How to Become Insurance Agent
This article provides in-depth information into What is Insurance Agent? What Insurance Agent do? Degrees for Insurance Agent, Steps to become Insurance Agent and much more.
What does an Insurance agent do?
An insurance agent solicits, negotiates or instigates insurance contracts on behalf of an insurer. They are responsible for identifying sales opportunities for insurance plans, overseeing a portfolio of clients, identifying risk management strategies, handling policy renewals and tracking claims. They are also known as Insurance Sales Agents. Types of insurance that agents work with include life, property and casualty, health and long term care.
Life insurance agents sell policies that pay beneficiaries when a policy holder dies. They also sell annuities that promise a retirement income. Property and casualty insurance agents are responsible for selling policies that protect people and businesses from financial losses resulting from accidents including road accidents, fire, theft and other events that can damage property. In case of businesses, property and casualty insurance also covers injured workers’ compensation, product liability claims or medical malpractice claims.
Health and long term care insurance sell policies that cover the costs of medical care and assisted living services in old age. These agents also sell dental insurance and short term and long term disability insurance.
Insurance agents these days have started offering their clients comprehensive financial planning services including retirement planning, estate planning and help in setting up pension plans for businesses. The target customer for these plans are those nearing their retirement date. Insurance agents may earn license to sell mutual funds, variable annuities and other securities.
Insurance agents also have to market their own services and create their own base of clients. They recruit new clients through cold sales and referrals. The key to a successful career as an insurance agent is keeping their clients happy.
Steps to become an Insurance Agent
Following is a step by step guide to become an insurance agent
Earn a High School Diploma
The first step to becoming an insurance agent is to earn a High School Diploma like GED or an equivalent. Ensure to major in subjects related to accounting and finances which will help you in creating a base for a future career in insurance.
Obtain an Associate’s or Bachelor’s Degree Program
Although it is not mandatory to obtain a college degree, pursuing higher studies is beneficial for any career at any given point of time. College education can be a stepping stone for experienced agents who want to move into careers related to risk management, actuaries and other positions that require post secondary education.
Students should prefer to take up majors related to accounting, business and finance. Associate degree programs in business and finance are offered in community colleges and take upto 2 years to be completed and a bachelor’s degree program in business and finance are offered in colleges and universities and take up to four years to be completed.
Decide the type of Insurance Agent you want to be
There are basically two types of insurance agents to choose from when starting out: captive and independent.
Captive Insurance agents are those that work with one company, most often with a large national insurance provider. Captive agent is trained by the company. Insurance agents represent only the captive company’s products and are barred from selling any other company’s policies. Agents are sometimes made to sign a non compete agreement limiting them to sell policies of only one insurance company for a specific period of time.
Independent agents are those that work with more than one insurance company at the same time. The job of an independent agent is to provide clients with policy quotes from multiple companies. The client may choose the best policy as per their need and want. The challenging part about being an independent agent is that agents have to build their own brand and market their own products without the tag of any big brand
Pick up a Specialty - Decide Insurance product
Insurance agents sell different kinds of insurance like property, casualty, and personal insurance. Personal insurance focuses on coverage for individuals and families including insurance for motor vehicles, home insurance and life insurance. Commercial insurance agents focus on providing coverage to businesses with policies including general liability insurance, property insurance and errors and omissions coverage. These are referred to as “ lines of authority” in the industry and it is a must to receive licensure for their particular line of authority.
Review and complete Pre-licensure Requirements
Before beginning the licensure process, prospective insurance agents will need to know which products that want to sell so as to be able to choose the right license for their insurance agent business. Pre licensure requirements vary from state to state but is a mandatory step towards earning licensure as an insurance agent. Most states require agents to complete a pre-licensing class. Requirements vary from a one day class to 20 to 40 hours of online training.
The two most common types of license are:
- Property and casualty license is for insurance agents who plan to sell policies like auto, home and business.
- Life, Health and Accident license is for agents who plans to sell policies related to life such as life insurance, accidents or health insurance
Take and Pass the licensing exam
After a candidate has fulfilled the pre-licensure requirements of a state, they have to take a licensing exam. Agents have to pass the licensing exam to be eligible to sell insurance. Usually, an outside company proctors these exams. Candidates have to go to a testing site at the scheduled date and time to take the test online. Candidates have to show proof of completed training class before taking the exam. After passing the state insurance license exam, agents will have to submit all required licensing applications to the state licensing department. Some states require background checks including fingerprints.
