Put simply, an insurance agent is a licensed professional who helps individuals and businesses to assess their insurance needs and select the appropriate coverage.
In this What Is an Insurance Agent article, we’ll discuss this topic in more depth, breaking down the factors that can impact what an insurance agent does, how much they earn, and how you can become one.
Tip: Doing a pre-licensing education course dramatically increases your chance of passing your exam on your first attempt, which can end up saving you both time and money in the long run.
Kaplan Education Company
At face value, it’s the role of an insurance agent to simplify the process of acquiring insurance for its clients and present them with the best policies for their needs.
However, when you dive into the specifics, there are two key factors that can influence what an insurance agent actually does, which we’ve explored in more detail below.
As an insurance agent, the first factor that determines what you’ll be doing on a daily basis is the insurance line you select — or in other words, the category of products you’re licensed to sell (e.g., health, travel, or life insurance).
While the situation can vary depending on your state, there are typically two main types of insurance lines for you to choose between:
General Lines Licenses: This allows you to sell a broad range of policies, typically including:
Limited Lines Licenses: This lines focus on a specific type of insurance, such as:
General lines licenses are typically the most popular with insurance agents as they’ll allow you to sell a much wider range of insurance policies and make you a lot more versatile. Many agents even look to obtain both P&C and Life & Health insurance licenses so that they can work with the majority of the most common products.
Depending on the type of agent you decide to become, you’ll sell policies in one of two different ways.
We’ve broken down these two distinct types of insurance agents in the sections below.
The most popular choice among newly qualified agents, captive insurance agents only work with one insurance carrier or agency, exclusively selling its policies to customers.
Since captive agents tend to offer a narrower selection of insurance policies, they often become experts on their company’s products and are able to provide detailed explanations plus address highly specific client needs within that range.
Additionally, captive agents can generally focus much more of their time on selling and servicing clients as they normally receive support from their company in areas like marketing, training, and even generating leads.
Finally, since they’re paid through a combination of commissions and a regular salary, this financial security means there’s less pressure for captive agents to find options that best suit their clients’ needs, and can instead prioritize selling their company’s policies.
On the other hand, if you opt to become an independent insurance agent, you essentially work for yourself and are therefore free to offer a wide range of policies from a number of different insurance providers (e.g., MassMutual, Prudential, and Northwestern).
Since you’re not locked in to selling a specific provider’s products, this means your job will be more focused on shopping around and finding the best fitting policies for customers, as well as those with the lowest premiums.
As touched on above, you’ll also need to prioritize meetings with clients in order to maximize your potential earnings through commission since you won’t have the financial security of a regular salary to fall back on.
On top of this, as an independent agent you’ll need to focus on developing your marketing skills and ability to generate leads by yourself, as you won’t have any company support to rely on.
Recommended
Doing a pre-licensing education course dramatically increases your chance of passing your exam on your first attempt, which can end up saving you both time and money in the long run. For pre-licensing education, StateRequirement recommends:
Kaplan Education Company
Across the US, insurance agents earn an average annual salary of around $64,919 — with the highest and lowest percentiles earning $128,874 and $32,702 respectively.
However, these figures only represent a general estimation of an insurance agent’s potential earning capacity, which can vary quite a bit depending on your:
For more information on all the different factors that could influence your salary, as well as more state-specific information, check out our How Much Do Insurance Agents Make guide.
Now that you know a little bit more about what an insurance agent is and their duties, we’ll walk you through how you can become one.
It’s worth noting at this point that while the exact process is state-specific, it typically includes the following five general steps:
You can find a more detailed look into each of these steps in the section below.
Your journey toward becoming an insurance agent will start with a decision on which types of insurance policies you want to be able to sell. While there are normally a large number of different insurance lines you can opt for, we typically recommend either going for Life and Health or P&C insurance.
This is because these two lines encompass the vast majority of almost all the most common insurance policies that individuals and entities need, such as car, business, home, life, and health insurance.
Although it is possible to obtain both of these lines simultaneously, we typically recommend prioritizing the line you plan to specialize in first before coming back later to obtain the other line separately. This is because these exams are very challenging and require a lot of preparation if you want to pass on your first attempt.
After you’ve decided the insurance line you want to go for, the next step in most states is to take a pre-licensing education course. Taking one of these in-person or online courses is often a mandatory step, though we recommend completing one even if this isn’t the case in your state.
This is due to the fact that these courses contain a number of invaluable features that will help you pass your insurance exam on your first attempt, such as:
All of this helps to consolidate your understanding of the exam’s content and build your test-taking skills so that you’re confident and capable by the day of your exam.
Having finished your pre-licensing education course, it will now be time to take and pass the relevant state exam for your insurance line.
These multiple-choice exams are proctored, timed, and closed-book — meaning you won’t be able to bring anything with you to the testing center. In most states, these exams usually have between 80 and 160 questions and last around two hours.
You’ll normally be required to pay a fee in order to sit these exams, which will vary between $40 and $150 per attempt depending on the state in which you’re taking it.
Note: You’ll need to take one of these exams for each insurance line you’re planning to obtain, though there’s no requirement to take multiple tests in one go.
As part of the application process to become an insurance agent, most states will require you to undergo a fingerprinting and/or background check. This is to ensure that you comply with all the ethical and professional regulations surrounding this industry.
As a result, if you’ve committed any felonies (especially those involving fraud), you may be ineligible to apply for an insurance agent license; be sure to check with your state’s Department of Insurance for more information on this.
This background check is typically carried out online using IdentiGO and will cost around $40, though this will depend on the state in which you’re applying.
Note: For more state-specific information on how these background checks work in your jurisdiction, be sure to contact your state’s Department of Insurance.
Once you’ve completed all of the above steps, you’ll be ready to file an application with your state’s Department of Insurance. This application, which is typically filled out online, should typically contain:
It’s important to be aware that you’ll be required to pay a filing fee in order to submit your application, though the specific amount you must pay will depend on your state.
After submission, it’s just a matter of waiting. If you’ve completed and filed this application properly, you should receive your license within the next few weeks — just be sure to watch your emails and mail for official communications from your state’s Department of Insurance.
Pro tip: Doing a pre-licensing education course dramatically increases your chance of passing your exam on your first attempt, which can end up saving you both time and money in the long run.
Kaplan Education Company
