Life insurance agents sell life insurance policies to people in their community to help them provide financially for their loved ones. Becoming a life insurance agent requires preparation because of the licensing requirements in many states across the country, especially those states that require hours of coursework to be licensed. If you’re interested in working as a life insurance agent, you may wonder how to plan for the career. In this article, we describe what a life insurance agent is, what they do and how to become a life insurance agent.
What is a life insurance agent?
A life insurance agent is a type of insurance professional who sells life insurance specifically. Life insurance agents may sell other types of insurance if they have the appropriate license, or they may focus only on life insurance. A life insurance may work for an insurance agency or on their own, sometimes under the name of an insurance company but as the owner of their own business. Often, life insurance agents are paid in commission to give them incentive to sell more insurance policies.
Related: 15 Types of Insurance Agents
What does a life insurance agent do?
A life insurance agent works with clients to find a life insurance policy that fits their needs. Life insurance policies are usually purchased by someone to benefit people in their lives when they die. For instance, a middle-aged adult might buy a life insurance policy and request the benefit amount be paid to a mix of their spouse, their children or their siblings. Many times, life insurance is also meant to help a person’s family pay for their burial and for any life expenses they face after the person passes away.
In order to sell life insurance, an agent needs to work within the confines of the law, which is why they must be licensed, and sell life insurance policies through a variety of networking and marketing methods. Life insurance agents are often active in their community as a way to increase sales of life insurance policies. A life insurance agent may also reach out to leads they purchase through a service or the company they work for, through email or cold calls.
Once the life insurance is sold, the life insurance agent ensures all paperwork is completed properly and submitted to the right place. Life insurance policies have to go through approvals from the company offering the policy, so life insurance agents may need to manage that process and communicating with their clients about the status of their policy.
How to become a life insurance agent
Life insurance agents must have a license, which has varying requirements depending on your location. Here are the steps to becoming a life insurance agent:
1. Earn a high school diploma or GED
Life insurance agents need to have a high school diploma or a GED in order to earn their insurance license. Additionally, many insurance companies that hire agents may expect their employees to have a high school diploma or GED at a minimum. While you’re in high school, if you know you want to be a life insurance agent, classes relating to business concepts, marketing, communications and math may be most helpful.
Some insurance companies are looking for candidates that have a bachelor’s degree in a related field like business or marketing, but it isn’t required to become a life insurance agent. Since so many life insurance agents are independent contractors or own their own small businesses, you really only need a bachelor’s degree to be one if you want to work for a company that requires them.
2. Research licensing requirements
Once you know you want to become a life insurance agent, you probably want to research the licensing requirements that apply to the area you want to work in. If you have already been hired by a company to fill a life insurance agent role, they may assist you with the licensing process, but for many insurance agents, navigating the licensing requirements is done independently. You can often find information on licensing requirements on your state’s insurance department or commission’s website.
Some states require life insurance agents take a pre-licensing class with a minimum number of hours before taking an exam, while other states require passing the exam only. Additionally, the requirements are different if you are getting licensed as only a life insurance agent or if you want to be a licensed life and health insurance agent. Doing your research to decide what license is best for you and how to get it can make the rest of the process easier.
3. Complete licensing requirements
Once you’re aware of what the licensing requirements in your area are, you can complete them to get your license. You may need to take a class that covers a certain number of hours to meet a pre-licensing education requirement.
These classes are usually offered by third-party organizations and they are something that either you pay for or your employer pays for if you’ve been hired already.
Besides potentially needing to take a class, you may also need to do a background check and fingerprinting if your state requires it for licensing.
In some states, you need to apply for a license before you take your exam and receive your license, but in other states that isn’t required.
Whatever requirements your state has, to ensure you receive your license as planned, verify you have completed those requirements.
4. Pass licensing exam
Once you’ve completed all your other licensing requirements, you probably need to pass a licensing exam.
For some, an exam preparation course can be helpful, especially if your state has no educational requirements to become a licensed life insurance agent.
You may also decide to prepare on your own with study materials you find online or in a book. Some topics of a life insurance agent licensing exam include:
State rules and regulations
Insurance applications, underwriting and delivering policies
Policy riders and exclusions
Taxes and retirement
Types of policies
The contents of each exam often vary by state, particularly the state rules and regulation questions.
Besides prep classes and other educational materials, you may be able to find information about what’s on licensing exams via your state’s insurance department or commission website.
Once you’ve passed your test, you may need to complete your licensing requirements by submitting paperwork in order to be officially licensed.
5. Consider additional licenses
Once you are a licensed life insurance agent, especially once you’ve begun working in the field, you may decide that you need additional licenses.
There are a few reasons you might want other licenses.
One is that you may live in an area where you sell life insurance in more than one state, and since each state has its own licensing requirements, you need a license to sell life insurance in each state individually.
Another reason you might want another license is that you may decide you want to sell other types of insurance in addition to life insurance, and those other insurances likely require a separate license.
Finally, if you sell variable-contract life insurance products or securities, you may need to be licensed by the Financial Industry Regulatory Authority (FINRA) and North American Securities Administrators Association (NASAA).
When you are first starting as a life insurance , you may not be entirely sure what licenses will be most effective for your career. Since obtaining each license requires time and money, for many agents it makes sense to wait and see what they need once they start working.