For many people, becoming an insurance agent seems like a great career. Besides being viewed as a professional that can provide necessary information to protect the financial futures of individuals, a great deal of freedom and respect comes with the job. However, many new agents and potential agents don't know where to learn about the logistics of working in the insurance industry. This articles provides a brief overview of that information.
For many people, a career where you can be in control of
your own future seems very appealing.
Even more, having a career where you are viewed as a professional with
knowledge that can be beneficial to others seems even more appealing.
For anyone who has ever considered becoming a life insurance
agent, this may seem like the perfect career, except for one thing: the actual
logistics of selling life insurance.
From how to be an independent insurance agent to working directly for a
major company, and let’s not forget how to become affiliated with individual
companies to sell their products, all of this can seem very confusing.
Even more, it seems difficult to know where to look for
these answers. Unless you want to enter
the business and learn through a “trial by fire” method, or you know someone in
the business to give you the real story about the insurance industry, it is
difficult to truly learn about working as an insurance agent.
The information presented in this article should provide a
very basic explanation of the process of entering the insurance business, as
well as working as an insurance agent.
In addition, links to other sites and companies will be provided to get
you started on a potentially new career.
Getting the License
The first thing you need to sell insurance is a
license. In the insurance industry,
there are many types of licenses for various types of products. For most people entering the business, there
are two important licenses: life & health and property & casualty.
A life & health license is required to sell all types of
life insurance, such as whole life, term, certain universal life products, and
health insurance. The property &
casualty license is needed in order to sell auto insurance, boat insurance,
homeowners insurance, and other insurance to cover property. The licenses for life insurance and property
insurance are different because the vast information and products that come
under each heading truly require their own knowledge.
In order to get each license, a test must be passed which is
administered through each State Department of Insurance. In some states, in order to take the
licensing exam, a pre-licensing course must be completed. The pre-licensing course, which is usually
around 40 hours, provides basic instruction on insurance products, state
insurance laws, and insurance ethics.
For each state in which to intend to sell insurance, you
must have the appropriate license.
However, once you have successfully obtained a license in one state,
passing a license test in another state is not required. You simply have to show that you have a
license in your home state, and pay the license fee for the state in which you
wish to obtain the additional license.
Agent or Broker
The next thing to consider when entering the insurance
business is how you are going to be employed: as an agent or a broker. Each type of insurance professional has its
advantages and disadvantages. Sometimes,
working as one may be better when you are entering the business. Then, after you have improved your skills, a
change might be appropriate.
An insurance agent is a person who is employed directly by
an insurance company, such as Allstate or MetLife. This person is paid from the company, with
all of the rights and responsibilities that come with that—such as having taxes
taken out of each check.
Now, depending on the company for which the agent works,
different rules about what insurance can be sold applies. For example, some companies allow agents to
sell products of other companies if it is in the best interest of the
consumer. Other companies, however, only
allow their agents to sell their insurance products. An insurance broker, on the other hand, is typically an
independent agent who works for the best interest of the consumer. When a consumer comes to a broker, the broker
searches several companies to find the best prices.
The advantage of working as an agent for a company is the
name recognition that comes with working for an Allstate, MetLife or New York
Life. In addition, the company provides
more support to assist with keeping track of insurance licenses, providing
guidance, especially for new agents, and other resources.
The disadvantage, however, is similar to working with any
major corporation. You must follow the
usually stricter rules of the company.
In addition, as a new agent for a major corporation, a great deal of
time is usually required to attend mandatory training sessions and
meetings. The bottom line is that you
have less overall control because you are working for someone else.
The advantage to being an independent insurance broker is
that you truly have almost complete control.
Most brokers are independent business people who are running their own
business. As long as you operate your
business within the rules of the individual State Department of Insurance, and,
of course, local business rules, you have a lot of independence.
The disadvantage that comes with being a broker is that you
must operate an independent business.
You must organize a business, obtain appropriate insurance, which
includes Errors & Omissions insurance that protects insurance agents and
brokers from lawsuits, and run the business with less assistance and resources.
How to Sell Specific Products
One thing that can be difficult to figure out for a new
agent is how to sell specific products for specific insurance companies. The answer to this question is insurance
wholesalers.
An insurance wholesaler is a company that represents many
different insurance companies. By being
a member of a particular wholesaler, an agent or broker can sell insurance for
any of the companies the wholesaler represents.
In addition, the wholesaler usually provides other support, such as
providing software to run insurance quotes, giving access to marketing
materials, and assisting with changes in insurance laws.
The important thing to remember if you decide to enter the
insurance industry is to do your homework.
The information presented here is basic information about the logistics
of selling insurance. Let’s not forget
that a great deal of being an insurance agent is selling. Learning the skills to sell insurance comes
from general sales knowledge, as well as building a thorough knowledge of how
insurance can be used to protect the financial futures of potential clients.
In the end, being an insurance agent is about having enough
knowledge to provide sound advice.
People will look to you to be an expert.
Because of that, it is important to truly be an expert.