How to Become an Insurance Agent

Fran Majidi April 13, 2023
How to Become an Insurance Agent

The hardest part of becoming an insurance agent is motivating yourself to go for it. It only takes a few weeks to acquire a license in each state that you anticipate selling in. Getting licensed is a requirement in order to be able to sell insurance in all 50 states. Ideally, you’ll get licensed in multiple states, but inquiring about licensing within your own state is a good place to begin. Here are some frequently asked questions about becoming an insurance agent.

The Pros and Cons of Being Independent vs Captive

There are many pros and cons to becoming an independent agent vs a captive agent. It’s really a matter of deciding which is better for you, the support of a big company or the freedom to work with several insurance companies?

If you work as a captive agent, you may be required to sign a non-compete agreement, limiting your business to one company for a specified duration of time. Do note, however, that some companies allow captive agents to sell policies from other companies if they do not sell that particular product (so look into the fine print before you sign on!).

For instance, a captive agent will be given marketing materials and even receive cost share for insurance leads by the parent company. With that said, captive agents make smaller commissions due to the costly marketing support they receive.

Some carriers offer bonuses to captive agents who surpass their goals, making it much easier to see a profit in the beginning lean years. Most independent agents do not get bonuses from their various carriers.

Independent agents have the benefit of giving shoppers options, and even offering multiple quotes side-by-side, which has become popular with so many insurance comparison sites. Which is better? They are both great ways to earn a living, so figure out which is best for you!

Which Kinds of Insurance Licenses Should I Get?

Insurance is regulated at the state level and is overseen by the government. If you operate a business without an insurance license you could face legal penalties.

You have options on the types of licenses to work towards, and most people usually opt to start with property and casualty, which includes car insurance, homeowners insurance and business insurance. If you are thinking about working as a captive agent for a big company like State Farm, Allstate or Farmers, you may also consider getting your health, life and accident insurance certificate because these are some products they offer.

As an independent agent, you also have the option of starting with only a P&C license and adding on as you go, especially if you decide to become an agency owner. You may even decide to go farther than selling insurance and offer annuities and savings plans.

How Soon Can I Open My Own Agency?

If and when you decide to start your own insurance agency, you’ll have some options too, like the Farmers Protege Program, which will give you a year of on-the-job training so that you can quickly start your own business after your first year as an agent.

For some agents, the most important part of becoming a professional insurance salesperson is which company they work for. But maybe you’ll decide to be an independent agent, who can quote shoppers from a list of companies. Many insurance agents find success this way, too, because you can always satisfy an unhappy client by quoting them other options so you keep their business, even when they switch carriers.

Who Has More Flexibility: Captive or Independent Agents?

Either way, working as an insurance agent will allow for flexibility in your schedule, great news for people who don’t like a straight 9-to-5 job and want to be their own bosses. With that said, the ability to work independently and get motivated without much direction are important factors in an agent’s success in both instances.

How Long Does it Take to Get an Insurance License?

If you pass the first time, it only takes a few weeks. You have the option of taking classroom training or an online course. Either way, there are a set number of study hours you’re expected to complete, anywhere from 20 to 40 hours.

The licensing exam is not a particularly difficult one unless you’re new to insurance topics. There’s minimal math, and the test is in a multiple-choice format. You immediately find out how you scored after taking the test. If you do not pass, you can reschedule to take the exam again. After you pass, it may take a couple of weeks before the license is issued to you. You will also be asked to submit a licensing application and to allow the state to do a background check, which may include fingerprinting.

How Do I Choose Which Companies to Sell Insurance For?

In order to sell insurance for a company, you must get an appointment to do so. This includes applications to each company you are considering. You must have the appropriate licenses to sell the products they offer.

Ideally, you want a direct appointment with an established insurance carrier. Their products are easier to sell and they offer the most competitive products and rates to clients and the most competitive commissions to agents. It’s a win-win situation for you and your clients if you can land a direct appointment like this. You may have thought you wanted to be an independent agent with many carriers you work with, you may even consider becoming a captive agent if it seems more within reach. Do whatever you have to do to gain a few years of experience. Even more importantly, build a book of business to show them!

Also, don’t underestimate your location. While the Internet is changing things and the 5-mile radius rule is slowly being put to rest, insurance still operates based on territory. You need to show a prospective carrier that you can market their insurance products in desirable territories.

You’ll also need a good business plan and proposal. Carriers want to hear that you have a strategy, not just selling while reporting to a director. They also are impressed by a long-term commitment, not someone who is hoping to make it rich quick! Don’t feel confined by the plan you put into place. Remember that nothing written in an insurance business plan is set in stone. This is a constantly shifting and changing document that you will revisit once you hit the ground running. Your aims and goals will change according to your average close ratio, something you’ll soon determine.

See more details on how to draft a business proposal and a link to a free template you can use to get started.

How Do I Get Started Selling

You may consider buying a book of business, but keep in mind that it’s the equivalent of taking a mortgage out on a house. Even then, you’ll want to balance thoroughly scouring the entire book to maintain existing clients, to upsell and cross sell when possible. You’ll still need to buy insurance leads to keep the business growing by constantly having fresh prospects in the pipeline.

If you’re starting from scratch, the best way to get shoppers right in front of you is to buy insurance leads. The right lead vendor will be upfront with you and tell you that you are making an investment. While it’s not as huge an investment as financing a book of business, it will take several months for you to see a considerable profit. However, it’s the best way to ensure contact and shopper’s intentions.

SmartFinancial’s blog articles and advertisements attract shoppers who are researching their options. Insurance shoppers then fill out a questionnaire with all the important information you’ll need to give a quote. You’ll still have to verify that information, but half the work is done for you!

SmartFinancial will assign an account manager to your account. This will be your point-person for the life of your account unless you’re not happy with that person. An account manager will help you tweak your account so you get the type of clients you are looking for. They will help you add filters according to your carrier’s requirements. It is the goal of the account manager to see progress in your sales figures.

Learn the difference between a shared and exclusive lead so you get what you are expecting. Also, live-transfer calls are a little more pricey but contact rates are guaranteed and close rates are highest.

If you’re a captive agent, SmartFinancial has cost share programs with partnering carriers so be sure to ask about them when you call to learn more about insurance leads at 877-323-7750.

Do I Have to Have a College Degree to Sell Insurance?

No, you do not need to have a high school diploma even. A GED will do just as well. However, many insurance agents do have college degrees. The more diplomas and accreditations you have, the better. There's a lot of competition out there!

How Can I Sell Insurance Out of State?

You’ll have to get a non-residential license to sell insurance, but it’ll be much easier than getting your primary license(s). We always suggest you start selling with friends and family and then adding zip codes in your area.

To get a good volume of insurance leads, you’ll want to add more than one zip code. And the more states the merrier. Your SmartFinancial account manager will explain how it all works once you get started!