How To Become A Life Insurance Agent
Updated: March 23, 2021|
Updated: March 23, 2021|
If you enjoy working with people to plan their financial security, you may enjoy a career as a life insurance agent. Becoming a life insurance agent requires some preparation and professional knowledge, but with planning and study, it can prove to be a rewarding career.
Becoming a licensed insurance sales agent requires that you pass a state licensing exam and meet all other application criteria. While the path has a few steps, you can confidently complete each one and be a life insurance agent.
Being a life insurance agent comes with a great work atmosphere and plenty of job prospects. Life insurance is one of a number of insurance products that individuals can use to ensure they have access to money when unexpected life events occur, in this case providing financial support for their family after their passing.
Insurance sales agents generally work with clients to provide some type of insurance against life’s disasters or events that would have a big financial impact, such as disability insurance, homeowner’s insurance, or automobile insurance. A life insurance agent specializes in providing insurance coverage in the event of a client’s death.
Many agents work with both life and health insurance. These can be rewarding areas of insurance to work in, particularly if you enjoy helping clients consider their family’s future needs or working as part of a long-term financial plan.
Becoming a life insurance agent is more dependent on meeting professional licensing requirements than academic credentials, but both are important to have a successful career as a life insurance agent.
Follow our step-by-step guide to become a life insurance agent.
Insurance licenses are state-specific. This means that the licensing requirements vary by state. While many follow the same steps, you should always check with your individual state for the latest guidance.
Before pursuing your insurance license, many states require that you show that you have completed a pre-licensing education course. Most people do this online through a third-party financial education company. This helps busy professionals fit studying for their life insurance exam around other commitments, such as a demanding work schedule or family events.
The required hours of your course will vary by state. Some, such as California, require that you complete 20 hours of pre-license education for the life insurance license. This requirement increases to 40 hours for a joint life, accident, and health license. Many states have similar pre-license education hour requirements.
Even if a pre-license education course is not required, you will still need to pass the state life insurance exam. Taking a structured study course is the best way to prepare for and pass the exam on your first attempt.
Once you have a completion certificate documenting your required hours of pre-license education, you can move on to filling out the application for your insurance sales license. Make sure to complete it thoroughly and accurately. Leaving out information, such as a criminal record that will come up in a background check, will impact your approval. Having a criminal record does not automatically disqualify you from getting your insurance sales license but leaving it off your application will be a problem when it is reviewed.
Insurance sales agent license applications are often available online through the state’s Department of Financial Services, Department of Insurance, or State Corporation Commission. You will be redirected to the National Insurance Producer Registry (NIPR), which processes applications in all 50 states as well as the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.
Some states require that you pass the licensing exam before being allowed to apply for a life insurance license. Your exam results will be automatically sent to the applicable state agency by the testing center.
Due to the sensitive nature of a life insurance agent’s work, states require that you submit to a background check and have your fingerprints on file before being granted a life insurance agent license. You can find directions to schedule your fingerprinting appointment in the same place that you find the insurance license application, normally a state agency or department. Search for your state’s step-by-step guide to find contact information and links to schedule your appointment.
Fingerprinting is completed by a third party company. As the applicant, you will pay the fingerprinting fee. Costs typically range from $35 to $75 dollars. Some states work with law enforcement agencies to provide electronic fingerprinting as an option.
In most cases, you will be able to initiate your background check online or after submitting your fingerprints. You are not required to do anything related to the background check other than paying a fee, but you should be aware that it is part of the life insurance agent licensing process.
All of the steps to becoming a licensed life insurance agent are important, but passing the state licensing exam can be one of the most stressful. This is where completing a pre-license education course is helpful, even if it is not required by the state.
Life insurance licensing exams typically cover state insurance regulations, general insurance concepts and terms, specific policies applicable to life insurance (underwriting, setting up a policy, policy provisions, options, riders, etc…), annuities, tax considerations, and requirements to maintain an insurance sales agent license.
Check with your state for a copy of the exam content outline. While much of the testable information is similar, it can vary by state. For example, the life insurance license exams in Indiana and Illinois both include 50 scored questions and 10 unscored questions. The general knowledge portions of the exam cover the same information, including:
But the state statues, rules, and regulations portion of the test is individualized to each state. Indiana’s exam includes 30 scored and 5 unscored questions, while Illinois includes 31 scored and 8 unscored.
