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May 15, 2020

How Do I Become a Licensed Insurance Agent?

becoming a licensed insurance agent

Why choose a career selling insurance?

Selling insurance probably isn’t at the top of the list when one is considering career options. People may have misperceptions about what it means to be an insurance agent; however, a career as a licensed insurance professional deserves a closer look.

Insurance is an essential product

When you think about it, many important events in life have insurance either as a requirement for them to happen or as a desirable benefit to have when they do. For example, you can’t drive a motor vehicle, own a business, or get a mortgage without proof of appropriate insurance coverage. Having health insurance to help with the expenses associated with welcoming your first child, or life insurance to help with the final expenses of a loved one can help ease the financial stress of these events. Since most people will likely face several such events in their lifetime, it becomes apparent that insurance is an essential and ongoing need.

Purposeful, satisfying work

Selling insurance provides opportunities for gratification on many levels, including the satisfaction of knowing that you are providing the vital service of helping to protect families from financial devastation. In that respect, insurance professionals are part of their clients’ lives in the best and some of the worst of times.

Aside from the satisfaction of helping others, a career in insurance also offers the opportunity to earn what you’re worth. Compensation for insurance agents is often 100 percent commission-based. According to the U.S. Bureau of Labor Statistics, the median pay for an insurance sales agent in 2019 was $50,940.1 In the long term, agents are also compensated in the form of renewals, which are residual income from sales the agent has made in the past. Renewal income from some companies continues as long as premiums are paid on those sales. Companies may also offer performance-based bonuses, contests, and incentive trips that make selling insurance an appealing prospect.

How do I become an insurance agent?

A college degree is not a requirement to become an insurance agent; the typical entry-level education is a high school diploma or equivalent.1 States do require insurance agents to be licensed, and the licensing requirements vary by state. You may need multiple licenses if you plan on selling multiple types of insurance products. For example, different licenses are required to sell home and auto insurance, life insurance, and health insurance products. If you move or if you plan to sell in multiple states, you will need to fulfill the licensing requirements for each state and insurance product.

Why do I need a license?

The insurance industry is heavily regulated by the state(s) in which you operate. Having earned a license proves you have basic knowledge of products and regulations and helps add to consumer confidence and trust. State licensure also protects consumers by allowing the state to track agent activities. You can go through the process of acquiring a license on your own, prior to contracting with an insurance company, or you can start the process after having met with a company to represent.

What are typical requirements to become a licensed insurance agent?

Many states require that you to take a state-approved pre-licensing course in order to have the best chance of passing your state insurance exam for the first time. Even if your state doesn’t require it, it may be wise to do so, as the licensing tests can be tough. Insurance exams in all states are taken at professional testing centers, are time restricted, and do not allow books or other study materials with you when you are testing.2

States will differ as to whether you apply for your license before or after you pass your exam, so it’s important to check your state’s licensing steps. All states will require some sort of background check and may also require fingerprinting.3

To maintain your insurance license, states require that you complete periodic continuing education requirements to refresh your knowledge and learn about any new laws which affect the insurance industry. Continuing education requirements vary by state. You may also have to renew your license(s) periodically.2

The need for licensed insurance sales agents is projected to grow 10 percent from 2018 to 2028, faster than the average for all occupations.4 Many clients do their own research and purchase insurance online, but agents will still be needed to help clients understand their options and choose a policy that is right for them.

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  1. U.S. Bureau of Labor Statistics, Occupational Outlook Handbook (May 4, 2020)

  2. StateRequirement, How to Become an Insurance Agent (May 4, 2020)

  3. America’s Professor, Become an Insurance Agent (May 4, 2020)

Categories: Job Search Tips, Careers in Insurance, Insurance Agents

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