What is a life insurance agent 2024

What is a life insurance agent 

A life insurance agent is an insurance professional specializing in selling life insurance. Life insurance agents may sell other types of insurance if they have the appropriate licenses or focus solely on life insurance. A life insurance agent can work for an insurance company or independently, sometimes under the name of an insurance company but as their business owner. Life insurance companies often pay agents a commission to incentivize them to sell more insurance policies. Everyone wanted to know what is a life insurance agent.

A life insurance agent is a licensed professional who sells insurance policies to customers on behalf of one or more insurance companies.

To obtain a license in their state, an agent must take an accredited course, pass a life insurance agent exam, and complete continuing education requirements every few years to renew the license.

What Does a Life Insurance Agent Do?

Life insurance agents help clients find a life insurance policy that fits their needs. People generally purchase life insurance policies to benefit others after their death. For example, a middle-aged adult may buy a life insurance policy and request that the insurer pay the benefit amount to their spouse, children, or a combination of siblings. Often, life insurance helps a person’s family cover burial and living expenses after their death. Everyone should know what is a life insurance agent.

To sell life insurance, an agent must work within the boundaries of the law, as they must be licensed and sell life insurance policies through various networking and marketing methods. Life insurance agents are often active in their communities to increase sales of life insurance policies. A life insurance agent can reach out to leads via email or cold calls to purchase a service or company that works for them.

Once the life insurance is sold, the life insurance agent ensures that all the paperwork is completed correctly and submitted to the right place. Life insurance policies must go through the approval of the policy-issuing company, so life insurance agents have to manage that process and communicate with their customers about the status of their policies.

How Do Life Insurance Agents Get Paid?

Insurance agents earn their money through commissions, which are a percentage of premiums. Don’t worry—you won’t receive a bill right after you buy a policy! You pay a commission to the insurance company from which you buy the insurance.

The more life insurance policies an agent sells, the higher the commission. Independent agents are usually paid through commissions, but a “captive” agent may receive a regular salary and a lower commission from the company they work for. Their pay may be slightly lower if their employer handles things like marketing and administrative costs.

Each state regulates its insurance prices. This means that insurance companies file a “price list” of all policies sold with state insurance departments. This regulation ensures that an agent cannot quote a higher price than what you would be charged if you purchased the insurance policy directly from the company.

That’s why it’s wise to get several quotes from an agent. You can see that they are not just pitching the most expensive options for your insurance coverage but are genuinely trying to get you the best deal.

How To Choose a Life Insurance Agent

When you’ve called and are speaking with an agent, take a seat and keep this handy list by your side to see if it’s worth it from the start.

• They understand your situation and financial journey. Are they listening well to who you are and what you need coverage for?
• They know what you don’t need. Make sure they are not trying to sell you unnecessary coverage.
• They answer your questions (even small ones). Life insurance is complex enough without overlooking your questions—no matter how insignificant they may seem.
• They will write a summary and give you time to decide. If they pressure you to decide that first call, it’s too soon!

• They are licensed to sell insurance in your state. They should be transparent about this information, including how much commission they are paid.
• They are qualified but don’t overemphasize this. Surnames and letters after their names can indicate qualifications, but don’t let that give you a false sense of security:
  • CLU – Chartered Life Underwriter
  • ChFC – Chartered Financial Consultant
  • CFP – Certified Financial Planner
  • RR or RP – Registered Representative or Registered Principal
  • CIC – Certified Insurance Consultant

The bottom line is—don’t get too hung up on these credentials. It’s good to know what they mean, but if the agent still tries to sell you unnecessary coverage or doesn’t listen to your needs, they’re not doing their job!

Do I Need a Life Insurance Agent?

It is always better to use an expert when buying life insurance. You can also do some homework ahead of time by using our coverage checkup tool to see what type of life insurance you need. It’s quick and easy to use, giving you something to work on when you’re talking to an agent.

