What You Need to Know About Getting an Insurance Sales License

TLTR: This article explores the roles and responsibilities of an insurance sales agent and outlines the steps you need to take to acquire an insurance sales license.

Getting insurance can be a tricky affair for your clients. Not only do they need to navigate through the seemingly never-ending processes, they also have to work extra hard to try and make sense of all the policies that they come across.

This is where insurance sales agents come in.

As an agent, you can make your clients’ day by extending a helping hand. But in order to do that, you need to first get your insurance sales license, and second, fully understand what your role and responsibilities are.

So let’s start with the basics!

What Is an Insurance Sales Agent?

Also known in the insurance industry as “producers,” insurance sales agents are usually the first people in the company that customers interact with. They are responsible for finding insurance packages from carriers that can meet the individual needs of their clients.

All insurance sales agents need a state-prescribed insurance agent license to work in their profession.

What Does an Insurance Sales Agent Do?

The primary role of an insurance sales agent is to help insurance companies generate new business by converting leads into customers and selling them one or multiple insurance policies. Besides selling policies, insurance sales agents may also sell mutual funds, securities, and annuities.

Insurance sales agents can sell a wide variety of insurance. The two most prominent types of insurance that they sell are:

Property and Casualty Insurance

Sales agents who work in property and casualty insurance sell insurance products and services to individuals and businesses. These coverage types typically provide financial protection against any losses resulting from fire, storms, theft, motor accidents, and other factors that can damage a property.

This insurance can cover product liability insurance, worker’s compensation, and medical malpractice claims for businesses.

Property and casualty insurance covers:

Car insurance – provides financial protection against bodily injuries physical damage resulting from a traffic collision. It can also provide liability coverage arising from incidents within a vehicle.

Homeowners insurance – provides financial protection against losses and damage to a private residence and assets in the home.

Ocean marine insurance – covers the transportation of goods and merchandise that are shipped across national and international waters.

 

Life Insurance and Health Insurance

Sales agents who work in life insurance specialize in selling insurance policies that pay beneficiaries when a policyholder passes. They also specialize in annuities related to retirement income.

Agents working in the health insurance field sell policies that cover the costs associated with medical care and assisted-living services for the elderly. They may also sell dental insurance, as well as short and long-term disability insurance.

Besides selling insurance, some of the primary responsibilities of insurance sales agents are:

• Talking to prospective clients to retrieve information about their financial status and discussing suitable coverage
• Handling policy renewals
• Explaining the features and range of various policies
• Examining their client’s current policies and suggesting any changes or add-ons
• Carrying out any administrative tasks and carefully maintaining a proper database.
• Assisting policyholders in settling claims

How Can You Get An Insurance Sales License?

You must have an insurance sales license if you are looking to sell insurance. Selling insurance without a license is considered a third-degree felony in the U.S. and is punishable by up to five years in prison.

According to a news article on insurancenewsnet.com, a 44-year-old former insurance agent was fined $2,500 and was sentenced to a five-year suspended prison sentence for selling insurance without a license.
So, if you’re serious about starting a career as an insurance sales agent, you will need to follow these steps to acquire your insurance sales license.

Decide what type of insurance agent you want to be

Decide on whether you want to become a captive agent or an independent insurance agent.

Both career options have their benefits and drawbacks. So spend some time doing a little research before setting off on your journey.

Decide what type of insurance product you want to sell

The next step is 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 motor vehicles, homeowners insurance, and life 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.

Both career options have their benefits and drawbacks. So spend some time doing a little research before setting off on your journey.

Review your state’s licensing requirements

Each state has its own requirements. Based on the line of insurance you’ve chosen to go with, you’ll need to assess the licensing requirements in the state you intend to operate in.

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. It’s best to get the specifics from your state’s licensing department or the companies you plan on representing.

Take the insurance exam

Once you’ve met all pre-exam licensing requirements for your state, you’ll need to register for your official licensing examination. This exam is generally held at a testing site where you’ll be placed with 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 of insurance terminology, fundamentals, numbers, state insurance laws, and practicality-based scenarios.

You’ll need a score of over 70 to pass the exam, and you’ll find out if you 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 may also require background checks and a copy of your fingerprints.

Note: Most state licensing authorities will require insurance sales agents to take continuing education courses to maintain their license. These courses focus on insurance laws, ethics, consumer protection, and the technical details of various insurance policies that they are selling.

