Insurance agents sell a variety of types of insurance policies including health, life, disability, home, auto, and personal. Often, they sell a variety of other financial products such as mutual funds, annuities, and other investments. Insurance agents typically either work for one company and sell their products or sell many different companies’ products to provide a variety of options for their clients.
In this free career guide, learn how to have a successful career as an insurance agent.
Insurance Agent Career Summary
- In addition to offering insurance policies, agents increasingly sell mutual funds, annuities, and securities and offer comprehensive financial planning services, including retirement and estate planning services, some designed specifically for the elderly.
- Agents must obtain a license in the States where they sell.
- Job opportunities should be best for college graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services.
Working as an Insurance Agent
Most people have their first contact with an insurance company through an insurance sales agent. These workers help individuals, families, and businesses select insurance policies that provide the best protection for their lives, health, and property.
Insurance sales agents, commonly referred to as “producers” in the insurance industry, sell one or more types of insurance, such as property and casualty, life, health, disability, and long-term care. Property and casualty insurance agents sell policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, storms, and other events that can damage property. For businesses, property and casualty insurance can also cover injured workers’ compensation, product liability claims, or medical malpractice claims.
Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Depending on the policyholder’s circumstances, a cash-value policy can be designed to provide retirement income, funds for the education of children, and other benefits, as well. Life insurance agents also sell annuities that promise a retirement income. Health insurance agents sell health insurance policies that cover the costs of medical care and loss of income due to illness or injury. They also may sell dental insurance and short-term and long-term-disability insurance policies. Agents may specialize in any one of these products, or function as generalists, providing multiple products to a single customer.
An increasing number of insurance sales agents offer their clients advice on how to minimize risk as well as comprehensive financial planning services, especially to those approaching retirement. These services include retirement planning, estate planning, and assistance in setting up pension plans for businesses. As a result, many insurance agents are involved in “cross-selling” or “total account development.” Besides offering insurance, these agents may become licensed to sell mutual funds, variable annuities, and other securities. This practice is most common with life insurance agents who already sell annuities, but many property and casualty agents also sell financial products.
Insurance sales agents also prepare reports, maintain records, and seek out new clients. In the event that policy holders experience a loss, agents help them settle their insurance claims. Insurance sales agents working exclusively for one insurance company are referred to as captive agents. These agents typically have a contractual agreement with the carrier, and are usually an employee of the carrier. Independent insurance agents, or brokers, are mostly facilitators who represent several companies. They match insurance policies for their clients with the company that offers the best rate and coverage.
Technology—specifically, the Internet—has greatly affected the insurance business, making the tasks of obtaining price quotes and processing applications and service requests faster and easier. The Internet has made it easier for agents to take on more clients and to be better informed about new products. It has also altered the relationship between agent and client. Agents formerly used to devote much of their time to marketing and selling products to new clients. Now, clients are increasingly obtaining insurance quotes from a company’s Web site and then contacting the company directly to purchase policies. This interaction gives the client a more active role in selecting their policy, while reducing the amount of time agents spend seeking new clients. Insurance sales agents also obtain many new accounts through referrals, so it is important that they maintain regular contact with their clients to ensure that the client’s financial needs are being met. Developing a satisfied clientele that will recommend an agent’s services to other potential customers is a key to success for agents.
Increasing competition in the insurance industry has spurred carriers to find new ways to keep their clients satisfied. One solution is hiring customer service representatives who are accessible 24 hours a day, 7 days a week to handle routine tasks such as answering questions, making changes in policies, processing claims, and selling more products to clients. The opportunity to cross-sell new products to clients will help an agent’s business grow. The use of customer service representatives also allows agents to concentrate their efforts on seeking out new clients and maintaining relationships with old ones.
Work environment. Most insurance sales agents work in offices. Since some agencies are small, agents may work alone or with only a few others. Some independent agents, or brokers, however, may spend much of their time traveling to meet with clients, close sales, or investigate claims. Agents usually determine their own hours of work and often schedule evening and weekend appointments for the convenience of clients. Some sales agents meet with clients during business hours and then spend evenings doing paperwork and preparing presentations to prospective clients. Although most agents work a 40-hour week, some may work much longer.
Training, Other Qualifications, and Advancement
Every sales agent involved in the solicitation, selling, or negotiation of insurance must have a State-issued license. Licensure requirements vary by State but typically require some insurance-related coursework and the passing of several exams. Although some agents are hired right out of college, many are hired by insurance companies as customer service representatives and are later promoted to sales agent.