Apply at and get appointed by insurance agencies
Agents who have met all the requirements and earned licensure are eligible to work as insurance agents. In order to be able to sell policies of any insurance company, it is important to be appointed by the company. Insurance agents will have to fill and submit an application form with each insurance company and be granted an appointment and binding authority which is recorded on the state insurance license.
Salary of an Insurance Agent
The average annual salary of an insurance agent is $50,600 as per the Bureau of Labor Statistics. While the bottom 10% earn less than $26,100 approximately per year, the top 10% make upto $117,000 approx per year.
Employment opportunities for insurance agents are projected to grow at the rate of 10% between 2018 to 2028. Although many people prefer to do their own research and purchase insurance online, the demand for insurance agents will always be there to help clients understand their options and choose a policy that is right for them.
Types of Degrees for becoming an Insurance Agent
Following are the types of degrees required for becoming an Insurance Agent:
High School Diploma: the basic requirement is a high school diploma or an equivalent. Students who plan to start building their career early on can opt to do so after successfully completing HIgh School Diploma or GED. Students may take up subjects like business and finance to help them build a foundation for the job.
Bachelor’s Degree: A bachelor’s degree is not a necessary education for insurance agents but can be helpful. There are a variety of major fields of study that are interested in insurance sales. A bachelor’s degree comes in handy for those that want to move into risk management. Psychology and marketing graduates have a better understanding of human behaviour and can be better prepared as an insurance sales agent.
Graduate Degrees: Graduate Degrees like law and business are of great use for those that want to pursue a career in insurance sales. Law graduates will have a better understanding of legal processes for large estate transfers . business school grads will be able to communicate in better ways with business owners and accountants. Moreover, a graduate degree adds more credibility to the CV and helps acquire clients easily.
Professional Designations: insurance agents are eligible to earn a variety of professional designations. Designations help them demonstrate their level of expertise in their field of work. To earn a professional designation, agents have to take a series of courses and pass a standardized test from the designation board
Concentrations to consider for an Insurance Agent
Following are the job concentrations for an Insurance Agent:
Life Insurance: Agents who sell life insurance basically sell policies and annuities that provide for a beneficiary upon the death of the insured person.
Health Insurance: agents sell medical, disability, medicare supplement and long term care policies. A health insurance agent’s job is to assist an individual or a family select a health insurance policy that fits their personal health coverage needs.
Property & Casualty Insurance: a property insurance agent sells products like homeowners, automobile, boat and motorcycle insurance. The job of a property insurance agent is to sell on behalf of a specific insurance company or act as an agent that represents several different insurance companies
Surplus Line Insurance: SL insurance agents negotiate coverage on a client’s behalf from an excess and surplus lines (E&S) insurer. SL insurance agent sells coverage for unique or unusual situations with risks that aren’t covered by standard insurances.
Adjuster: an insurance adjuster also known as claims adjuster helps figure out a fair settlement by speaking with the client and assessing damages. They are in the business of investigating and adjusting claims of an insurance policy. Adjusters are usually hired by insurance companies.
Stand out Skills for an Insurance Agent
Following are the skills that are amust for being successful as an insurance agent:
Good listener: one of the most important skills for a successful insurance agent is to be a good listener. The agent must be patient enough to listen to and answer all the queries of a client. In order to understand the needs and be able to provide an apt policy, insurance agents have to be good listeners.
Strong Communication Skills: Insurance agents must possess strong communication skills- both verbal and reading and comprehension. In order to convert prospects to clients, it is important that insurance agents are able to communicate in a language that is easily understood by clients.
Good Marketeers: insurance agents need to be good marketeers for their products. They should possess a charming personality and should be able to speak in a language that has the power to convince prospective clients to buy their policies.
Technical knowledge: in order to be a successful insurance agent it is more important to know more than how to sell a policy. The agent must understand the taxation and legal aspects of the product they are selling and how they are designed to fit into a client’s overall financial situation