The ultimate goal of every insurance company is to sell insurance policies, be it life insurance policy, auto insurance policy, property insurance policy or any other insurance policy to either individuals or businesses. Thus, there is a need for marketing and sales persons. These marketing and sales persons are commonly known as insurance agents or insurance brokers.
While the success of any business depends on the revenue made from sales, the success of an insurance company depends on the revenue made from sales. In which case, the insurance agents or insurance brokers play a vital role to the success of any insurance company.
Most insurance companies required a high school diploma and insurance classes as basic requirements to become an insurance agent. Others provide on-the-job training to every insurance agents or insurance brokers, and they are also required to must pass licensing exams from their state and understand the common types of policies, like the life, health, property and liability insurance. While a college degree may be helpful, especially for gaining promotions, the willingness to learn is the most important requirement for a career as insurance broker or insurance agents.
What Is an Insurance Agent?
Insurance agents or insurance brokers are generally referred to as sales professionals. They research and sell health, home, life, car and other insurance policies to businesses and individuals.
Insurance agents are either employed by an insurance firm or work as independent insurance brokers who sells insurance policies. Usually, the insurance broker specialized in the sales of one or two insurance policies types since each line requires a separate state license. For example, a life insurance agent is a specialized in the sales of life insurance policy. The agent might also sell insurance policies in niche areas, such as disability income, marine, malpractice and crop insurance.
The insurance broker duties generally include creating insurance plans that suit your clients' needs, interviewing potential clients about their finances and customizing insurance policies to meet their needs, suggesting policy changes, implementing policy changes, explaining policy terms, calculating premiums, ensuring clients fulfill policy requirements and maintaining records. The insurance agents may be place on the company’s payroll or rely on commissions paid by the insurer for bringing in new business (this is mostly true for independent insurance agents or independent insurance brokers)
Types of Insurance Agents
There are generally two major types of insurance agents: health and life insurance agent, and property and casualty insurance agents. While both types of insurance agents face similar challenges, and enjoy similar compensation benefits, their main difference is the type of insurance policies they sell. A health and life insurance broker sales health and life insurance policies to an individual and business whereas the property and casualty insurance brokers sales property and casualty policies to an individual and business.
Overview of the Insurance Sector
there are many kinds of insurance policies that an insurance company may engaged in. These include life insurance, health insurance, property insurance, auto insurance, and liability insurance. Among these insurance policies, the best money is for those selling life insurance. Insurance agents focusing on this end of the insurance market help employers, businesses, and families to protect against a financial loss that occurs when someone dies.
Life insurance agents are either "non-captive", when they represent multiple insurance carriers or brokerage, or “captive” agents, which mean they only sell insurance from one company. Either way, the typical insurance broker is going to spend the bulk of his time engaging in some type of marketing activities, trying to identify people who might be in need of new or additional insurance coverage, providing them with available insurance quotes from the companies they represent and then persuading them to sign the new insurance contract.
Generally, a life insurance agent gets anywhere from 30-90% of the amount or premium paid by the client in the first year and in the concurring years, the agent may receive anywhere from 3-10% of each year's premium, also known as "trailing commissions" or "renewals".
Steps on How to Become an Insurance Agent.
When considering a job as an insurance broker, there are some conditions that you may be required to fulfil. Most of these requirements are simply to make sure that you are knowledgeable about the insurance sector and are able to persuade prospective clients to buying an insurance policy. Here are some of the basic requirments and steps you might have to look at as we try to explain “how to become an insurance agent”.
Step 1: Earn a Bachelor’s Degree
While most companies provide on the job, and some may hire an agent out of high school, most companies prefer applicants with a Bachelor’s degree in an area such as marketing, economics or business. If you're interested in not just becoming an insurance broker, but also to eventually becoming an insurance investigator or underwriter, you might choose a major in risk management concentration in a business administration or a risk management and insurance degree. Some insurance companies provide prospective insurance agents with internship programs that allow them to begin training and working as an insurance agent while in college, as long as they have the required state license.
Step 2: Complete Pre-licensure Requirements
Every State requires every insurance broker to have a license in each category of insurance for which they sell policies. These agents will need to complete prelicensure courses and submit information for a criminal background check or be fingerprinted. Depending on the state and the type of insurance policy, the prelicensure course may be classroom training or self-study, requiring between 20-50 hours. Classroom-based prelicensure courses may be available at public technical colleges, community colleges or private for-profit education providers.
Step 3: Take License Exams
A state insurance license qualification requires the agent to pass a licensing exam that covers category-specific insurance concepts and state insurance laws. Some types of life insurance may require agents to hold a Series 6 or Series 7 securities registration. The examinations for these qualifications are administered via the national testing centers on behalf of the FINRA (Financial Industry Regulatory Authority).
Step 4: Pursue a Job
As an insurance broker, you might work directly for a specific insurance company as a captive agent, or you may work with several insurance companies and operate as an independent insurance broker or an independent insurance agent. According to the U.S. Bureau of Labor Statistics (BLS), the insurance sector is trending toward the use of independent insurance agents. As you start out, you'll likely receive on-the-job training by working alongside experienced agents for a training period before prospecting for and seeing clients on your own.
Step 5: Maintain Certifications and Licensure
In most states you are required to complete continuing education courses in insurance law, policy terms and ethics every two years to renew any of your licenses. While professional certifications are voluntary ways of demonstrating to potential and existing clients that you're well versed in your specialties or specialty, courses required for many common insurance certifications may fulfil continuing education requirements for state licensure.