Education and training. For insurance sales agent jobs, many companies and independent agencies prefer to hire college graduates—especially those who have majored in business, finance, or economics. High school graduates may be hired if they have proven sales ability or have been successful in other types of work.
College training can help agents grasp the technical aspects of insurance policies as well as the fundamentals of the insurance industry. Many colleges and universities offer courses in insurance, and a few schools offer a bachelor’s degree in the field. College courses in finance, mathematics, accounting, economics, business law, marketing, and business administration enable insurance sales agents to understand how social and economic conditions relate to the insurance industry. Courses in psychology, sociology, and public speaking can prove useful in improving sales techniques. In addition, familiarity with popular software packages has become very important because computers provide instantaneous information on a wide variety of financial products and greatly improve an agent’s efficiency.
Agents learn many of their job duties on the job from other agents. Many employers have their new agents shadow an experienced agent for a period of time. This allows the agent to learn how to conduct their business, how the agency interacts with clients, and how to write policies.
Employers also are placing greater emphasis on continuing professional education as the diversity of financial products sold by insurance agents increases. It is important for insurance agents to keep up to date on issues concerning clients. Changes in tax laws, government benefits programs, and other State and Federal regulations can affect the insurance needs of clients and the way in which agents conduct business. Agents can enhance their selling skills and broaden their knowledge of insurance and other financial services by taking courses at colleges and universities and by attending institutes, conferences, and seminars sponsored by insurance organizations.
Licensure. Insurance sales agents must obtain a license in the States where they plan to work. Separate licenses are required for agents to sell life and health insurance and property and casualty insurance. In most States, licenses are issued only to applicants who complete specified prelicensing courses and who pass State examinations covering insurance fundamentals and State insurance laws. Most State licensing authorities also have mandatory continuing education requirements every 2 years, focusing on insurance laws, consumer protection, ethics, and the technical details of various insurance policies.
As the demand for financial products and financial planning increases, many insurance agents choose to gain the proper licensing and certification to sell securities and other financial products. Doing so, however, requires substantial study and passing an additional examination—either the Series 6 or Series 7 licensing exam, both of which are administered by the National Association of Securities Dealers (NASD). The Series 6 exam is for individuals who wish to sell only mutual funds and variable annuities, whereas the Series 7 exam is the main NASD series license that qualifies agents as general securities sales representatives.
Other qualifications. Previous experience in sales or insurance jobs can be very useful in becoming an insurance sales agent. In selling commercial insurance, technical experience in a particular field can help sell policies to those in the same profession. As a result, these agents tend to be older than entrants in many other occupations.
Insurance sales agents should be flexible, enthusiastic, confident, disciplined, hard working, and willing to solve problems. They should communicate effectively and inspire customer confidence. Because they usually work without supervision, sales agents must have good time-management skills and the initiative to locate new clients.
Certification and advancement. A number of organizations offer professional designation programs that certify an agent’s expertise in specialties such as life, health, and property and casualty insurance, as well as financial consulting. For example, The National Alliance for Insurance Education and Research offers a wide variety of courses in health, life and property, and casualty insurance for independent insurance agents. Although voluntary, such programs assure clients and employers that an agent has a thorough understanding of the relevant specialty. Agents who complete certification are usually required to fulfill a specified number of hours of continuing education to retain their designation, as determined by the Alliance.
In the area of financial planning, many agents find it worthwhile to demonstrate competency by earning the certified financial planner or chartered financial consultant designation. The Certified Financial Planner credential, issued by the Certified Financial Planner Board of Standards, requires relevant experience, completion of education requirements, passing a comprehensive examination, and adherence to an enforceable code of ethics. The exam tests the candidate’s knowledge of the financial planning process, insurance and risk management, employee benefits planning, taxes and retirement planning, and investment and estate planning.
The Chartered Financial Consultant (ChFC) and the Chartered Life Underwriter (CLU) designations, issued by the American College in Bryn Mawr, Pennsylvania, typically require professional experience and the completion of an eight-course program of study. For those new to the industry, however, the American College offers the Life Underwriter Training Council Fellow (FUTCF), an introductory course that teaches basic insurance concepts. Many property and casualty insurance agents obtain the Chartered Property Casualty Underwriter (CPCU) designation, offered by the American Institute for Chartered Property Casualty Underwriter. The majority of professional designations in insurance have continuing education requirements.
An insurance sales agent who shows ability and leadership may become a sales manager in a local office. A few advance to managerial or executive positions. However, many who have established a client base prefer to remain in sales work. Some—particularly in the property and casualty field—launch their own independent agencies or brokerage firms.
