How to Get an Insurance License
TLTR: This blog describes whether you need a license to sell insurance, how to get an insurance license, and points out some tried and tested ways to help you ace your licensing exam.
Starting your career as an insurance agent can be an appealing decision. Besides earning good wages, it also provides you with flexible working practices and a constant stream of interesting clients to work with. And while the requirements to become an agent can vary from state to state, you can generally attain them much quicker compared to requirements for other contemporary professions that also require licenses.
However, to become an insurance agent, you’ll first need to sit in for an insurance licensing examination. You also need to plan carefully and have a proper understanding of the industry requirements. Going into it blind is not a good idea.
So, what are some of the most important things that you need to consider before you jump into the realm of insurance sales? And what are the steps that you need to follow to become a licensed insurance agent?
Let’s start with the most important question!
In this blog
Do You Need a License to Sell Insurance?
Yes! All 50 states mandate insurance professionals to be licensed to sell insurance. You must also hold the proper license for the type of insurance policy you’re advertising and selling. For example, if you only have a license to sell homeowners insurance, you cannot sell life insurance.
Note: Individuals who operate without a license can face penalties, legal actions, and even jail time.
How To Get Insurance License
Now that we’ve established that getting an insurance agent license is necessary, there are multiple steps that you need to follow:
Decide whether you want to be an independent agent or a captive agent
The first thing you need to decide is whether you want to become a captive agent or an independent insurance agent. Both career paths have their pros and cons. So, you’ll need to spend some time researching before you set on a career path.
Choose whether you want to sell personal lines or commercial lines
You need to then decide on whether you want to sell commercial insurance or personal insurance. Agents specializing in personal lines of insurance focus on providing coverage for individuals and families. Their coverage options include auto vehicles, and homeowners insurance.
Base your decision on what line of insurance you’d be comfortable selling. Your academic background can act as an indicator to help you decide.
Review your state’s licensing requirements
Depending on the line of insurance you’ve chosen to go with, you’ll need to assess the state’s licensing requirements that you’re planning on operating in. Each state has its own custom requirements, and you need to be aware of them before taking your next step.
Some states will also require you to attend a 20-hour pre-licensing course in a classroom or through online platforms before sitting for an exam.
Your career plan could require you to obtain multiple licenses. So, it’s advisable that you get the specifics from your state’s licensing department or the companies you plan on representing.
Take the insurance exam
Once you’ve fulfilled all pre-exam licensing requirements for your state, you’ll need to register for your official insurance licensing examination. This exam is held at a testing site where you’ll be placed at a computer. The date and time will be scheduled beforehand and the test usually lasts for two to three hours.
Note: You may need to show proof that you’ve completed the required pre-licensing classes, so remember to take all the necessary documents with you.
As with any subject, the level of difficulty will depend on how prepared you are. You should have a relatively smooth experience if you’ve completed your pre-exam requirements. The question format is typically multiple-choice and will test your knowledge on insurance terminologies, numbers, and practicality-based scenarios.
You’ll need a score of over 70 to pass the exam, and you’ll find out if you’ve passed or failed the test immediately after you’ve submitted the paper. You can reschedule the exam if you fail on your first try.
Submit the required documents and complete the background check
Once you’ve passed your state licensing exam, you’ll need to submit all the necessary documents to your state licensing department. Some states also require background checks and your fingerprints.
Once you have acquired your license, you can finally legally start discussing insurance.
Test Preparation Tips to Get an Insurance License
An insurance licensing exam is no small deal. It will kick start your professional career in the insurance industry. But with adequate preparation coupled with the right mindset, it can be a relatively pleasant and stress-free experience.
Here are a few tried and tested tips to help you prepare for your insurance licensing test.
Take A Breather and Relax
Exams can be difficult. But remember, it’s a milestone that will transform you into a better professional. So, think of the exam as a positive experience. Picture yourself knowing all the answers and feeling content and confident once you’ve finished your exam. Doing so can help you prepare mentally and emotionally for when the day comes.
Figure Out How to Best Enter your Learning Zone
Not everyone learns the same way. While some people learn best by reading long texts, others might prefer an auditory medium of learning. So, look within yourself and your learning habits to recognize which approach works best for you. Some people also learn by using flashcards and watching tutorial videos on YouTube.
You can also try recording portions of your course and listen to them while you’re driving, working out, or simply relaxing.
Create A Schedule At Least a Month Before
Allow yourself enough time to prepare for your insurance licensing test properly. Aside from reducing stress and anxiety, it also eliminates the need to cram everything at the hours leading up to the day of the exam.
Create a schedule and compartmentalize the hours of the day you know you can devote to learning. Trust yourself to follow this schedule, and it will help you learn better.
Complete All Available Test Preparation Materials
You can get your hands on a lot of test preparation materials in the market. So, make the best use of it. Go through archived questions and take mock tests online. Some platforms even show you your scores once you’ve completed the mock tests.
Get any study guides, booklets, and question banks that are available to you. It will give you an idea of what the real test will be like. It will also help you realize how well you know the material that the actual test will cover.
Apply The 50-10 Rule
Human beings aren’t machines. Your brain and body can only handle so much at one time. The human mind requires some time to process the information that you’ve consumed. Your body also needs a break from sitting still and studying for a prolonged period of time.
