The insurance industry is expanding every day, and with that, insurance becomes a more appealing career option. An insurance career can be rewarding but challenging. An agent’s responsibility is to help clients understand and navigate the insurance industry to find policies that suit their needs.
A career as an insurance agent can be challenging but rewarding. I started as a State Farm CSR (customer service representative), worked my way to a sales position (for two years), to eventually start my own independent insurance agency selling car, home, life, and health insurance.
In this article, we will go through what it means to be an insurance agent, the requirements for the job, go over challenges and drawbacks, and provides some tips for success. Let’s get started!
Table of contents
How Much Does An Insurance Agent Make?
On average, insurance agency owners make $70,000 per year (net after taxes). Insurance agents (those who do not own the agency but work for an employer) make on average $45,000 per year. These figures vary depending on the location of the job/agency and how successful the agency is.
First-Hand Experience (My Income As An Agent)
When I started my insurance agency, I made $17,000 net the first year. My gross profit was much more but when considering all of the write-offs, expenses, and incidentals, my net was below $20,000 which is very low but par for the course!
Now the agency’s gross revenue is well over $100,000 but it took years of building up a residual income through selling car and home insurance.
Responsibilities And Duties Of An Insurance Agent
Insurance sales agents are professionals who sell different types of insurance policies to potential customers. They have a few key duties, such as reaching out to potential clients, discussing their financial situation and existing coverage, and explaining different insurance policies.
They also analyze clients’ current policies and suggest any changes that could be helpful, and customize insurance programs to fit each client’s specific needs.
There Are Different Types Of Insurance Policies That Insurance Agents Can Sell.
- Property And Casualty Insurance Policies help protect people and businesses from financial loss due to things like car accidents, fires, theft, and other types of damage to property.
- Life Insurance Policies pay out money to beneficiaries when the policyholder passes away, and health and long-term care insurance policies help cover the costs of medical care and assisted-living services for older adults.
Insurance Agents Can Work For One Company Or Several Companies.
- Captive Agents work for only one company and sell policies that are provided by that company.
- Independent Insurance Agents can sell policies from different companies, and try to match their clients with the company that offers the best rate and coverage.
- Insurance Brokers work for insurance brokerage firms, and they represent their clients instead of the insurance companies. They can give advice about different insurance companies and their policies, but they must involve an insurance agent or company to complete a sale.
As an insurance agent, I can tell you that within the industry, the responsibilities of an insurance agent will vary depending on the job. Generally, however, these are common responsibilities and duties of an insurance agent:
| Tasks | Description |
|---|---|
| Meeting With Clients | Meet with clients to understand their specific insurance requirements and exposure to risks. |
| Explaining Insurance Options | Explain insurance options and coverage to clients, including policy details and pricing. |
| Providing Support | Offer assistance and support to clients during the claims process. |
| Staying Up-To-Date | Keep up-to-date with the latest industry developments, trends, and changes in regulations. |
| Building And Maintaining Relationships | Develop and maintain relationships with clients and insurance providers to ensure customer satisfaction. |
| Seeking Out New Business | Look for new business opportunities through networking and marketing efforts. |
As an insurance agent, you must have excellent communication skills and the ability to build trust with clients. On top of that, here’s a bunch of things to consider (skills-wise) when thinking of the responsibilities of an insurance agent:
| Skills/Qualities | Description |
|---|---|
| Knowledge Of Insurance Products | Have a good understanding of insurance products and industry, and the ability to explain them in simple terms. |
| Well-Organized | Be able to organize and prioritize tasks, and manage time effectively to meet deadlines and goals. |
| Good Listener | Be attentive and able to listen to clients’ needs and tailor the approach accordingly. |
| Stay Calm | Stay calm and focused under pressure, and be able to think on your feet to solve problems and answer questions. |
| Self-Motivated | Be self-driven and motivated to find new clients and meet sales goals, as the job can be demanding. |
| Sales | Be comfortable with sales and able to work independently as well as part of a team to meet business objectives. |
| Good Computer Skills | Be proficient in computer skills, and able to navigate the various software and systems used by insurance companies. |
Education And Training Requirements For Becoming An Insurance Agent
As an insurance agent, I can tell you that to have a career in the insurance industry, you will need at least a high school diploma (or equivalent) and on-the-job experience to be an insurance agent. Education requirements, of course, can vary depending on the state and type of insurance sold.
In terms of formal education, some states require insurance agents to have a college degree, while others have no formal education requirements.
Many insurance companies also have their own training programs for new agents, which can include classes and online courses. In addition to formal education and training, insurance agents must pass a licensing exam in order to sell insurance.
The licensing exam typically covers state and federal regulations, as well as the specific type of insurance being sold. Continuing education is also important for insurance agents to maintain their license and stay current on industry developments.
Many states require insurance agents to complete continuing education courses in order to renew their license.
Earning Potential For Insurance Agents
As an insurance professional, I frequently hear (and even say) that the insurance industry is a lucrative career choice. While that can be true, the salary and earning potential are greatly variable depending on factors such as experience, type of insurance being sold, and location.
However, the average salary for insurance agents is around $50,000 per year. Commission is often the main source of income for insurance agents.
Commission is a percentage of the premium paid by the client for the policy. The more policies an agent sells, the more commission they can earn. Experienced agents can earn significantly more than new or entry-level agents.
Some insurance companies also offer bonuses and incentives for agents who meet or exceed sales targets. This can be an additional source of income for agents. In addition to salary and commission, some insurance agents also earn benefits such as health insurance, retirement plans, and paid time off.