Employment for Insurance Agents
Insurance sales agents held about 434,800 jobs in 2008. About 51 percent of insurance sales agents work for insurance agencies and brokerages. About 21 percent work directly for insurance carriers. Although most insurance agents specialize in life and health insurance or property and casualty insurance, a growing number of “multiline” agents sell all lines of insurance. A small number of agents work for banks and securities brokerages as a result of the increasing integration of the finance and insurance industries. Approximately 22 percent of insurance sales agents are self employed.
The majority of insurance sales agents are employed in local offices or independent agencies, but some work in the headquarters of insurance companies.
Job Outlook
Employment is expected to grow about as fast as average for all occupations. Opportunities will be best for college graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services.
Employment change. Employment of insurance sales agents is expected to increase by 12 percent over the 2008–18 period, which is about as fast as average for all occupations. Future demand for insurance sales agents depends largely on the variety of financial products and volume of sales. Sales of health insurance, long-term-care insurance, and other comprehensive financial planning services designed specifically for the elderly are expected to rise sharply as the population ages. In addition, a growing population will increase demand for insurance for automobiles, homes, and high-priced valuables and equipment. As new businesses emerge and existing firms expand their insurance coverage, sales of commercial insurance also should increase, including coverage such as product liability, workers’ compensation, employee benefits, and pollution liability insurance.
Employment of agents will not keep up with the rising level of insurance sales, however. Many insurance carriers are trying to contain costs and are shedding their captive agents—those agents working directly for insurance carriers. Instead carriers are relying more on independent agents or brokers.
It is unlikely that the Internet will threaten the jobs of these agents. The automation of policy and claims processing allows insurance agents to take on more clients. Most clients value their relationship with their agent and prefer personal service, discussing their policies directly with their agents, rather than through a computer. Insurance law and investments are becoming more complex, and many people and businesses lack the time and expertise to buy insurance without the advice of an agent.
Job prospects. College graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services should enjoy the best prospects. Multilingual agents should have an advantage, because they can serve a wider range of customers. Additionally, insurance language tends to be quite technical, so agents who have a firm understanding of relevant technical and legal terms will also be desirable to employers. Many beginning agents fail to earn enough from commissions to meet their income goals and eventually transfer to other careers. Many job openings are likely to result from the need to replace agents who leave the occupation or retire.
Agents may face some competition from traditional securities brokers and bankers, as they also sell insurance policies. Insurance sales agents will need to expand the products and services they offer as consolidation increases among insurance companies, banks, and brokerage firms and as demands increase from clients for more comprehensive financial planning.
Independent agents who incorporate new technology into their existing businesses will remain competitive. Agents who use the Internet to market their products will reach a broader client base and expand their business. Agents who offer better customer service also will remain competitive.
Projections Data
| Occupational Title | SOC Code | Employment, 2008 | Projected Employment, 2018 |
Change, 2008-18 |
|||
|---|---|---|---|---|---|---|---|
| Number | Percent | ||||||
| Insurance sales agents | 41-3021 | 434,800 | 486,400 | 51,600 | 12 | ||
| NOTE: Data in this table are rounded. | |||||||
Earnings for Insurance Agents
The median annual wages of wage and salary insurance sales agents were $45,430 in May 2008. The middle 50 percent earned between $33,070 and $68,730. The lowest 10 percent had earnings of $26,120 or less, while the highest 10 percent earned more than $113,930. Median annual wages in May 2008 in the two industries employing the largest number of insurance sales agents were $48,150 for insurance carriers, and $44,450 for agencies, brokerages, and other insurance related activities.
Many independent agents are paid by commission only, whereas sales workers who are employees of an agency or an insurance carrier may be paid in one of three ways: salary only, salary plus commission, or salary plus bonus. In general, commissions are the most common form of compensation, especially for experienced agents. The amount of the commission depends on the type and amount of insurance sold and on whether the transaction is a new policy or a renewal. Bonuses usually are awarded when agents meet their sales goals or when an agency meets its profit goals. Some agents involved with financial planning receive a fee for their services, rather than a commission.
Company-paid benefits to insurance sales agents usually include continuing education, training to qualify for licensing, group insurance plans, office space, and clerical support services. Some companies also may pay for automobile and transportation expenses, attendance at conventions and meetings, promotion and marketing expenses, and retirement plans. Independent agents working for insurance agencies receive fewer benefits, but their commissions may be higher to help them pay for marketing and other expenses.