So, apply the 50-10 rule to your learning processes. Study for 50 minutes and then take a 10-minute break. During the break, you can move around, get some fresh air, drink some water, grab a snack to eat or go to the restroom. You can also do some burpees, jumping jacks, or yoga stretches to get your blood flowing again. Basically, do something that will get your heartbeat up before spending another 50 minutes studying again.
Slow And Steady Does It
Your insurance licensing exam will be anywhere from one to three hours long. Given that you’ve followed the previous tips, it provides you with at least a month and one to three hours to prepare. If you separate a few hours a day solely to prepare for your test, it can amount to 30 to 60 hours of preparation time.
Additionally, by spending an hour or two a day to learn, you’ll actually be preparing yourself for the time it takes to complete the exam.
Recognize When to Stop
Now that it’s established that your mind and body need time to rest and recuperate, it can benefit you not to study within 24 hours before sitting for the exam. Rather than spending time studying, use this time to physically and mentally prepare for the test.
You can also use this time to build up composure and self-confidence. Doing this can help you destress and get in the proper zone.
Get a Good Night’s Sleep
Going into an exam exhausted and sleep-deprived can be catastrophic. Not only can it hinder your concentration, but it can also have dire physical consequences. So, make sure that you get a good night’s sleep.
According to research by the National Center for Biotechnology Information (NCBI), not consuming sleep disturbance substances like caffeine, nicotine, and alcohol close to bedtime can vastly help you fall asleep quicker. Furthermore, not engaging in arousing activities and staying away from bright lights can also help you wind down better.
Start Your Day Off on A Positive Note
Given that you’ve had a good sleep start your day off by eating a good breakfast. Your mind and body will need all the energy you can get on the day of the exam. Get some gentle exercise and stretching in, and keep off consuming too much caffeine. You don’t want to walk into the exam room with coffee jitters.
You can also go for a light jog or walk your dog around the block. Remember not to overwork yourself too much and only focus on burning off any nervous energy you might have.
Remember To Relax During the Exam
Now you’re in the exam room, looking at your questions. You’ve spent the last month or so preparing for this moment. You know that you’re equipped and capable of answering most, if not all, of the questions in front of you. You’re mentally, emotionally, and physically prepared to knock the ball out of the park.
So, relax and go with the flow. Feel free to take a few quick breaths every now and then. Maintain your confidence and come out of the exam content and satisfied knowing that you did your best. You’ve got this!
What Are the Types of Insurance Licenses?
Insurance licenses come in many forms depending on where you want to operate and the type of coverage you, as an insurance professional, wish to sell. Licenses are issued by your state’s department after you’ve passed your license certification exam and completed all the necessary protocols.
Some of the most prominent types of insurance licenses are:
Agency and Individual Resident License
This is the first license that insurance agents or agencies need to acquire. An agency and individual license allow you to legally operate your insurance business from the state that you’re located in.
Agency and Individual Non-Resident License
If you’re looking to operate your insurance business in multiple states, you will also need to acquire an agency and individual non-resident license.
For example, you have an insurance business in your home state of Tennessee and want to sell insurance in Kentucky and Alabama. In that case, you will require an agency and individual non-resident license.
You will also need to pay additional fees and other requirements for each additional state you wish to extend your operations in.
Policy Specific Licenses
Most states issue policy-specific licenses that agents need to possess in order to sell insurance. Acquiring these licenses comes with additional costs and certifications. Some of these policy specific licenses include:
Fire and Casualty
A fire and casualty license allows insurance agents to offer various types of general insurance coverage that are offered by property and casualty insurance providers.
Limited Lines Automobile
Insurance agents who wish to only sell auto insurance in a particular state will need a license in limited lines automobile. In some states, this license may also include motorcycles.
This license covers motor vehicles with a load capacity of 1,500 lbs. that are not used for public, conveyance, or rental purposes.
This license allows insurance professionals to sell products that are tailored towards personal lines of insurance. This includes coverage for personal automobiles and property.
This license allows insurance representatives to conduct only life insurance business in a particular state. This includes standard life insurance, annuities, accidental death, accidental dismemberment, and disability income.
Accident and Health
An accident and health insurance license comprise of additional insurance products to life-only agent license. For example, it includes health insurance that can provide coverage for accidents and sickness.
An appointment license links an agent or an agency with a specific insurance provider and allows them to sell their products through their channels.
For example, once you’ve passed your licensing certification test, you can’t just start selling insurance products from carriers such as State Farm and Allstate. You will need to first contact the carriers and then acquire proper appointment license.
Only then will you be authorized to start selling insurance.
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Frequently Asked Questions (FAQs)
Do I Need A Degree To Get An Insurance License?
No, having a degree is not among the insurance license requirements. A high school diploma or a GED will be enough for you to qualify for an insurance license test. However, a bachelor’s degree in a related field like finance, sales, marketing, and business can help you transition into a professional insurance agent quicker.
According to IBISWorld, As of 2021, there are 422,688 insurance brokers and agencies businesses in the U.S. So, given the level of competition in the insurance market, most employers tend to prefer individuals who has a bachelor’s degree in a related field to someone who only has a high school degree.
How Long Does It Take to Get an Insurance License?
In most cases, you can get your license in a matter of a few weeks. If you choose to take an online course that requires a specific number of pre-set study hours, obtaining your license will generally depend on how long you’ll take to complete it.
You can expect to put aside around two to eight weeks to complete all the necessary steps to acquire your insurance license.
There might also be a further week or two of waiting period for the license to be issued. This is due to the background checks that your state might have mandated.
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