The National Alliance for Insurance Education and Research (NAIER) offers the Certified Insurance Counselor, Certified Risk Managers, and Certified Insurance Service Representatives. To earn any of the certifications you are required to complete five NAIER courses and pass an end of course exam. Each certification has its own set of courses and end of course exam, as well as a program for continuing education requirements.
Some organizations also offer certification if you choose to provide financial planning services, including the American Institute for Chartered Property Casualty Underwriters and Certified Financial Planner Board of Standards.
Some Questions and Answers Concerning the Insurance Agents Job
After interviewing many people and prospective insurance agents, I realized there are some common worries that need to properly address. For this reason, we have taken this time to address some of these worries here.
What kind of training do I required to become an insurance broker or agent?
Insurance agents can come from widely different educational backgrounds. Agents can qualify for jobs with just a high school diploma, but some companies prefer a college degree. Completing a degree in management or business for instance, can be good preparation step for a career in insurance sales. This is because graduates from such fields are familiar with principles of finance, marketing and economics.
While there is no one degree that is required to qualify you for insurance agents’ job, most states require agents to complete a pre-licensing training course. These courses usually take a few months or more to complete and cover topics that appear on the state licensing examination. People undertaking pre-licensing courses learn about the different types of insurance policies, insurance ethics, and their state’s laws as they apply to the type of insurance (health and life insurance agent or property and casualty insurance agent) they want to sell.
Also, many insurance companies provide on-the-job training to new insurance agents after they are hired. Trainees receive training in sales strategies and may be matched with a mentor with experience in insurance sales. They also learn about the types of insurance products (policies) their agency sells.
Are there any insurance licensure or certification requirements?
While each state has different licensure requirements to qualify as an insurance agent, some state requirements vary depending on the type of insurance one sells. Generally, in order to obtain a license to sell insurance policies, one must pay a fee, complete a pre-licensing training course and pass the corresponding licensing examination. Some states even require license applicants to be sponsored by an employer.
Insurance agent licenses must also be renewed periodically and maintained by completing continuing education.
How much does an insurance agent earn?
The average yearly pay for insurance agents in the United States is about $48,150. The top ten percent earned more than $116,940 while the lowest ten percent earners less than $26,120 and that year.
How long would it take to become an insurance agent?
While one can become an insurance agent after completing only a pre-licensing course, which generally takes just a few months, taking two or four years to earn a college degree enhances one’s job prospects, in many cases.
What are the career prospects for insurance agents?
Insurance agents who gain experience usually advance into senior management and marketing positions within their company. Some agents find success working independently by starting and running their own agencies.
How can one learn more about how to become an insurance agent?
There are a few national associations for insurance agents, such as the Independent Insurance Agents and Brokers of America, Inc. and the National Association of Professional Insurance Agents, with some states also having some state associations for insurance agents, and are good sources of information on becoming an insurance agent in your state. State associations generally offer pre-licensing training courses for agents as well.
What are the job prospects?
The Bureau of Labor Statistics projects a general growth of 10% in the employment of insurance agents by 2020, which also lines up with the average projected growth for all occupations. The job prospects is expected (as projected by the BLS expects) to be best for insurance agents who sell health and life insurance and also for those who in addition to insurance sales, provide financial planning services.
How can one find a job as an insurance agent?
There are many local and national insurance brokerages and carriers you can contact for information about employment or job opportunities. Success in sales position typically depends on making connections, especially in your community. Thus, having volunteer experience can be an asset in your job search. If eventually you are unable to find a job immediately, you may also be able to build experience by taking a related job in the insurance field or completing an internship.
Benefits of an Insurance Agent
They give you a choice: Insurance brokers especially the independent agents represent many different insurance companies (on average) that offer a wide variety of coverage options and price points. There’s thus no need for you to accept just an insurance quote from one company, and also no need for you to spend time filling out many different online applications to get your own insurance quote comparisons. With the aid of an insurance agent, and their knowledge of the market, they are often in a better position to find a better value for your insurance dollar than you might find searching on your own.
Licensed experts: Insurance agents are well knowledgeable about the various insurance legislatures and as such can explain the complexities of insurance in simple terms thus helping you make smart decisions. These agents make a career out of assessing their customers’ insurance needs and aligning those needs with the insurance carrier best equipped to meet those needs at a price the customer can afford.
Personal advisers: Insurance agents not only find you competitive pricing, they help you with the most relevant advice to making the best choice. By working with you one-on-one, the insurance agent becomes your personal adviser, taking the patience to listen to you and understand your individual needs. The point is they don’t just find you a price you can afford, they also making certain you are appropriately covered so that you don’t end up insurance-poor when you do suffer a loss.
Your advocate: Whenever you need to change your coverage, or have a claim or billing concern, your insurance agent can be your advocate, working with the insurance company on your behalf.
They are right around the corner: The independent insurance brokers are always at your service and close to you. They share your interest in the community where you live, and understand the challenges and benefits of living in your locale community. These agents are usually highly involved in the community, buying from your local businesses; sponsoring youth sports teams, voicing opinions at the monthly Chamber of Commerce meeting and supporting school organizations. They are always right at your reach, ready to help.
One-stop shopping: Independent insurance brokers typically can meet all of your insurance needs with the companies they work in, providing renters, auto, home, and business coverage. Many equally offer life and health insurance as well.
Consultants for a lifetime: Independent insurance agents periodically review your coverage. They are always present to help you through all the changes in your life, whether you’re going from starting a business, renting an apartment to buying a home, getting married, renovating your home, or looking to cover your retirement expenses.
Insurance agents or brokers are always at the front line whenever we try getting an insurance policy. They are always present to help us with the most needed information to enable us make the best inform decision.
A career as an insurance brokerage is very promising with good salaries but it also require some serious hard work to make it in the field.