How to Become an Insurance Agent and Insure Your Business

If you have an entrepreneurial spirit and a knack for sales, then learning how to become an insurance agent can possibly be a step in the right direction for your career.

And if you’ve found yourself reading this, then you’ve already taken the first unofficial step toward kicking off your career in insurance. But there’s a long road ahead of you. Where do you start?

We’re here to tell you how to become an insurance agent. In this article, we’ll review how to consider which path is right for you; how to typically get your insurance license, depending on where you live; which skills will likely benefit you long term; and more.

What Type of Insurance Agent Do You Want to Be?

You may know about insurance agents from your interactions with them as a client — maybe you have homeowners insurance, car insurance, health insurance, or any other type of coverage.

Your insurance is licensed and trained to help you understand the options they present to you. Their path to become an insurance agent likely began by deciding what products they wanted to offer.

Let’s take a look at the types of insurance products you could potentially sell:

Property and Casualty Insurance often covers products you’d sell to both commercial and individual clients.

Policies you could write with this license could include: commercial liability insurance, commercial property insurance, homeowners insurance, and more.

The list goes on, but as a general rule: If someone has property that’s worth insuring or is at risk of damage, you may be able to sell them a product under a property and casualty license.

Business owners in particular will often talk to a licensed property and casualty insurance agent to insure their business and protect it against risk.

Life Insurance and Health Insurance are two products you can typically sell to individual clients. You can choose to get your life insurance license and health insurance license separately, but many choose to get licensed for both.

Once you decide the type of insurance you want to offer to clients, you’ll need to decide what type of agent you want to be: an independent agent or an agent working for a captive insurance agent. We’ll go over the definitions for each next.

Independent Insurance Agent

An independent insurance agent gets their license and partners with different carriers to offer products to clients.

As an independent agent, you’re able to offer your clients the gift of choice and typically aren’t tied to doing business with one specific brand or carrier.

If you’re entrepreneurial, becoming an independent insurance agent may be the path for you. Independent agents are responsible for all the overhead costs to get their business started, such as:

  • Getting office space
  • Marketing your services
  • Administrative work
  • And more

One benefit to becoming an independent insurance agent is that you work entirely on commission, meaning there’s motivation to make sales — because that’s how you’ll earn your income.

To some people, that challenge may present more of a risk, but the commission independent agents may earn from a closed sale will be higher than that of a captive insurance agent.

Captive Insurance Agent

If you want to become an insurance agent but aren’t ready to strike out on your own, becoming a captive insurance agent may be a good fit. A captive insurance agent gets licensed and is hired by a specific company to sell only that company’s insurance products. Often, big brands like State Farm or Allstate hire captive insurance agents.

Is becoming an insurance agent worth it if you can’t earn as much on commissions as independent agents? Yes! For many, the benefit of working as a captive insurance agent — or insurance producer, as they’re sometimes called — is having a big brand name helping to gain the trust of potential clients.

Depending on the carrier, a captive independent agent may receive financial help setting up their agency, such as getting office space.

When a captive insurance agent is hired, they typically inherit a book of insurance business from a former agent, and are responsible not only for maintaining those policies and client relationships, but also for bringing in new business.

Captive insurance agents are paid a salary, so their commission rates are often typically lower than those of independent insurance agents.

If you’re entrepreneurial in spirit but are open to representing an established brand, then becoming a captive insurance agent may be a good path to consider.

Now let’s explore the requirements to become an insurance agent.

Steps to Becoming an Insurance Agent Differs by State

So, how do you become an insurance agent? First, you’ll need a license. Depending on which state you’ll be an agent in, the licensing process may vary.

In many states, requirements to become an insurance agent include applying to become an agent and adhering to a background check; sometimes these steps come before the licensure exam, while in other cases (again, depending on the state), they can come after the exam.

The cost of the insurance agent license application can typically range from $20-$200, depending on which state you’re applying to work in.

Some states may require you to take pre-registration classes that precede the courses you’ll take to prepare for the licensure exam.

The licensure exams themselves also will differ, depending on the state and which kind of insurance products you intend to sell. We’ll cover that in the next section.

Taking the Insurance Agent License Exams

If you want to become an insurance agent, you can’t ignore this step in the path: the licensure exam.

All licensure exams are timed, closed-book, have a proctor, and usually have anywhere from 80 to160 multiple-choice questions.

Pre-registration classes can come in handy. Many prospective agents spend a good deal of time studying for their exams, and taking a class can only help.

There are four different types of insurance license exams:

  • Property
  • Casualty
  • Health
  • Life

Each correlates to which type of insurance you want to be able to sell. Depending on your state, an insurance license exam may combine two types into one exam.

Property & Casualty

This license exam can set you up to become an insurance agent for Property and Casualty (P&C), meaning you can work with a wide variety of products, or you can choose to specialize. There’s approximately a 55% passing rate of the property and casualty exam, which explains why so many students devote time to study in preparation.

To pass the P&C insurance agent license exam, many states require scores of 70-75 or above.

Life & Health Insurance

Some states may offer the health insurance and life insurance license exams separately, while others will include them on the same exam.

Passing this exam will allow agents to sell health and life insurance products. The average pass rate is around 50% of people taking it for the first time.

Note: The number of questions, passing grade, cost, and how many times you’re able to take the test differ depending on your state., so be sure to check your state’s exam requirements.

Apply for Your Insurance Agent License

After passing the exam, you will need to apply for your insurance agent license in order to sell insurance in your state.

Each state has a different protocol for processing applications. Typically, you can apply online, and the price of the applications usually ranges from $30-$200, not including the cost of a background check.

In addition to the background check, some states may require you to be fingerprinted.

