Starting a career in the insurance industry is likely an exciting opportunity for new and established professionals. Depending on the area of specialization, it is a career path that allows flexibility and a diverse roster of exciting clients. This article discusses how to become an insurance agent in 2024.
State-specific criteria differ for insurance agents, although they may be fulfilled considerably more quickly than for other license-required careers. If you are ready to enter the world of insurance sales, consider following the steps outlined in this article to become an insurance agent.
Table of contents
- Who is an Insurance Agent?
- What Does an Insurance Agent Do?
- How Do Insurance Agents Make Money?
- How Much Do Insurance Agents Make?
- Why Do Insurance Agents Need to Get a License?
- How Long Does It Take to Become an Insurance Agent?
- How to Become an Insurance Agent
- #1. Decide on the insurance agent you want to become
- #2. Choose the insurance products you want to sell
- #3. Review the licensing requirements in your state
- #4. Pass the insurance license exam
- #5. Send in your background check and licensing application
- #6. Get a sales appointment with an insurance firm
- #7. Find and maintain clients
- #8. Protect your business with insurance
- How to Get More Clients for Your Insurance Business
- FAQs
- Conclusion
- References
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Who is an Insurance Agent?
An insurance agent is an individual employed in an insurance company who promotes and markets this company’s insurance products. An essential aspect of working with an agent is that they sell insurance products of one company only and is typically not able and not interested in comparing prices and features of other products on the market.
Agents should be distinct from brokers (or insurance brokers) who cannot compare products from several insurance providers.
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What Does an Insurance Agent Do?
Selling insurance policies is what an insurance agent does. Agents are to create marketing campaigns to sell various insurance products, assess the needs of businesses and individuals, suggest insurance plans that satisfy those needs, and cultivate connections to increase their clientele.
Most agents often specialize in a particular insurance category, such as health, property, disability, casualty, or long-term care.
Many insurance agents diversify their revenue by providing financial planning and management services to customers who are getting ready for retirement or could set up investment or pension plans.
Below are some roles of an insurance agent:
- Helps in promoting and selling insurance products and services to its customers.
- Giving sound financial advisory services and customer support to clients
- Deals with not only individuals but their families and corporate businesses too.
- Creates general awareness about the markets.
- Draws marketing strategies from time to time, keeping the clients’ preferences in mind.
- Gives public-relation (PR) building exercises noteworthy importance.
- Pursues business Development tactics.
- Sell general insurance (non-life) policies, casualty insurance, health insurance, disability insurance, long-term care insurance, burglary insurance, etc.
- Sell other financial packages like variable annuities, mutual funds, and other securities.
How Do Insurance Agents Make Money?
Generally, an insurance agent makes money through commissions. It is the most typical way that insurance brokers get paid.
The kind and volume of insurance sold determine the commission rate, whether a new policy or a renewal affects the commission in another way.
Most agents market houses, cars, and life and health insurance. For selling a home and car insurance, insurance companies give agents a percentage of the premium and renewals.
On the other hand, life and health insurance policies yield a more significant percentage of the sale when a client first signs up. Agents can also make less money from renewals than from new policies. But there are additional ways to make money. Depending on the insurance provider an agent works for, it varies.
These models comprise the following:
- only a salary
- remuneration and commission
- only commission
- combined with a bonus
When an agency achieves a profit aim, some businesses offer bonuses as an incentive.
How Much Do Insurance Agents Make?
An insurance agent may make more than $100,000 in their first year, according to the Bureau of Labor Statistics (BLS). As of May 2020, the average yearly salary for insurance sales agents was $52,180. The industry’s bottom 10% of earners took home less than $29,000, while the top 10% took home more than $127,840.
Commissions are one of the primary factors influencing the disparity in insurance agent pay. This is true since you will earn more money the better a salesperson you are. However, other elements also affect how much money an insurance agent makes.
Why Do Insurance Agents Need to Get a License?
To discuss insurance products or make sales, insurance agents must be licensed. The license requirements vary by state. Operating without a license may cause sanctions or legal action.
