Preparation 101:
How to Get an Insurance License

TLTR: This blog discusses whether you need a license to sell insurance, how to get an insurance license, and covers some tried and true ways to help you ace your licensing exam.

So, you’re thinking about becoming an insurance agent. It’s not a bad idea. 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 faster compared to requirements for other professions.

However, to become an insurance agent, you’ll first need to take 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—you need to be prepared.

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 take a look…

In this blog

You Need a License to Sell Insurance

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

There are several steps you need to take to obtain an insurance agent license:

Decide what type of agent you want to be

The first thing you need to figure out is whether you want to become a captive agent or an independent insurance agent. Both career paths have their pros and cons. You’ll just need to spend a little time researching before you decide.

Choose your type of insurance

You then need to decide 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.

Commercial insurance agents provide coverage to commercial businesses with policies ranging from general liability insurance and commercial property insurance to errors and omissions 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 licensing requirements of the state that you plan 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 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 and is usually done on a computer. The date and time will be scheduled beforehand and the test 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 terminology, numbers, and practicality-based scenarios.

You’ll need a score of over 70 to pass the exam. You’ll find out if you passed or failed shortly after you’ve finished. You can reschedule the exam if you fail on your first try.

Submit 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 fingerprints.

Once you have acquired your license, you can legally work as an agent.

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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 legally work as an agent. 

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, this is a milestone that will start you on a new career and transform your life. So, think of the exam as a positive experience. Before you take it, picture yourself knowing all the answers and feeling content and confident once you’ve finished.

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 listening to them while you’re driving, working out, or hanging out at home.

Create A Schedule At Least a Month Before

Allow yourself enough time to properly prepare for your insurance licensing test. Aside from reducing stress and anxiety, it also eliminates the need to desperately cram in 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 that are available to you. It will give you an idea of what the real test will be like.

You can find some sample questions at America’s Professor. You can also take a mock test through CompuCram.

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 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.

Slow And Steady Does It

Your insurance licensing exam will be anywhere from one to three hours long. Assuming that you’ve followed the previous tips, you should have at least a month to prepare. If you dedicate a few hours a day solely to preparing for your test, it can amount to 30 to 60 hours of study time.

Recognize When to Stop

It’s beneficial to stop studying within 24 hours before sitting for the exam. (Assuming you’ve studied adequately up to that point, as you should have.) Rather than spending time studying, use this time to physically and mentally prepare for the test.

Get a Good Night’s Sleep

Going into an exam exhausted and sleep-deprived is a big mistake. Not only can it hinder your concentration, but it can also have dire physical consequences.

According to research by the National Center for Biotechnology Information (NCBI), it’s important to avoid caffeine, nicotine, and alcohol close to bedtime, as all of these can cause sleep disturbances. You should also avoid bright lights and strenuous activity in the evening. And it’s a good idea to keep a natural sleep aid on hand, such as melatonin.

Start Your Day Off on A Positive Note

Begin the day by eating a good breakfast. Your mind and body will need all the energy you can get on the day of the exam. Get in some light exercise and stretching, and don’t consume too much caffeine. You don’t want to walk into the exam room with a case of the jitters.

Remember To Relax During the Exam

Now you’re in the exam room and the test is beginning. You’ve spent the last month or so preparing for this moment. You know that you’re ready, willing, and able to answer 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. Maintain your confidence and come out of the exam feeling content and knowing that you did your best. You’ve got this!

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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 wish to sell. Licenses are issued by your state after you’ve passed your license certification exam and completed all the necessary protocols.

Some of the most common 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 want 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 also 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 operate in.

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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.

This includes car insurance, motorcycle insurance, personal property insurance, flood insurance, and other products that aren’t life insurance.

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.

Personal Lines

This license allows insurance professionals to sell products that are tailored towards personal lines of insurance. This includes coverage for personal automobiles and property. 

Life-only Agent

This license allows insurance representatives to conduct just 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 allows you to sell additional insurance products beyond what’s allowed by a life-only agent license. For example, it includes health insurance that can provide coverage for accidents and sickness.

Appointment

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 a proper appointment license.

Only then will you be authorized to start selling insurance.

Let us help you become the independent insurance agent that we know you’re capable of becoming! Sign up for our membership plan and start your professional journey today!

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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