Your pre-license education course will be tailored to your state, so make sure that you register for the state you intend to be licensed in before beginning. If you want to be licensed in multiple states, you will need to complete the licensing process for each state.
Once you have completed all of the required steps, your application will be reviewed, along with your background check. This process can take up to a few days to several weeks depending on the state, but you will be notified if there is an issue as well as when the application review is complete.
A completed application review, along with your pre-license education courses (if required), a passing score on your state exam, fingerprints, and a background check result in your life insurance sales agent license. You can print your new license once it is sent to you by your state. Now you are ready to get started working as a life insurance agent.
If you will be marketing and selling securities or variable-contract life insurance products as part of your life insurance plans, you will also need to be licensed through the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA).
Series 6 and 63 licenses are the most common securities licenses for insurance agents. The Series 6 license requires that you pass a licensing exam and be registered with a FINRA member firm before testing. You will also need to take and pass a prerequisite test, the Securities Industry Essentials exam (SIE), although you can do this without being sponsored by a firm. The Series 63 exam covers more state-specific securities regulations and policies.
The Series 7 license is another securities license that will allow you to market and sell even more securities products as part of a life insurance plan. Like the Series 6, you will need to take and pass the SIE first and be sponsored by a FINRA-member organization. All licensing exams require preparation and study. The 125-question Series 7 exam is not an exception.
While you can work as a life insurance agent without these licenses, you will be limited in the type of life insurance that you can offer to clients. Mutual funds, variable annuities, and indexed life insurance all require a FINRA Series 6 license to market and sell. Pursuing your Series 6, 63, or Series 7 licenses will be a valuable step when you start working with life insurance policies.
According to the Bureau of Labor Statistics, available positions for insurance sales agents are expected to grow by 10% by the year 2028. This is double the expected growth rate of 5% across all professions in the United States. If you are changing careers to become a life insurance agent, compare the job growth of insurance sales agents with your current profession. Chances are the insurance industry is growing faster, making it a great time to become a life insurance agent.
You should consider what kind of work environment that you enjoy before pursuing a career as a life insurance agent. You can expect to:
Life insurance agents often work in an office, but can also meet with clients in their homes or other public locations. Most of a life insurance agent’s job consists of completing paperwork, so both strong administrative skills and record keeping are very important in this career.
The time to complete all the steps to become a life insurance agent depends a lot on how dedicated you are to studying, completing pre-license education requirements, and passing your state licensing exam. You should expect the entire process to take one to three months, but don’t be surprised to take longer, especially if your state requires a lot of pre-license education.
There is an eligibility window, usually six months, once you initiate the process that you must submit a completed application. If you are not finished with your pre-license education or have not passed the state exam during that time, you will need to initiate a new application, which can require you to pay additional fees.
The pay structure for life insurance agents depends on your work environment. If you are an independent insurance sales agent, you are often paid on commission. This means that you earn a percentage of the insurance sales that you make. Your income is based on how much business you bring in for your firm or company.
Some companies pay their insurance sales agents a preset salary or a combination of salary and commission. This can help offset the high fluctuations in income that a commission-only pay structure can have.
The Bureau of Labor Statistics reports that insurance agents working in health and medical insurance carrier firms can expect to earn a median income of $65,180 per year. Those working at insurance agencies and brokerages tend to make a little bit less, a median income of $49,000 annually, but this is not always the case. Bonuses and commission percentage can have a large impact on the overall earnings potential of an insurance agent. The income that a life insurance sales agent brings home can vary widely, especially when it is based on commission only.
Beginning a career as a life insurance agent can be rewarding and fun. If you like to help clients ensure their family’s financial security, even after their own death, then becoming a life insurance agent is a great choice for you. Start the steps to becoming a life insurance agent and get ready for your new career.
Information on this page has been gathered by a multitude of sources and was most recently updated on July 2020.
Any Information on this site is not guaranteed or warranted to be correct, accurate, or up to date. StateRequirement and its members and affiliates are not responsible for any losses, monetary or otherwise. StateRequirement is not affiliated with any state, government, or licensing body. For more information, please contact your state's authority on insurance.
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