How Long Does It Take to Become an Insurance Agent?
In a few weeks, most individuals can become insurance agents. Your ability to complete an online course that needs specific study hours will influence how quickly you can get licensed.
Once your test and background checks are over, a week or two may wait before the license is awarded.
How to Become an Insurance Agent
These include the following steps:
#1. Decide on the insurance agent you want to become
You must choose between captive and independent insurance agents when launching your agency.
- Captive insurance agent: A captive agent solely represents one business, usually a major national insurer. The captive business offers the agent help and training. In exchange, it prohibit the agent from selling insurance to rival companies and must only promote the company’s products. Many captive insurance agents are compelled to sign non-compete contracts, which prevent them from working for over one insurer for a certain period. Based on the marketing help the carrier gives the agent, commission rates may be reduced.
- Independent insurance agent: An independent agent works with over one insurance company. The agent provides clients with quotes from multiple companies to find the best policies and prices. Independent agents offer a wider range of products but are given less training and help from their insurance companies. Becoming an independent insurance agent is more challenging because agents must develop their brand in the places they operate rather than depending on marketing help from well-known insurers.
#2. Choose the insurance products you want to sell
Commercial insurance and personal insurance plans come in a variety of forms.
Commercial insurance brokers offer companies protection through various products, including general liability, commercial property, and errors and omissions coverage.
Personal insurance focuses on protecting single people and families. This covers life insurance, house insurance, and automobile insurance.
#3. Review the licensing requirements in your state
Before you get licensed, you will need to know which products you will sell so that you will choose the proper license for your insurance agent business. License names will vary depending on the state you live in.
The most common type of license types include:
- Agents who wish to assist clients needing business, house, and vehicle insurance must hold a property and casualty license.
- Agents who intend to assist people who require insurance connected to life events, such as life insurance, accident insurance, or health insurance, should get a health, life, and accident license.
You may need to get various licenses depending on your job goals. The organization you want to represent or your state’s licensing office will need to provide you with the information.
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#4. Pass the insurance license exam
You must successfully finish a pre-licensing course in most states. Many of these are available for online or in-person learning. Depending on the state, requirements might range from a one-day session to 20–40 hours of online training.
Your state’s pre-exam criteria must be satisfied before you may arrange your formal licensure exam. An independent business often proctors these tests.
You must be at a testing location at the appointed time and day to take the online exam. Before taking the exam, you need documentation of your training course completion.
The exam process usually is not complicated, especially if you have completed pre-exam requirements and be well -prepared. You will be seated at a computer when you come at the appointed time.
Most exam questions are multiple-choice ones. When the test is over, you will know instantly if you passed. If you cannot pass the exam the first time successfully, you can schedule and retake it as many times as necessary.
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#5. Send in your background check and licensing application
Once you pass the insurance license test, you will submit the necessary licensing applications to your state’s office.
A background check may be necessary for some places and could entail fingerprints. You can legally discuss and sell insurance policies once you have received your official license.
#6. Get a sales appointment with an insurance firm
Before you are allowed to sell an insurance company’s goods, they must appoint you. Each insurance company you intend to sell products to will require that you fill out an application and be given an appointment and binding authority, which is reflected on your state insurance license.
#7. Find and maintain clients
You have a license. What next? You will start prospecting for clients. Many agents begin by writing their insurance and prospecting with family and friends. This is an excellent way to get a good feel for the system’s work and become comfortable quoting new coverage.
Starting your agency’s marketing is also a good idea. You can look into local advertising possibilities, create a website, promote your business online, or join the neighborhood chamber of commerce.
#8. Protect your business with insurance
As a brand-new insurance agent, you also ensure that your company has business insurance to safeguard it. There are several forms of insurance to consider:
General liability insurance: this coverage will safeguard you in several scenarios. Suppose a customer is hurt while in your office; claims of physical harm are among the most frequent hazards.
The possibility for harm and legal action exists even in something as straightforward as tripping on the carpet. This coverage can be added to a company owner’s policy together with commercial property insurance, sometimes at a discounted price.
