Becoming an Insurance Agent: Independent vs. Captive and Licensing Process

Author:Shelden SmollanChief Experience Officer
Shawn Redford
Reviewed by:Shawn RedfordChief Business Development Officer
September 22, 2023
12 Minute Read

For those who desire to work as insurance agents for insurance businesses, getting a life insurance license is a crucial first step.

An insurance agent sitting at her desk with paperwork on it while shaking hands with a client

Navigating the Landscape of Insurance Licensing: A Guide for Aspiring Agents

For those who desire to work as insurance agents for insurance businesses, getting a life insurance license is a crucial first step. These licenses are often called “insurance licenses,” or state insurance licenses.

A state insurance license, also known as an insurance producer license, is a credential that individuals must obtain to legally sell insurance products within a specific state. 

Before diving into the field, aspiring agents must pass a state insurance license exam specific to the line of insurance they intend to pursue. For instance, an insurance agent license is required to sell insurance products such as personal lines, home insurance, and business applicable insurance. This license type is commonly sought after by many insurance agents who wish to provide a diverse range of coverage to their clients. 

A number of steps make up the license application process. Applicants may need to pay an application fee and go through background checks. Small business owners looking to establish an insurance agency must also fulfill specific criteria set by the state. 

Insurance agent posing for picture with his arms crossed

Understanding License Types, Specializations, and the Path to Becoming a Licensed Insurance Agent

Insurance agents often have the flexibility to choose the type of license they want based on their desired specialization. An independent agent, for instance, may opt for multiple license types to broaden their service offerings. They are able to properly meet the demands of various clientele thanks to this. 

Most of the time, you can take the state insurance license exam in person or online, based on the rules in your state. Licenses for life and health, property and casualty license, and more are examples of common licenses. Even though these licenses allow agents to sell different kinds of insurance, some may choose to focus on a single license type that matches their experience and career.

In the insurance market, which is always evolving and provides multiple insurance products to fulfill various demands, having the appropriate license is crucial. Whether clients are looking for personal coverage or complete business solutions, agents with the appropriate licenses can easily walk them through the complicated world of insurance. 

A woman sitting at a desk and working in front of a computer

How to become a licensed insurance agent

In the United States, becoming an insurance sales agent requires a license. Obtaining an insurance sales license requires an individual to pass a licensing exam in the state where they intend to work. 

The cost of the exam varies from state to state, and the exam covers topics such as laws and regulations, types of insurance, and insurance contracts. After passing the exam, you must pay a fee to the state to receive their license. To become a licensed agent, future licensed insurance agents must also meet certain qualifications that states require. 

These qualifications may include completing a pre-licensing course, having a minimum amount of experience in the insurance industry, and passing a background check and social security number. After meeting all of the requirements, the individual can apply for their license. 

By becoming a licensed agent, you will be able to provide expert advice and guidance to customers. Insurance agents must stay up-to-date on the latest industry regulations and trends to provide the best advice to their clients.

What kind of licensed agent do you want to become?

So, you want to be an insurance agent, that’s great! But first, you need to decide what type of insurance agent you want to be. 

There are two main types of agents: independent and captive.

Independent agents work for themselves and sell policies from many different companies. 

On the other hand, captive agents work for one specific company and only sell its policies. Both have their perks, it just depends on what suits you best! 

An Independent Insurance Agent

If you love the idea of being your own boss and having the freedom to offer your clients a variety of products, you might want to consider becoming an independent insurance agent. You will have the flexibility to represent multiple insurance companies, which means more choices for your clients and you can tailor their coverage to specific needs, making your service highly personalized. Plus, you will be your own boss of the insurance company and run your business your way. 

This can make you a one-stop-shop for all insurance needs!

Captive Insurance Agent 

If you prefer a more structured environment and enjoy focusing on one line of products, then becoming a captive insurance agent could be the right fit for you. You’ll work for a specific insurance company and sell their products exclusively. This allows you to become an expert on many offerings and provide top-notch service to your clients. 

You will have deep knowledge about the specific products your company offers. This can be beneficial as your customers will appreciate expert advice. Furthermore, working for a company can provide a structured work environment and potentially more stable income.

Which Types of Insurance Licenses Do You Need?

The type of insurance license you need depends on what kind of insurance you want to sell. For example, if you want to sell life insurance, you will need a life insurance license. If you’re interested in selling property and casualty insurance, you will need a separate license for that. Your state’s department of insurance can provide more specifics on the different types of licenses available.. 

The National Insurance Producer Registry NIPR provides a comprehensive guide on the types of licenses you might need. Check out their website for more information. 

Insurance Pre-License Education

Before you can get your license, you’ll likely need to complete some pre-license education. This is basically a course that teaches you all about insurance, the laws that govern it, and the ethical considerations involved. It’s a crucial step in preparing for your licensing exam. 

It’s your foundation before diving into the world of insurance. Various online platforms offer these courses, such as ExamFX. If you are looking to get your license Experior Financial Group offers a discount code to those who sign up with us. 

