What is Insurance?
Insurance is defined as “a contract by which one party undertakes to indemnify another for loss or damage from specific causes”. In other words, insurance exists as a way to be paid for losses that you or your company expect to incur. You buy a policy – whether it’s a whole life policy or a term life policy – and if something happens, the insurance company will pay you back. How does this happen? The insurance company collects premiums from customers and invests them in securities (stocks/bonds/etc.) with the expectation of making more money than they have to pay out in claims. This difference between what they invest and what they have to pay out is called the Gross Premium. The Gross Premium minus administrative expenses equals Net Premiums which are then put into reserves for future claims payments. In the end, if all goes well, there should be more money in reserves than there was when people bought policies. I am becoming an insurance agent because of the income potential, but I also love the security that insurance provides. No matter what happens in my life, I can always fall back on my insurance.
How To Become An Agent/Broker
First things first: You must get licensed! Licensing is your legal right to sell insurance products for an insurance company. There are many different types of licenses you can get, but it all depends on what you want to sell and how much money you want to make. If you’re not sure about becoming an agent yet, read this post here about whether or not it’s a good idea for your career path. If you’ve decided that becoming an agent is right for you, read on! There are two main routes for getting licensed: independent agents and captive agents (the difference between these two will be explained shortly). The steps involved in becoming an independent agent will be mentioned below; however if your goal is to become a captive agent then these steps will be slightly different because captive agents usually start off working at their parent company (a large corporation like State Farm or Allstate) where they learn the business while studying towards their license at nights and weekends. For the sake of simplicity, I will focus on independent agents in this post.
Step 1: Get Your BA in Risk Management!
Your first step will be to get your BA in Risk Management. This is crucial because you must have a bachelor’s degree to become an agent. After you’ve received your degree, it’s time for the next step! You should also sign up to take the exam for your state right away so that you can take it before applying for exams with individual companies. The exam consists of studying several states’ laws and regulations regarding insurance, how different types of policies work, and other miscellaneous information about insurance in general (such as terminology). Keep reading below for more information about what exactly you’ll need to know when taking these exams! You’ll also need to provide proof that you are who you say you are when applying at each company; this usually involves submitting a social security card, driver’s license or passport. Oh! And don’t forget about getting fingerprinted either – some companies require this before they give out their exams/licenses too. If you’re interested in knowing which states require fingerprinting, click here.
Step 2: Choose a Company!
Now that you’ve received your BA and taken the exam for your state, it’s time to choose a company! There are hundreds of different insurance companies out there, but you’ll only be able to sell for a few of them – usually four or five. This is because each insurance company will have their own exams that they want their agents to take before giving out licenses. If an agent sells policies from more than one company then they could be accused of over-selling (which is not allowed). So once again, choosing which companies will become your partners is crucial to becoming licensed as an independent agent. A good place to start looking at companies is the Insurance Information Institute website where you can find all sorts of information about almost every type of insurance possible (including life/health/auto/homeowners). The best way I found was just by driving around town and seeing what kind of agencies were located on main streets near me; usually big corporations like State Farm or Allstate have big signs with their logos on them which makes it easy enough if you’re doing this drive-by method. I am selling insurance for Allstate, so if you live in the United States I would recommend checking out their website. You can also look at websites for other companies to see what they offer in terms of plans, agents and commissions.
Step 3: Take an Exam!
Now it’s time to decide which company you will sell for! I highly recommend that you take a few days to visit each company’s website and read through their policies regarding the license process. The main things that you should be looking for are how much they are paying their agents, what exams are required by each state where they do business, how much training is provided during your first year of selling insurance (which will be explained below), and whether or not there is any sort of mentorship program where experienced agents will help new ones learn the ropes.
If you’ve read this far then I want to thank you for taking the time to put your life before mine. I hope that you’ll all take the time to do what’s important in life, which is helping others. If anyone has any questions about my insurance experiences or if they have any requests regarding future posts, please let me know through a comment below!