Errors and omissions insurance: Almost all insurance firms want E&O insurance coverage before you can write their policies. This shields your clients from any mistakes you or your staff might make.
How to Get More Clients for Your Insurance Business
You will need to bring in new business to generate revenue and replace consumers who have canceled their policies, whether you have been selling insurance for years or have just started your insurance firm.
Here are five practical ways to produce insurance leads and draw in new customers, which are outlined and fully discussed below:
Discover your niche
Insurance agents sometimes appeal to everyone, but specialist marketing is a more effective tactic to boost your insurance sales. You can benefit from focusing your marketing efforts on a single business class by:
Develop a thorough understanding of the dangers in a particular sector. Sometimes the risks are plain to see. However, your capacity to assess hazards grows as you develop expertise in a specific career.
Obtain a competitive advantage. Customers are more inclined to select an insurance agent knowledgeable in their expertise.
Increase your bar. A great strategy to establish yourself as the industry’s go-to agent is to provide them with insurance coverage at a reasonable price.
Achieve recommendations. More clients may bring you fresh leads as your reputation spreads.
Start by researching the typical company kinds in your region before deciding on a specialism. To keep informed on crucial problems, join trade groups, read industry periodicals, and concentrate your networking efforts on people in that sector.
Engage in community networking
As you probably know, finding new clients requires networking. However, attending often occurring events could put you in front of the same crowd. Attend events outside of the insurance sector to meet new clients to shake things up a bit, like:
- Group meetings
- Trade shows
- Local events
- Board meetings for schools
- Charity activities
- Business conferences
Prospect everyday
Nobody expects you hunting for new clients for half the day. Prospecting is essential to maintaining your agency’s growth. Set aside an hour every day to read the local papers, read the business section, and peruse the engagement notices. Both might have sales possibilities.
Producing leads. Include elements on your websites that ask for email addresses, such as a “Get a Quote” button or a newsletter subscription form.
Sending company owners a cold email. Cold emailing is a fantastic approach to connecting with potential customers.
Obtain additional business cards. Offer business cards to new clients and request that current clients tell other potential customers where they can find you and how to reach you.
Make use of lead generation. Make sure existing customers, friends, and family know the kinds of insurance products and advice you provide.
Pay attention to potential customers’ concerns and doubts to increase your return on prospecting. Prepare a brief explanation of why they require insurance and how it will save them money.
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Develop your leads
Every pitch should trigger a sale, which seldom happens in the insurance industry—generating leads is just as crucial as nurturing them. Create a method that promotes your agency’s worth to their business while keeping it top-of-mind. It’s possible that you’d like to:
- Write posts showcasing your knowledge of annuities, life insurance, health insurance, and other insurance requirements.
- Make short instructional movies that explain various policies.
- Provide webinars showing how insurance might allay their worries.
- Send helpful risk management advice in frequent emails.
- Connect with your insurance clients on social media platforms like LinkedIn and provide informative articles to grow your clientele and increase awareness of your insurance agency.
Value the effectiveness of email marketing. Sales should shortly follow if you send out a newsletter with beneficial hints and recommendations. Additionally, it conveys professionalism and helps to develop trust.
FAQs
You need a bachelor’s degree in economics, finance, computer science, marketing, or communications; you will need to gain proper skills that will help you succeed in a career at an insurance company.
Selling life insurance is the insurance industry job with the highest pay.
Being an insurance agent will always be relevant. Technology cannot wholly replace insurance agents because we live in a human-to-human world in which the insurance industry is based.
Conclusion
The insurance industry has a high earning potential. A good deal of insurance sales agents earn their income based on commission; the earning potential is substantial. (https://chrisrenzema.com/) Your potential for earning depends on your hard work and willingness to put yourself out there to create and build relationships and sell insurance products to your prospective clients.
References
- investopedia.com – Qualities That Make a Good Insurance Agent
- indeed.com – How to Become an Insurance Agent
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