Insurance sales is one of the most fulfilling careers because it has a broad scope for growth. Agents can start earning immediately after completing a one-month course. Insurance sales can also pay better than general sales because insurance agents must acquire specialized skills about the products they want to sell. This post explains the process of becoming an insurance sales agent in the U.S.
How to get an insurance sales license
To get a sales license, you need to complete state-specific pre-licensure requirements. Most states have a licensure exam that aspiring salespersons must pass. The National Insurance Producer Registry website provides a comprehensive list of the requirements for different states.
In most states, aspiring agents register for a state-sanctioned pre-licensing course. Most courses take 20-40 hours, depending on the specialty—students study content on general insurance knowledge and state and federal insurance policies and regulations. Students can study online or attend physical classes.
After completing the course, they take an exam. Those students who score more than 70% get a Certificate of Completion; those who aren’t so lucky can retake the test after two weeks. Students who intend to sell a wide range of insurance products must take an exam for each specialty. Most states have two specialties: property and casualty, and life and health.
All states perform background checks before clearing a license application. The requirements include fingerprint data and other personal details. Some specialties, such as retirement products and life insurance, require a federal license.
How much does a typical insurance agent make when starting?
The amount of income an agent makes depends on their experience, specialization, and reputation. Data from the Bureau of Labor Statistics indicates that most beginners earn around $27,000 annually. Other websites estimate that most beginners earn around $33,000 while experienced agents average at $42,000 annually. However, there is a huge scope for growth as the median income is around $50,000, while the top 10% earn over $125,000 annually.
The factors that may account for the disparities in income include the strength of the local economy and the significant economic activities. States with a vibrant service sector are more likely to pay agents better than those highly dependent on extractive activities such as fishing. For instance, the annual median income in California is $77,700, while that of Idaho is $61,590.
How do insurance commissions work?
Insurance sales agents are compensated through a base salary, commissions, and bonuses. The commission is a percentage of the price of the product the agent sells. Most organizations pay commission rates of 5-20%. Home and Auto insurance agents also earn an extra commission when the client renews a policy. Prolific agents can make plenty of passive income from renewals. In contrast, Life and Health insurance agents earn high commissions but get low renewal rates.
The pay structure for agents depends on whether they are independent or employees. Employees work for one insurance company while independents are not tied to any organization. Most employees earn a basic salary, low commissions of 5-10%, and a high bonus incentive. Independents do not receive a basic salary but get bonuses of above 10%.
What types of insurance can you sell?
Insurance agents sell a wide range of products in different sectors. They include property, auto, medical, and life insurance. The type of premium agents sell depends on their license. For instance, a Property & Casualty license allows you to sell auto covers to car owners and property insurance to homeowners.
Similarly, a Life and Health Insurance license allows you to sell Medicare products, life insurance, general health insurance, and annuities. Medical insurance is an attractive area for agents because most states require employers to provide some form of health insurance benefit. Medicare agents can work in almost more of an advisory capacity, helping their customers select suitable coverage from a variety of plans.
How can you increase your sales?
Insurance agents spend most of their time marketing and communicating with clients. The key to boosting your sales is earning the client’s confidence. You can do this demonstrating that you understand their insurance needs and that the product you are selling will solve the problem. Maintain contact with the client even after you have made the sale (customer service is one of four things that will accelerate your growth) and always respond to their concerns and inquiries. This approach attracts new clients and increases loyalty.