It’s important to note that earning potential can vary depending on the type of insurance being sold.
Agents who sell life insurance typically earn more than those who sell property and casualty insurance. But this is only true to a point because P&C agents earn residuals whereas life insurance agents (unless they are selling annuities with riders or permanent life insurance policies with residuals) have no opportunity of building a true, residual-based book of business!
Ultimately, earning potential as an insurance agent is largely determined by the agent’s own effort and ability to build a successful business. Those who are able to build a large client base and consistently meet sales targets can earn a higher income.
Job Outlook And Growth Potential For The Insurance Industry
The insurance industry is a growing industry. In fact, according to the Bureau of Labor Statistics, insurance agent employment is expected to grow by 4% from 2020 to 2030. I can honestly say that starting a career in insurance can be great!
Life insurance agents will have increased opportunities through selling annuities because as the population ages, the need for consistency-based insurance products increases.
Property and casualty insurance agents will always be relevant because car insurance is a required insurance for all the states within the United States aside from one. And homeowners insurance is required for those who own a home so long as they have a mortgage in place!
In addition, with the rise of technology, many insurance companies are shifting their sales online, creating more opportunities for insurance agents to sell policies online.
Another factor driving job growth in the insurance industry is the increasing complexity of insurance products.
With the rise of new technology, there are more opportunities for insurance agents to sell specialized policies such as cyber insurance or drone insurance. As the economy continues to grow, there will be more demand for insurance from businesses. This will create more job opportunities for insurance agents who specialize in commercial insurance.
The insurance industry is also becoming more diverse and inclusive, creating more opportunities for insurance agents from diverse backgrounds. Overall, the job outlook for insurance agents is positive and there are many opportunities for career growth and advancement within the industry.
Tips For Success As An Insurance Agent
Throughout my career as an insurance agent, I’ve learned some information over the years that can really make a difference between success and failure as an agent. Some tips for success based on my experience are:
Build A Strong Network: This is very important and includes building relationships with clients, as well as other insurance agents, underwriters, and industry professionals.
Networking can help an agent stay informed about industry developments, find new business opportunities and stay ahead of the competition.
Have A Deep Understanding Of The Products And Services: This includes understanding the coverage, the terms and conditions of the policies, the exclusions, etc. Having good communication and negotiation skills is also essential.
Insurance agents must be able to explain complex information in simple terms and persuade clients to buy policies that will best protect them from financial loss.
Have Good Organizational And Time-Management Skills: Insurance agents often have to balance multiple clients, paperwork, and other tasks, and thus, should be able to prioritize and manage their workload effectively.
Setting And Achieving Realistic Goals: This includes setting targets for the number of policies to be sold, the number of clients to be acquired and the amount of income to be earned.
Have A Positive Attitude, Be Persistent, And Have A Strong Work Ethic: This job can be challenging at times, and it’s essential to have the drive and determination to overcome obstacles and achieve success.
Potential Challenges And Drawbacks Of A Career As An Insurance Agent
As an insurance professional, I know I talk a lot about how great a career as an insurance agent can be. And, while true, it is important to understand that it does come with challenges and potential drawbacks.
One of the main challenges is the need to constantly build a client base. Finding new clients can be difficult and time-consuming, and requires a lot of effort, including networking and marketing. Another potential challenge is dealing with rejection.
Insurance agents often have to make cold calls and pitch insurance products to potential clients, and not everyone will be interested in buying. Dealing with rejection can be difficult and can take a toll on an agent’s self-esteem. Another challenge is the pressure of meeting sales targets.
Insurance agents often have to meet specific targets for the number of policies sold, and not meeting these targets can lead to decreased income and job insecurity. The insurance industry is also highly regulated, and agents must stay up-to-date on state and federal regulations and compliance requirements.
This can be time-consuming and can add to the workload of an agent. Additionally, insurance agents need to be comfortable working independently and being self-motivated.
This job can be demanding and requires a lot of effort to find new clients and build a successful business. Lastly, dealing with difficult clients or clients during difficult times like a claim can be emotionally taxing, and can be challenging for an agent. It can require a lot of empathy and patience to help clients navigate through the process.
Frequently Asked Questions
Being an insurance agent can be a good career choice for some people, but it depends on your interests and skills.
It’s possible to make a good income as an insurance agent, but it depends on the effort you put into your work and the policies you sell (which is like most sales jobs and professions).
It can be challenging, as it involves a lot of communication, sales, and staying up-to-date on changes in the industry. This is why the burn-out rate is so high for insurance agents.
The hardest part can vary, but for some people, it’s finding new clients and making sales, while for others it’s handling difficult customers or staying motivated.
There are many reasons, but some common ones are difficulty meeting sales goals, stress and burnout, and seeking out a different career path.
The highest paid are agency owners. Some other positions that typically make more money in insurance are underwriters, actuaries, and claims adjusters.
It depends on the type of insurance, but math skills can be helpful for understanding complex policies and calculating billing issues that arise daily with clients.
Pros can include the ability to help people and potentially make good money, while cons can include a lot of competition and the need to meet sales goals.
The turnover rate can vary, but some estimates suggest that around 90% of insurance agents leave the industry within their first few years.
Conclusion
I think it is important to fully understand what a career in the insurance industry entails before deciding if it is a career path you want to pursue. As an insurance agent, you are responsible for assessing clients’ needs, explaining insurance policies, and providing support, and you may encounter challenges such as building a client base, finding sales targets, rejection, and regulations.
