Do you want to start an insurance agency in USA? If YES, here is a detailed guide on how to get licensed to sell insurance in Texas, California, Florida.
The insurance industry is a very lucrative recession proof industry that can change your financial fortune. Most insurance products are life sublimes and are necessary in this modern age. It’s nearly impossible to own a car without automobile insurance and no one wants to leave their lives unprotected.
The individual mandate of the Affordable Care Act ensures that there will always be a steady supply of health insurance customers.
Of the major insurance types, the only one that is even considered optional by some people is life insurance — but in today’s more financially savvy world, it is becoming a necessity. According to industry data and a booming market, now is the perfect time to dive into the insurance business.
From 2016 to 2026, the U.S. Bureau of Labour Statistics expect employment of insurance agents to grow by 10 percent. While most industries are expected to have an average growth rate of only seven percent within the same timeframe, it looks like insurance agents are on the path to success.
The Bureau indicated that the growth rate may be even higher for health insurance agents specifically, with projected growth of 28 percent during the same period.
Experts believe this growth is due to several factors, one of them being the projected growth of the economy as a whole. But insurance agents particularly lucked out due to the rise in the demand for insurance, which directly leads to the need for more agents.
As more insurance carriers turn to brokerages to expand distribution, the role of the independent insurance agent also grows.
It’s important to state that the average age of today’s insurance agent has surpassed 60 years old. It simply means that very soon and most likely, many of them will be hitting retirement age, creating plenty of room for new, motivated agents.
It is one of the reasons why now is a great time for anyone considering joining the industry to do so. Also with America’s largest generation, the Baby Boomers, reaching retirement age, more than 10,000 people are turning 65 every single day.
This will continue into the 2030s. That means that as the need for Medicare increases, so does the need for expert agents who sell Medicare. With so many potential consumers, now is the perfect time to start building your client base. Just remember to always focus on building relationships with your clients and finding plans that will fit their unique needs
How to Get Licensed to Sell Insurance
Have it in mind that insurance agents can come from all types of educational backgrounds. Successful agents have been known to have qualified for jobs with only a high school diploma, but some employers prefer a college degree. It’s highly advisable that you complete a degree in business or management.
It can be good preparation for a career in insurance sales, because graduates will be familiar with principles of marketing, economics, and finance.
Although there is no one degree that is required for insurance sales agents, a lot of States in the united states require agents to complete a pre-licensing training course. These courses typically take a few days or more to complete and cover topics that appear on the state licensing examination.
Students in pre-licensing courses learn about insurance ethics, different types of insurance policies, and their state’s laws as they apply to the type of insurance they want to sell.
Aside pre-licensing courses, insurance agents often receive on-the-job training from their employer after they are hired. At that point they learn about the types of insurance products their agency sells. They also receive training in sales strategies and may be matched with a mentor with experience in insurance sales.
It’s also necessary to point out that each state in the United States has its own licensure requirements for insurance agents, and even within a state, these requirements differ depending on the type of insurance one sells. But generally, to obtain a license to sell insurance, one must pay a fee, complete a pre-licensing training course and pass a licensing examination.
Some states also require license applicants to be sponsored by an employer. Note that licenses must be renewed periodically and maintained by completing continuing education.
Although taking two or four years to earn a college degree can enhance one’s job prospects, in many cases, one can become an insurance agent after completing only a pre-licensing course, which can take several days. Below are detailed steps of acquiring adequate licensing in the insurance industry.
7 Steps to Getting Licensed to Sell Insurance
a. Complete a bachelor’s degree program and also gain industry experience
Notably, a college education can help experienced agents propel into careers in risk management, working as actuaries, or other positions that require post secondary education. Also, having a background in business and finance can be an added advantage to agents.
If you’ve never worked as an agent for a broker or as a captive agent for a single insurer, then you should carefully consider if you have the personality for the insurance business.
Aside from licensing and product knowledge, being a successful independent insurance agent requires having the right personality for the job. It’s one thing to be a people person who enjoys talking to anyone and has a deep desire to help people understand new things, it’s quite another to be a commission-only salesperson.
Have it in mind that being personable at a luncheon or on a sales floor is not the same as sitting down face-to-face with complete strangers in their home, where they have all the control, and convincing them to trust you, your knowledge, and your advice.
You will have to develop the ability to do that immediately after finishing with someone else who rejected you — and all the while knowing that if you don’t make a sale, you don’t eat.
Surviving and scaling such sort of pressure is one of the personality traits you will need to succeed. Another equally important trait is discipline. Do you have the discipline to make the hundreds of cold calls a week necessary to build a book of business and grow a reputation as a trustworthy and knowledgeable agent?
b. Getting Licensed
In the United States, you have to be licensed to sell insurance in each state that you plan on soliciting business. Although some states allow you to transfer your license, some do not. But have it in mind that all states in the United States require that you take and pass between 20 and 40 hours of general insurance education courses and up to 12 hours of ethics courses before you can take their licensing exam.
This is to prepare and feed you with the necessary state laws and information you need to successfully do insurance business in the region. Note that these courses you take must be in the state you are planning on becoming licensed in. This is because state laws vary from one to another. Many of the courses are available as online self-study, self-paced programs.
The cost of courses runs from $300-$500 each. Some States also require different licenses for life, accident, and health insurance, and property and casualty insurance, as well as inland marine. Licensing tests are multi-part, which simply means if you pass the life, accident, and health portion, but fail the property and casualty part, you can become licensed but may not sell auto or homeowners insurance.
In most cases you can retake a failed section at least one time without the need for a new application fee. Therefore, if you’re looking to sell variable annuities or variable life insurance, you must also complete and pass the required coursework for a Series 6 license.
c. Apply at insurance agencies.
At this point, agents who have met all the requirements and earned licensure are now eligible for employment at insurance agencies and brokerages, this can also differ from small local brokerages to regional offices of well-known insurance carriers.
Although in most states if you choose to operate your business as a sole proprietorship and do not hire other agents, your individual license is usually all you need.
If you plan on bringing other agents into your business, or you choose to incorporate, you may need to get an agency license.
Note that requirements and rules differ from state to state but, in most cases, no additional testing is needed. However, there are applications and associated fees for becoming a licensed agency. Agency licensing is not required in most cases if you’re only hiring support staff, including office help and telemarketers.
Conclusion
No matter how good you are or the many licenses you acquire, you’ll need adequate funding to start your own independent insurance agency.
The amount you need can range from as little as $5,000 to $50,000 or more, depending factors such as where you’re located and how you plan to operate your business. Note that the surest way to hit the ground running as a newly minted independent agent is to buy a book of business from another agent.
A book refers to the clients and their associated policies. Have it in mind that when you purchase a book, the selling agent transfers his or her status as the agent of record for the account to you.
It simply means that when policyholders have a question they will call you and you are responsible for servicing their accounts even though you have not earned any commission from them as yet, and in fact have paid for the right to provide your services for free.
But you do gain the benefit of getting their renewals and any associated commissions. By the way, clients are under no obligation to stay with you, and can transfer their account to another agent at any time. Other agents may sell all or part of their book of business for a variety of reasons that range from retirement to scaling back in size or relocating.
We believe that the price or cost per client or policy depends on the market you are in and the types of policies that are in force. A book of auto policies is worth more than a book of life insurance business because auto policies renew annually, generating fresh commissions, while life insurance does not.