How long does it take to become an insurance agent? It depends on your state and the type of license. You can find your state’s requirements to become an insurance agent here.

Protect Your Insurance Agent Business

After becoming an insurance agent, your job will be helping people to protect their assets.

Make sure your assets are protected too. Insurance is all about anticipating risks. When disaster strikes, you could be left on the hook to cover repairs, replacements, damages, and more. You don’t want that for your business, any more than you would want it for your clients.

Here are some policy recommendations for insurance agents.

General liability.

General liability is a versatile policy option that’s well-suited for many types of business. It typically covers:

  • Third-party bodily injury
  • Third-party property damage occuring during the normal course of your business
  • Personal and advertising injury
  • And more

So if a client is injured in your agency or a competitor claims your advertising is libelous, these claims may be covered.

Professional liability.

A professional liability policy is geared toward business owners who — like insurance agents — provide informed advice to their clients. It will generally cover:

  • Negligence or alleged negligence
  • Omissions or alleged omissions
  • Legal defense costs
  • And more

Say, for example, that you mistakenly explain that a client’s coverage includes something it doesn’t. The client finds out about your error when they try to file a related claim thinking it’s covered. Professional liability may be able to help should the client take legal action against you for providing incorrect information.

Workers’ compensation.

If you have employees, you may be required to carry workers’ comp. This type of policy typically helps with costs resulting from employees’ work-related injuries and illnesses. These costs might include:

  • Medical payments
  • Rehabilitation expenses
  • Lost wages
  • Death benefits

Imagine your receptionist trips over a box of office supplies at the agency and sprains an ankle. Workers’ compensation could help cover the cost of their medical care.

Cyber insurance.

As an insurance agent, you’ll likely use computers and software to manage client and agency data. If you experience a data breach or other cyber attack, cyber liability insurance may help cover the resulting costs of:

  • Finding and fixing the breach
  • Notifying clients
  • Providing credit monitoring for affected parties

What if a hacker gains access to the client payment info stored on your computer? Your clients are now at risk of identity theft and credit card fraud, and without cyber protection you might have to pay for the damage control out of pocket.

Why Simply Business®?

Becoming an independent insurance agent makes you an insurance pro. It doesn’t, however, prepare you to run a small business.

We can help with that. At Simply Business, small businesses are our specialty. Our Resource Center is updated weekly with tips and tools to help you start, grow, and protect your business. We connect business owners with leading national insurance carriers to help them explore insurance options tailored for their industries and find the coverage they need.

Get started today using our quote comparison tool. Answer a few questions about your insurance business, and we’ll have policy and pricing options ready for you in minutes. It’s that easy.

You help clients with their insurance every day. Let us help with yours.

Get Insured in Under 10 Minutes

Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.

Maintain Your Insurance Agent License

Once you get your insurance agent license, you’ll need to do a little work to maintain it.

Most states will require you to complete continued education (CE) credits through courses offered either online or in-person. During these courses, you’ll learn what has and hasn’t changed in policy that’ll apply to how you help your clients to make informed choices.

Depending on your state and what type of insurance agent license you have (P&C, life, health, etc.), the amount of continuing education requirements differ. Typically around 20 to 25 hours of courses are required every two years.

The time interval and hours may differ, depending on your state.

Most states have a deadline for when you need to complete your credits, so be sure to stay updated on when to complete your CE credits. You’ll need time to study, similar to the way you did for your original license exam, so give yourself an appropriate window of time between your deadline and when you have to take your courses.

You can learn more about your state’s continuing education credit requirements here.

Skills of An Insurance Agent

You’ve done the work to understand your state’s steps to becoming an insurance agent, but what other skills can help you to succeed?

Interpersonal Skills

Regardless of where you work and what type of insurance you sell, all agents have one thing in common: clients.

One of the most important skills of an insurance agent is the ability to take complicated insurance jargon and make it easy for your client to understand. An agent needs to be able to relate to clients and understand their concerns.

Skilled salesmen may find success as insurance agents, but it’s less about selling the product and more about being able to explain it and how it could benefit the client.

You don’t need to be an extrovert to be a good insurance agent, but having empathy and patience for your clients will serve you well.

After all, insurance is a big investment and not a decision made lightly. Having an informed, confident agent can help make the process as painless as possible.

Technological Skills

While some insurance agents may still meet with clients in-person, it’s common for agents to spend a good deal of time on the phone.

Phone systems used by insurance agents may include technological systems that connect to other products, especially if a producer is a captive insurance agent or works for a brokerage.

Not every insurance agent is a technology whiz when they start out, but being comfortable with the technology you use daily is important.

If you work in an industry where you’re not using much technology and are hoping to become an insurance agent, don’t let that deter you.

Instead, remain open-minded to learning new ways of working, and don’t be shy about asking for help. Remember: The easier it is for you to navigate a company’s technology systems, the easier it is for you to help clients.

You’re Ready to Begin Your Career as an Insurance Agent

That was a lot of information. Let’s review what we covered. By now, you should better understand:

  • The different types of insurance agents
  • How to take your exams in your state
  • How to obtain and maintain your insurance agent license
  • The skills and requirements to become an insurance agent

Remember: This article is a starting point. Each state has different requirements that must be met to become an insurance agent — be sure to research and fully understand what’s required of you.

There are many steps to becoming an insurance agent, and once you become one, there’s still more to learn about how to become an insurance agency owner and run a business. Luckily, getting started is half the battle. Insurance can be tricky — trust us, we know — but with some time and effort it could be your next big career move.

Allison Grinberg-Funes

I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself – I’m a freelance writer and yoga teacher – I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).

Allison writes on a number of topics such as small business leadership, business structures, and employee training.