Dave always recommends going with independent insurance agents. They can shop in a large marketplace to get the best options for you, saving you time and money.

Our trusted friends at Zander Insurance have been helping you get the best life insurance plans for decades. Contact them today and know you are in safe, trusted hands with insurance experts ready to listen.

Overview of the Insurance Field

While there are many types of insurance (from auto insurance to health insurance), the most profitable carriers in the insurance field are those that sell life insurance. Agents focusing on this end of the insurance market help protect families, businesses, employers, and other parties from financial loss if someone dies.

Insurance agents who sell this type of coverage are either “captive” agents, meaning they only sell insurance from one company, or “non-captive” agents, meaning they represent multiple insurance carriers.

. Either way, the typical insurance agent spends most of their time engaged in some form of marketing activity, identifying people who may need new or additional insurance coverage, providing them with quotes from the companies they represent, and persuading them to sign up for a new insurance agreement.

Typically, a life insurance agent receives anywhere from 30% to 90% of what a client pays for a policy in the first year. In subsequent years, the agent may receive anywhere from 3% to 10% of each year’s premium, also known as a “renewal” or “subsequent commission.”

Insurance Sales Commission Example

The Uni insurance agent sells Ryan a whole life insurance policy that covers Ryan for the rest of their life (assuming they continue to pay their premiums). Uni’s insurance company pays a 90%/5% commission on whole-life policies, which means the selling agent gets 90% of the first year’s premium and 5% on future renewals.

The policy costs Ryan $100 a month, or $1,200 a year. Thus, in the first year, Uni will earn a commission of $1,080 for selling this life insurance policy ($1,200 x 90%). In all subsequent years, Uni will earn $60 per renewal, as long as Ryan continues to pay premiums ($1,200 x 5%). An agent selling one or two policies per week at this commission level can earn $50,000 to $100,000 in their first year as an agent.

Life Insurance Agent Qualifications

Everyone may think about what is a life insurance agent. As mentioned previously, a career as a life insurance agent is not suited for those who are easily discouraged. More than any other factor, including education and experience, life insurance agents must possess a resilient attitude. They must be people who love the thrill of the hunt, the rush of sales, and see rejection as a stepping stone to ultimate success. A career in life insurance sales is not suitable for individuals who identify as introverted, soft-spoken, or conflict-averse.

Most life insurance companies have no formal education requirements to become an agent. While many prefer college graduates, employers often ignore this general rule in favor of the ‘right’ candidates. Most medium and large insurance carriers do not require prior experience in the insurance industry, as they provide in-house programs to train their salespeople on what to sell.

While it may prove easy for a prospect to be hired by a reputable insurance company, there is one non-negotiable barrier that stands between a prospective insurance agent and their commissions: state licensing. Insurance agents are typically licensed by the state or states where they sell insurance. This process generally involves passing a state-administered licensing exam and completing a 20-50-hour licensing class.

Getting Hired to Sell Insurance

If you think life insurance sales is a career for you, there are a few steps you need to take to find your first job. First and foremost, it’s crucial to create a resume that showcases your entrepreneurial spirit. You’ll want to include something that demonstrates your initiative to make things happen, whether it’s starting your own business or taking someone else’s business to the next level. Life insurance agents must be driven and self-starters. A resume that shows a track record of such behavior will help you get your foot in the door.

Once you’ve polished your resume, you’ll want to start looking for positions and applying. You mustn’t feel pressured to take the first position offered because working for the wrong company can ruin you and set you back for the rest of your insurance career. Ideally, you should seek employment with a reputable company that consumers and insurance rating agencies highly regard.

Perhaps the best way to determine where to apply is to visit insurance company rating websites such as AM Best, Moody’s, or Standard & Poor’s. From there, you should be able to make a list of companies in your state that have an “A” or higher rating. These companies will generally offer safe products at reasonable prices, with an emphasis on compensation and quality agents.

