insurance you will be selling. Depending on the type of insurance you are selling, you may be required to hold a Series 6 or Series 7 securities registration.
4. Pursue a job
If you plan to operate as an independent insurance agent in an office with other agents, you'll likely receive on-the-job training as you work alongside other more experienced agents before searching for clients of your own. You may also want to pursue a position for a specific insurance company as a captive agent.
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Frequently asked questions about being an insurance agent
Here are a few of the most commonly asked questions about a career as an insurance agent.
How many hours per week does an insurance agent work?
Most agents work full time and some work over 40 hours per week. Many spend normal business hours with clients and then, in the evenings, complete paperwork and prepare presentations for prospective clients.
Are insurance agent jobs considered in-demand occupations?
Employment for insurance agents is projected to grow 10% from 2018 to 2028 according to the U.S. Bureau of Labor Statistics, significantly faster than the 5% average for all occupations.
What types of insurance do agents usually sell?
Insurance agents usually sell one or more types of insurance:
Property and casualty insurance: These policies protect people or businesses from financial loss as a result of fire, theft, auto accidents or other events that can cause property damage.
Life insurance: These policies are designed to pay a beneficiary when a policyholder dies.
Health and long-term care insurance: These policies are designed to cover the cost of assisted-living and medical care for seniors.
How do insurance agents make money?
Most insurance agents earn money from commissions as a result of selling insurance. However, many agents, particularly new agents, may also earn a salary as they build a book of business. Captive agents who work for a single company often receive a commission between 5% and 10% of the value of the policies they sell.