Once you have acquired your license, you can legally discuss and sell insurance. However, there are a few more steps that you’ll need to take to ensure that your business runs smoothly without any legal hiccups.

Get appointed with insurance companies

As an independent insurance sales agent, you’ll first need to be appointed by the company if you want to sell their insurance products. To do so, you’ll need to complete an application with each insurance company that you want to work with.

Only once you’ve been granted an appointment and binding authority are you legally allowed to sell their insurance products.

Find and build up your client base

An agent is only as good as their client base. It’s your responsibility to transition prospects into loyal clients. Many independent insurance agents start their career by prospecting their friends and family. Starting your career as a local independent insurance agent is a great way to garner some valuable practical experience in the industry.

So, sell insurance to people in your immediate social circle to get a feel for the process. It’s also vital to understand customer behavior and leverage your learnings into practice.

With the advances in technology over the past few decades, you should also know how to sell insurance online if you’re to capture a broader market.

Make sure that your business is protected

Being an insurance agent is a business in itself. So, you’ll want to make sure that your agency is well protected with commercial insurance. Some of the most essential insurance coverage to consider getting for your business is:

• General liability insurance will provide you with coverage for a wide variety of situations. For example, if one of your clients trips on a table and injures himself while in your office. This coverage can be bundled with commercial property insurance in a business owners policy.
• Errors and omissions coverage is something that every insurance company needs before they can write policies. It protects insurance buyers against any form of error that you or your staff may make.
• Workers compensation insurance will pay off any claims that one of your employees makes against the company. For example, if one of your staff trips on a carpet and ends up spilling hot coffee all over herself, workers compensation insurance will pay a portion of her lost wages and medical expenses. This coverage is mandated in almost all states and needs to be implemented even if you only employ people who work part-time.

Insurance Sales License Requirements for Customer Satisfaction

To become a successful insurance sales agent, you need to establish yourself as a knowledgeable, reliable, confident, and most importantly, trustworthy professional.

Here are some of the most important requirements that can help in getting your clients to trust you.

Display Exemplary Product Knowledge

An individual’s decision to purchase insurance is based on a substantial period of careful thought and consideration. When they approach an insurance sales agent, they expect the agent to be knowledgeable and able to help them along their insurance journey.

So it’s important for sales agents to not just be well-versed in insurance policies and fundamentals, but to also show that they are exercising their knowledge and skill set while helping you.

Be it for when you’re trying to find them the right insurance, or when you’re helping them through an insurance claim process, show that you have all the skills necessary to deliver an exemplary service.
Rest assured that your client will keep a keen eye on your performance as an insurance professional throughout the insurance process.

Show Drive And Resiliency

Clients tend to appreciate insurance sales agents who show zeal and enthusiasm to help them attain their needs. An agent who lacks confidence and doesn’t show any urgency to help their clients is almost guaranteed to eventually lose them.

Failure and rejections are common occurrences when it comes to selling insurance. Insurance agents who work in the field have to be able to handle rejection on a daily basis. They need to do so with a smile on their faces and without losing their eagerness and enthusiasm.

Brush Up On Your Social Skills

Just having the knowledge and drive isn’t enough. If you want your clients to develop trust toward you, you will also need to work on your listening and communication skills.

Make it a point to step back and assess your relationship with your clients. Think about whether you are the type of agent that you would have liked to work with. Your clients will appreciate someone who simplifies complex processes and guides them through a pleasant and hassle-free insurance experience.

Be Available

Disasters are unpredictable and always occur without any notice. So when your clients call you, it’s almost a guarantee that it’s an emergency. Make it a point to always be available. Whether through a phone call or an email, make sure that your clients have a way to reach you.

At the very least, make sure that they can leave you a voicemail.

Deliver On Your Promises

Perhaps the most crucial trait that an insurance sales agent needs to possess is the ability to live up to their promises. Keep notes of your client interactions and the promises that you have made to them.

Never over-promise on anything that you can’t deliver. Also, never exaggerate about a policy’s features and limitations just to sell it.

Conclusion

Acquiring a license is a must if you want to start your career as an insurance sales agent. Operating without an insurance sales license will deal you with a hefty fine as well as a possible prison sentence. Every state has its own laws and legislation that you need to abide by. But the processes involved in getting a license are about the same in all the states. Once you acquire a license, you will also need to be appointed with the insurance company or companies that you want to work with. And you’ll need to ensure your business so that it’s protected from any unforeseen circumstances.
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