A career as an insurance agent could be very fulfilling for you if you feel that helping to protect the safety and well-being of the public would bring you personal satisfaction. A career as an insurance agent offers many advantages, including a relatively simple entry into the field, the freedom to choose your own work environment, and high earning potential. As you consider whether a career as an insurance agent is a good fit for you, learning about the primary duties and educational requirements for insurance agents is a great first step.
In this article, we go over the duties of insurance agents, the two types of agents, their typical salaries, and how to become one. We also respond to a few of the most popular queries about this profession.
A salesperson who sells insurance policies is known as an insurance agent. Agents are in charge of creating marketing plans to promote various insurance products, assessing client needs and recommending insurance options that satisfy them, as well as building relationships with clients to expand their clientele. Most insurance agents typically specialize in a particular category of insurance, such as long-term care, property, disability, or health.
Offering financial planning services to clients who are getting ready for retirement or might set up investment or pension plans is another way that many insurance agents diversify their sources of income.
What qualifications must one have to work as an auto insurance agent?
You should conduct additional research and possibly consult with someone who is already in the industry because licensing and educational requirements differ from state to state. However, having a general understanding of these requirements will probably enable you to concentrate your research and get to your destination more quickly.
- Academic Requirements
To work as a car insurance agent, you will need to have a certain level of education. Some of the bigger, national businesses require applicants to have a degree in business or finance. Others might accept certification from a college course in the insurance industry. Instead of the four years needed for a degree, this option could be completed in two years or less.
On the other hand, there are a ton of businesses that do not demand a degree or certification, and some even favor applicants without them. This is due to the fact that they favor training agents in-house rather than having them learn the company’s procedures from a college or university.
The distinct advantage of being able to start earning right away while learning about the various types of auto insurance is offered by employers who offer on-the-job training. You can earn money and gain experience as an agent during the time you devote to training and passing the licensing exams. It’s important to develop a fundamental understanding of the elements that influence auto insurance rates as well as how the insurance system assists drivers.
- Licensing Conditions
State-by-state differences exist in licensing requirements, just like in education. But regardless of the state you’re in, a license is necessary. This typically entails attending a training program, passing a test, and undergoing a background investigation. The cost of the exam ranges from $40 to $150, and the background check costs $30 to $200. Depending on how intricate the training requirements and background checks are for each individual state, the process can take anywhere from three to six weeks.
How to get into the insurance business?
1. Get a bachelor’s degree
The only legal requirement for an insurance sales agent is a high school diploma, but most organizations prefer that agents have a college degree. To be more successful in selling insurance as a product, aspiring insurance agents should think about taking courses in business, economics, or finance. To improve their ability to market and sell their insurance products, they might also want to pursue studies in psychology or marketing. Some universities and colleges offer courses in risk management or insurance that instruct students in security analysis, insurance theory, and the fundamentals of risk management. If you want to work as an underwriter, a major in risk management and insurance or in business with a focus on risk management will be especially helpful.
2. Complete the prerequisites for admission
Although each state has its own licensing requirements, you generally need to have a license for each category in which you intend to sell insurance. You might need to finish classroom instruction or do some self-study while accruing a minimum number of hours. Additionally, you might need to submit information for a background check and provide your fingerprints.
3. Getting a license
You must pass a licensing exam in every state to prove that you are knowledgeable about the insurance laws of that state and the concepts related to the type of insurance you will be selling. You might need to hold a Series 6 or Series 7 securities registration depending on the kind of insurance you are selling.
4. Look for a job
You’ll probably get on-the-job training while working with other more seasoned agents before looking for clients of your own if you intend to work as an independent insurance agent in an office with other agents. Additionally, you might want to look into becoming a captive agent for a specific insurance provider.
How much do agents for auto insurance make?
As of May 2021, the average yearly salary for insurance sales agents was $49,840. Since auto insurance agents are typically compensated on a commission basis, the actual earnings are really up to each agent. While some businesses do offer a base salary, it’s typically very little, and the agent must sell insurance to make a living. Brokers of auto insurance typically receive a commission of between 15% and 20%, and some businesses also provide annual bonus incentives.
Your choice of agent type will also affect your salary.
- Agents in captivity.
A captive agent is a representative of just one organization, typically a sizable national insurer.
A non-compete agreement, which limits a person’s ability to work for more than one insurance company for a specific period of time, is sometimes required of captive insurance agents. Based on the marketing assistance the carrier gives the agent, commission rates may be lower.
- Unaffiliated Agents.
Insurance is sold by independent agents on behalf of various businesses. They essentially shop around for their customers to find the best prices and coverage. They don’t receive a base salary or employee benefits, but they do build their own brand and frequently earn higher commissions.
A person who works with several insurance providers is known as an independent agent. To find the best policies and prices, the agent gives clients policy quotes from various companies.
Independent agents offer a wider range of products, but they get less support and training from the insurance companies they deal with.
It can be more difficult to become an independent insurance agent because agents must develop their own brands in the markets they serve rather than relying on marketing assistance from well-known insurers.
Conclusion
The majority of insurance agents get paid through commissions from selling insurance. However, as they develop a book of business, many agents, especially rookies, may also receive a salary. The commission paid to captive agents who work for a single company is frequently between 5% and 10% of the cost of the policies they sell.
