7 Steps To Getting an Insurance Agent License

Fran Majidi January 6, 2023
licensed insurance agents

Did you know that a sales person cannot legally discuss insurance without an insurance license? If you’re looking to become an insurance agent or producer, the great news is that it only takes a few weeks to get licensed and a couple of weeks before your license is sent to you, right after a background check is conducted.

The process of becoming a licensed agent is pretty straightforward and easy, as long as you study hard for the licensing exam after making a few decisions about your career. There is only one test, too, and if you are familiar with the materials, it’s fairly easy to pass, without any curve balls thrown at you.

Here’s a step-by-step guide on how to get an insurance agent license and what to do after you’re legally equipped to sell insurance policies with a license (or two).

Step 1: Do You Want To Be a Captive or Independent Insurance Agent?

Before you even decide which types of insurance you will sell, it’s a good idea to learn the differences between captive insurance agents vs independent insurance agents to decide which type of agent you should become.

Captive Insurance Agents

As a captive agent, you will work with only one company and get support and training from that insurer. You will likely be asked to sign a contract stating that you will not sell insurance for a competitor. Each company is different and there may be some clauses in your contract that stipulate if and when you can sell policies outside of the company offerings.

There are some positives to working as a captive agent, including cost share with insurance leads and other expenses.

Learn the differences between captive insurance agents vs independent insurance agents to decide which type of agent you want to be.

Independent Insurance Agents

If you decide to become an independent agent, you can work with multiple insurance companies but you will be largely on your own and will make higher commissions as a result of not getting as much support or training.

While you are on your own to pay for insurance leads and marketing materials, you can leverage your relationship with multiple carriers to convince shoppers to buy a policy from you because of the multiple options you offer. There are benefits to working with some carriers over others.

Step 2: What Kinds of Insurance Will You Sell?

Some agents sell pretty much every kind of insurance, including pet insurance. However, most agents choose from the two following types of licenses or they get both:

Property and Casualty License

Also referred to as a P&C license, most insurance agents get this type of license at minimum, to sell auto insurance, renters insurance, homeowners insurance, umbrella insurance, commercial insurance for businesses and more.

Life, Health and Accident License

Medicare is another product that you can sell with a health insurance license, along with individual, family and group health plans. Life insurance and accident insurance are also products you can sell with this type of license.

A sales person cannot legally discuss insurance without an insurance license.

Step 3: Preparing To Take the Licensing Exam (Pre-licensing Requirements)

Each state has its own laws around how many hours you must spend on pre-licensing classes, but these days you can prepare and take an online course. State requirements vary from one day to 40 hours.

Reputable course offerings:

You can only take your exam after satisfying the pre-licensing course requirement. The licensing exam will be at a testing center near you. If you fail the course, you can retake the exam. Each state has a maximum number of times they allow you to retake an exam. There may also be a long waiting period to retake the exam (up to a year) if you fail multiple times.

How Is the Insurance Licensing Exam Conducted?

A government issued ID, like your driver’s license, will be necessary. You cannot take personal items in the testing room with you, and will have to leave your items in your car or a locker, if the site provides one for you.

You’ll likely take the exam behind a computer and will know the results as soon as you are finished. There is remote testing available too. The exam is multiple choice only.

If you do not pass the exam on the first try, it’s important to reschedule right away and study harder. It is up to you whether or not you want to retake a pre-licensing course, however. You should already have all the material so it is possible to study on your own.

You are required to score 60% or higher.

Step 4: Submitting Application and Background Check

After getting your license, you will have to send an application to the state department of insurance. You’ll likely have a background check and possibly fingerprinting. If you have a clean record, you’re ready to start selling insurance.

Step 5: Finding the Right Carrier or Carriers

Whether you’ve decided to become a captive agent or an independent one, you’ll have to choose before deciding which insurance company or companies you want to work for.

According to ZipRecruiter, the average captive agent makes anywhere between $50,000 and $80,000 a year, largely depending on where they live.

Independent agents, they say, make anywhere between $52,000 and $105,000+. However, you will not have a salary to fall back on and your income is based on commission and how good a salesperson you are.

In order to win over carriers, you’ll need a business plan, not just a license. Learn more about finding the right carrier in our article How To Get Carrier Appointments for a New Agency.

Step 6: Finding Customers Beyond Your Warm Market

A warm market is your sphere of influence, including family, friends, former colleagues, fellow members of clubs and religious organizations, etcetera.

After you sell to the people you know, it’s important to ask for referrals from your new customers, to expand your network.

You will eventually tap out your warm market. This is where insurance leads become essential for your agency’s growth. Without leads, you’ll have very few avenues to sell beyond your zip code. In fact, it’s highly advisable to begin selling in other states to stay competitive. For this, you’ll need an out-of-state insurance license.

Your options of leads:

Step 7: Finding the Right Lead Vendor

When you start working with a vendor, you need to give it some time before you determine whether or not working with them is the right way to spend your time and money. This will take a couple of months, unless you learn right away that they are hesitant to refund leads with inaccurate information or work with you to tweak your account settings for better results.

At SmartFinancial, for instance, you’ll have the same Account Manager assigned to you. It is their job to help you succeed. Other lead vendors do not offer the same level of support and guidance.

After a couple of months of tweaking filters and settings, you’ll get a sense of what your close ratio is. Your account manager will help you improve your sales pitch and call script. They will work with you on staying within your budget and closing more sales.

State requirements vary from one day to 40 hours of pre-licensing classes.

Insurance Agent License FAQs

What if I get caught cheating on the insurance licensing exam?

You will never be able to sell insurance if you are caught cheating on the exam. Each state has its own laws, but Per Section 1681.5(b) of the California Insurance Code, willfully cheating or subverting a license examination is punishable by a fine not to exceed $10,000 or imprisonment not to exceed one year.

What if I don’t have the money to buy insurance leads?

If you’re a captive agent, see if your carrier offers a cost-share program with SmartFinancial. Work hard on your warm markets, saving most of the money you make, and invest it in quality shared insurance leads, which are the most affordable.

Who makes more money, captive or independent agents?

On average independent agents make more money if they are successful at making sales. However, they do not have a salary to fall back on or the support and marketing help from their carriers.

Key Takeaways

  • There are 20 to 40 hours of pre-licensing class hours required before you take the insurance licensing exam.
  • There is a maximum number of times you are allowed to retake an insurance exam.
  • It’s essential to buy insurance leads after you exhaust your circle of friends, relatives and acquaintances, even if you buy a book of business?

The insurance agent license exam is not hard, but you have to really know the material. Make sure to study hard for your insurance agent license so you don’t have to wait months to retake the test. After you’re licensed and win over a carrier (or carriers) with your business plan, give SmartFinancial a call (877.323.775) so we can get you started on selling right away. We have the best lead program and a live U.S. based call center here for pre-qualified live transfer calls from shoppers actively looking to buy policies.

Good luck on the insurance licensing exam!