Just about everyone needs to carry some kind of insurance to protect themselves and their assets. If you are thinking about being an insurance agent, you should know that it can be a great career with plenty of growth potential. Independent insurance agents determine which types of policies they want to sell, as well as the insurance companies they want to work with. They can also set their own goals for a successful business with the ability to expand or even sell a book of business at the end of a long career.
To be an independent insurance agent, you need to meet a certain number of requirements. These rules depend on the state and the type of insurance you want to sell. With this information, you’ll understand how to become an independent insurance agent, including each step you must complete.
Steps to Becoming an Insurance Agent
- Choose Your Insurance Agent Path
Before you can start planning out your career as an insurance agent, you need to decide if you are going to be an independent or captive agent. Captive agents are limited to a single insurance company, while independent agents can choose which companies’ policies to sell. Independent agents usually have more freedom to build their careers, but captive agents may have an easier time getting started. If you’re not sure which direction you want to go, it’s important to research your options before you get too invested in the process.
- Select an Insurance Focus
Once you have an idea of your general career plan, you’ll need to pick an insurance focus to start. Licensing requirements depend on the state you live in, as well as the line of authority. Common lines of authority include casualty, accident, property, life, and more. If you plan to become an independent insurance agent, it is possible that you may end up selling multiple lines of authority over the course of your career. Start with the one that feels the most accessible to you with the knowledge that you can expand or change it over time.
- Research Licensing Requirements
To sell insurance policies, you need to have the right kind of license. Typically, getting a license involves passing an exam with your state’s licensing authority. You may also need to pass a background check and get fingerprinted. Some states set a pre-licensing education requirement, particularly if you are attempting the exam for the first time. You might have a variety of options for licensing education or exam prep. It’s a good idea to browse through preparation courses and determine which one is right for you. Be sure to confirm that the course is designed to meet the requirements for your state and line of authority.
- Prepare for Licensing Exam
Even if your state does not require a pre-licensing course, you should make sure that you understand the components of the exam before applying to take it. The licensing authority may provide details about the exam, identifying the format of the test and specific categories that you should know in order to pass. Prep courses may provide opportunities to take practice exams, so that you are more familiar with the format and able to solve mistakes before you take the actual test. Once you are ready, choose a time for the exam that works for you.
- Submit Application for License
In many cases, you need to apply for your license before you take the exam. If your state has an education requirement, you’ll need to get a copy of a completion certificate to submit along with your application. You can expect to pay a variety of fees for the exam, license, and other responsibilities. This is your opportunity to request a background check and get your fingerprinting done. Once your state approves this component of your application, you’ll receive a notice that you are approved to take the licensing exam.
- Take Licensing Exam
On the day of the exam, you should make sure that you sleep well, eat a good meal, and arrive with time to spare. Exams are usually done on a computer, with an immediate result. You’ll find out right away if you passed or failed. It’s not uncommon to fail the exam on the first try especially if you had limited time to prepare. Research your state’s requirements for a retry. You may need to wait a certain amount of time before you can schedule another attempt. Keep studying until your test date to keep the information fresh in your mind.
- Apply With Insurance Companies
As an independent insurance agent, you need to form relationships with different insurance companies. This process usually involves applying with each insurance company that you want to work with. Before you make a choice, make sure that you research and understand the benefits and limitations of working with each company. Companies set unique requirements with different sales targets and commission structures. You must wait until you have a binding authority with the company before you can start selling their policies.
- Research Insurance Requirements for Your Business
As a business owner, you’ll need to carry certain insurance policies for the work that you do. Insurance helps to protect you in the event of a problem. As a rule, you should plan to get general liability insurance and errors and omissions coverage. Your state may also require you to carry workers compensation insurance, especially as your business expands beyond you as a single agent. Once you have these policies, you’ll need to make sure that you keep them current for the duration of your career.
- Create a Marketing Strategy
If you want to know how to be a successful independent insurance agent, you should start by creating a good marketing strategy. Getting enough business to cover your expenses and maintain your income involves generating leads, turning leads into sales, and cultivating long-term relationships with clients. As an independent insurance agent, you may need to produce a lot of your own marketing materials. It’s common for agents to hire marketing services or take additional courses in the latest marketing techniques. In any case, you’ll need to continually work to bring in new business.
- Start Building a Client Base
Building a book of business is the best way to ensure that your career as an independent insurance agent will meet your income goals. Generally, you earn a commission based on the sale of policies. You may also get a portion of the money earned through policy renewal. Maintaining a large list of satisfied clients can make it easier for you to explore your options for expanding your business, while providing a reasonable guarantee of regular income. At the beginning, while you work on refining your marketing strategy, it’s wise to reach out to friends and family for referrals.
- Maintain Your License
Once you get your insurance license, you need to maintain it. States set their own rules for license renewal, with unique timelines and other requirements. If your state has continuing education requirements for renewal, you should find out what they are and your options for meeting them. Typically, you can look to exam preparation companies for continuing education courses. These courses may only take a few hours of your time, and they help to keep your knowledge current. Be sure to pay the fee and submit your license renewal within the right timeframe so that your license does not lapse.
- Develop an Expansion Plan
In the first year or two of being an insurance agent, you might be focused on the here and now. As time passes, you’ll need to shift your emphasis to the future. The ability to determine your course is one of the biggest benefits of being an independent insurance agent. Over time, you can decide if you want to add new lines of authority, which requires additional licensing. You might also apply to work with a larger number of insurance companies, so that you have more options to offer your clients.
Frequently Asked Questions
What do I need to be an independent insurance agent?
If you want to be an independent insurance agent, you will need to meet several requirements. These requirements include applying for a license, passing the licensing exam, getting a background check and fingerprints, obtaining business insurance, and applying to work with insurance companies.
What are the costs involved in becoming an insurance agent?
There are a few fees that you have to pay to become an insurance agent, including the cost of prep courses, application fees, licensing fees, and more. Prices depend on the state and the preparation courses you choose, but you should expect to pay a few hundred dollars at a minimum.
How much training do I need to be an insurance agent?
Becoming an insurance agent does not require an extensive education in most cases. Your state may have a pre-license education requirement, which typically ranges from 20 to 40 hours. Education in marketing or other aspects related to running a business can be helpful in establishing your career.
What is the difference between a captive and independent insurance agent?
A captive agent works with a single insurance company, usually with a regular income and limited options to expand their careers. Independent insurance agents can apply to work with any insurance company. They typically get higher commissions because they do not get a regular income from each company.
How to Start Your Career as an Independent Insurance Agent
When you want to know how to get started as an independent insurance agent, you can follow this step-by-step guide. The process may take you a few weeks or several months, depending on your state’s requirements, your existing commitments, and your long-term career ambitions. Renegade Insurance helps independent insurance agents establish a successful business with a platform that makes it easy for you to focus on your clients. Find out more about how to become an agent today.