How Can an Agent Assist You in Purchasing Life Insurance?

An agent can assist you in understanding your options—from determining the most suitable life insurance policy for you to selecting the appropriate beneficiary. It’s the agent’s job to sell you a policy, but they should also act in your best interest.

The agent should know what types of policies are available and which one is best for you based on your financial situation and lifestyle.

Agents should be familiar with life insurance company policies and be able to answer any questions you may have about purchasing life insurance coverage, such as:

• Should you choose term life insurance or whole life insurance?
• How much coverage do you need?
• What can increase or decrease your insurance premium?
• Should you buy life insurance for your spouse?
• When should you add a rider to your policy?

An independent agent can help you determine which insurer can offer you the best rate. Some insurers may offer more flexible premiums based on specific health conditions or lifestyle choices. Depending on your profile, you may pay less with one insurer than another.

Learn More About the Best Life Insurance Companies

Life Insurance Brokers vs. Agents

Life insurance brokers are similar to life insurance agents. Both brokers and agents act as intermediaries between insurance companies and consumers. Both must be licensed in order to sell insurance.

An agent who works directly for an insurance company is called a captive agent. Captive agents are more likely to recommend policies favored by their parent company.

Life insurance brokers, also known as non-captive agents or independent agents, build relationships with numerous insurance companies and can assist you in comparing policies from each.

Independent agents can easily submit your information to other insurance companies if your application is denied or if you receive a higher-than-expected final rate. If you want to improve your health and lifestyle, an independent agent can make sure you’re applying to the company that can offer you the lowest premiums.

Although both brokers and agents work with insurers to find buyers the right policy, agents often work with a limited number of companies, while brokers have no ties to a single insurer.

Jake Herskovits, a life insurance carrier relations specialist at PolicyGenius, explained that although agents may offer products from other companies, they usually focus on selling policies exclusively from the insurer that employs them.

Without receiving incentives from any single insurance company, an independent broker can often provide objective advice that prioritizes your best interests.

How Do Life Insurance Agents Make Money?

Most agents earn a commission—a percentage of the premiums sold—by selling life insurance policies rather than a fixed salary.

However, you don’t incur an additional cost from that commission because the premium already includes it.

The insurance department of each state determines insurance rates.

Each insurance company creates rate tables and then files those rate tables with state insurance departments.

Since the company sets these rates in advance, an agent cannot offer you policies that are only available directly from the company.

These pre-set commission rates are another reason why it is so important to compare quotes to secure the lowest price when purchasing life insurance.

Some agents may charge a fee for their labor rather than earning a commission from clients, but these fee-only agents are rare.

Do You Need a Life Insurance Agent?

You can buy some life insurance policies entirely online, but it’s best to talk to a licensed agent before buying a policy, especially if you have questions about how much coverage you need or what type of policy is best for your family.

If you’re looking for information about a particular insurer’s products, one of its agents may be the best person to talk to.
If you want to compare options between multiple insurers, you’re better off contacting an independent broker like Policygenius, who can help you look at policies from different companies.

Difference Between Captive vs. Independent Insurance Agents

Insurance agents fall into two categories—captive or independent. The difference between the two is how far they reach into the life insurance market.

Captive insurance agents can only sell insurance on behalf of the company they represent. They possess a good knowledge of the given policies but face limitations due to their exclusive work for that company.

However, independent agents (also known as “noncaptive” agents) work independently to scout policies among multiple insurance providers. This means noncaptive agents can find and sell insurance from a much larger pool of life insurance providers. This is good for you because they can save you money on your premiums (which you pay monthly or annually for your life insurance).

Life Insurance Agent

It is a contract between the life insurance company and the policyholder or owner. If you’re wondering what these names mean in life insurance contracts, you are the policyholder or policy owner. As long as you pay your premiums monthly, quarterly, or annually, the life insurance company guarantees that they will pay the death benefit to your heirs or anyone you name as a beneficiary.