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A Complete Guide for How to Become an Insurance Agent

9-minute read

Allison Grinberg-Funes

Allison Grinberg-Funes

11 March 2021

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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.

The agent you interact with is licensed to work with you and did a lot of work to understand all of the options they present to you. And how they got to be on this path likely began by deciding what type of insurance agent they wanted to be.

Before you decide which type of insurance agent you'd like to be, 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.

Some types of policies you'd usually be licensed to sell once you took and passed the applicable state exam are: commercial liability insurance, commercial property insurance, homeowners insurance, and more.

There is a long list of products that property and casualty insurance agents can sell to their clients, but as a general rule, you can think of it like this: 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, like yourself, 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 your health insurance license separately, but because these two products tend to be closely related, many choose to get licensed for both.

Once you decide the type of insurance product you want to offer to clients, you'll need to decide what type of insurance 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, this route may be 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 unlike captive agents, which we'll talk more about next, the commission that an independent agent may earn from a closed sale will be at a higher percentage.

Captive Insurance Agent

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.

The benefit of working as a captive insurance agent — or insurance producer, as they're sometimes called — is that you have 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.

How to Get an Insurance License Differs per State

Depending on which state you'll be an agent in, you’ll likely have a different process for getting your insurance license.

Many states may require potential agents to apply to become an agent and to adhere 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

Many of us don't like to flash back to high school, but when you're thinking of how to become an insurance agent, you can't ignore this step in the path: the licensure exam.

All licensure exams are timed, have a proctor, and usually can have anywhere from 80 to160 multiple-choice questions. The exams are typically closed-book, meaning that you can't bring notes in with you.

This is one case where the pre-registration classes come in handy. Many prospective agents spend a good deal of time studying for their exams, though how much depends on which exam you take and how you process and absorb information.

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.

For example, it's common for property and casualty insurance to be included in the same exam, but some states require a different test for each.

Property & Casualty

This license exam can set you up to be a Property and Casualty (or P&C) insurance agent working 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 property and casualty insurance agent license exam, many states require scores of 70-75 or above.

Life & Health Insurance

Just like with the property and casualty exams, 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 who take the test for the first time.

Note: The number of questions, passing grade, cost, and how many times you're able to take the test will differ, depending on your state. You can check your state's specific requirements per exam here.

Apply for Your Insurance Agent License

Once you pass 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 how they process applications. Most can typically be completed online, and the price of the applications can usually range from $30-$200, which doesn't include the cost of a background check.

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

To see how to get an insurance license in your state and what's required, check here.

Protect Your Insurance Agent Business

When you become a licensed insurance agent, your job will be helping people to protect their assets.

So why do you need to think about protecting yourself?

All of the work of taking preparation courses, studying, and exam preparation and sitting for the exam(s) takes a lot of time and money. Becoming an insurance agent takes an investment of your time and money, so it makes sense that you'd want to protect your work from the get-go.

Whether you decide to become an independent insurance agent or work as a captive insurance agent for a large brand, you could potentially face the risk of being sued by a client.

Let's look at a scenario where business insurance coverage for your insurance agent business may come in handy:

Let's say you're helping a new client get homeowners insurance for their new home. You're both excited that the process goes smoothly, and you help them find a customized policy that fits their needs.

Months later, the client calls you distressed. Their home was burglarized and their computers stolen from the home office, where your client did their work.

When attempting to make the claim, they find out that their homeowners policy doesn't cover home-based business insurance.

The client sues you for the cost of the computers. You may not be found at fault here — after all, your client never mentioned that they ran a business out of their home. But they still can make a claim against you.

With business insurance coverage, the cost of the computers could potentially be covered, as well as legal fees.

What if you end up working as a captive agent or for an insurance brokerage?

Even though these companies may have their own policies to potentially cover you, when you are starting your career in business insurance, having your own policy to accompany your license shows any potential employer that you understand the industry.

Simply Business has licensed insurance agents ready to help you find the coverage you need. Because they've gone through the process of becoming insurance agents themselves, they know how important it is to protect what you've worked for. You can talk to an agent and get free quotes by calling us at 844-654-7272.

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Maintain Your Insurance Agent License

The insurance landscape is constantly changing, which means that once you get your insurance agent license, you'll need to do a little work to maintain your license.

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 it's your responsibility as an insurance agent 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 You'll Use as an Insurance Agent

You've done the work to understand your state and specialty's regulations around how to get your insurance license, but what other skills can help you to succeed as an agent?

Interpersonal Skills

Regardless of which state you work in and what type of insurance you sell, there's one thing all agents have in common: clients.

A good insurance agent takes the complicated information of the insurance industry and explains it to a client in a way that makes sense to them. This means that an agent needs to be able to relate to a client, either in-person or over the phone, about their concerns.

People who find they have a knack for sales may find they can succeed as an insurance agent, but it's less about selling the product and more about being able to share the information with a client that shows how a product could potentially benefit them.

You don't need to be an extrovert to be a good insurance agent, but being able to display empathy and patience with your clients will serve you well.

After all, insurance is a big investment for many people and not a decision they make lightly. Having an informed, confident agent to help a client through the process of getting insured is greatly appreciated.

Technological Skills

We mentioned that you may be interacting with clients on the phone. While some insurance agents may still meet with clients in-person to write policies, it's common for agents to spend a good deal of time on the phone.

Phone systems used by insurance agents may include specific 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 transition to being 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 get clients the coverage they need.

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 figure out how to take your insurance agent license exam
  • How to apply for your insurance agent license
  • How to maintain your license
  • What skills will help you in an insurance agent role

We've mentioned it many times, but remember, this article is a starting point. Especially since each state has different requirements, be sure to do your research and fully understand what's required of you before continuing on your journey.

There are many steps to becoming a licensed insurance agent, and once you become one, there's so much more to learn about growing and protecting your business. Stop by Simply U, our blog for business owners, for more tips to use on your journey. You've got this!

Allison Grinberg-Funes

Written by

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).

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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