Insurance License Exam Cost

In order to become an insurance agent in the US, you must complete the necessary exams and certifications. In most states, you must pass a state-specific license exam to be eligible to sell insurance. The cost of the exam varies, but typically ranges from $50 to $100. After passing the exam, you must also obtain a certification from the Department of Insurance in your state to become a licensed agent. This certification is usually free and can be obtained online or through a local insurance office. With the proper licensing, you can then apply for a job as an insurance agent and start selling insurance.

Once you’ve completed your pre-license education, you are ready to take the licensing exam. The test usually consists of multiple-choice questions about insurance basics and the specific types of insurance. Don’t worry, with proper preparation, you will do great!

Select your state to review the requirements and additional information about testing providers.

Understanding State-Specific Requirements for Insurance Licensing

Understanding the specific requirements for insurance licensing in the US can be a complex process. To become an insurance agent, you must first understand the cost and the requirements for the license in the state you are interested in. Each state has its own set of laws and regulations regarding insurance licensing, so you must first research the specific requirements in the state. 

The difficulty of the licensing exam also varies. However, the Life and Health Insurance exam is considered challenging due to the breadth and complexity of the topics covered. Thorough preparation and understanding of the concepts are key to passing this exam. 

For example, in Massachusetts, you need to complete a pre-licensing education course, pass the state insurance exam, and submit a licensing application with the appropriate fees. Similarly, in Alabama, it is necessary to complete a pre-licensing course, pass the examination, get fingerprinted for a background check and then apply for your license.

Once you have gathered the necessary information, you can then begin to prepare for the  license exam. The cost of the exam varies from state to state. Once you have passed the license exam, you will be able to officially become a licensed agent and begin selling insurance.

View Insurance Prelicensing Requirements by State

License Application and Background Check

After passing the exam, the next step is to apply for your license. As part of this process, you will likely undergo a background check. This is a standard procedure to ensure that you’re reliable and can handle sensitive client information responsibly. 

Start the application process

FINRA Securities Licenses

Lastly, if you’re interested in selling variable life insurance or variable annuities, you’ll need to get securities licenses through FINRA (Financial Industry Regulatory Authority). This involves additional exams and ongoing education.

Remember, becoming an insurance agent is a journey. Take each step at your own pace, keep learning, and before you know it, you will be helping clients navigate their insurance needs with confidence!

Complete Your Insurance License Application

This application must be completed and submitted. This application is state-specific and is generally accessible from the Department of Finance, Department of Insurance, or the State Corporation Commission of your state. NIPR provides a database of insurance carriers companies and their licensed applicants. You must provide your own basic data for your application. Each question should be answered with care. 

Navigating the Insurance Industry: Which Path Will You Choose?

Tips for Passing the Insurance Licensing Exam

The process of becoming a licensed agent in the US requires passing a license exam. It is important to be well-prepared for the exam, so that you can pass it and become a licensed agent.  

Here are some tips to help you pass the insurance exam:  

  • First, make sure you are familiar with the material covered on the exam. You can find a list of topics and resources for studying for the insurance license exam on the website of the state insurance department where you plan to take the exam. Additionally, you may want to consider taking a prep course or using a study guide to help you prepare to become an insurance agent. 
  • Second, be sure to understand the cost associated with taking the exam. The cost of taking the insurance exam varies by state, so it’s important to check with the state insurance department to find out the cost. It’s also important to know whether there are any additional fees associated with the exam, such as registration or proctoring fees.  

By implementing these valuable tips, you can greatly enhance your likelihood of successfully passing the licensing exam and attaining your goal of becoming a licensed agent.

Additionally, there are many online resources that exist which can also help potential agents with their studies. Many of the larger insurance carriers companies provide online courses, study guides, and practice exams – all designed to help you achieve success on your licensing exam. By taking advantage of such resources, you increase your chances of passing the exam on the first try!

Remember, once you’ve obtained your license, it doesn’t necessarily mean the work stops there. Dedication to your career and your customers is key in the insurance sector. In your everyday work, you will be helping individuals and businesses understand and navigate the complex world of insurance policies. 

You will be solving problems, answering questions, and providing peace of mind in times of uncertainty. This can be a challenging role, but it can also be incredibly fulfilling. 

An insurance agent needs to be committed to continuing their education and keeping up with changes in the insurance field. This commitment not only benefits your clients but also helps you grow your business and improve as a professional. 

So, if you are serious about becoming an insurance agent, make sure to take the necessary steps to get your license and be prepared for the journey ahead. With hard work and dedication, you can become a successful insurance agent with a bright and rewarding career!  

Education for Insurance Agents

Continuing education is crucial in this industry to maintain an active insurance license. It ensures that agents stay updated with the latest industry trends, policies, and regulations. The continuing education requirements may vary depending on the state and the type of insurance license. 

Best Insurance Sales Books

Tips how to promote your insurance business

Don’t forget to use SEO tactics when building out webpages for your agency, such as using keywords that are relevant to the insurance business field. This will help potential customers find your site more easily on Google. Additionally, consider creating content related to insurance – how it works, why people need it, and more. This type of content will be a great resource for potential customers and can help you stand out among your competition. 

Consider posting on social media to promote your business. You can join insurance-related forums, post on LinkedIn, or start an online blog dedicated to insurance topics. Social media is a great way to reach new customers, keep existing clients updated, build your brand, and become known as an expert in the insurance business. Take the time to craft a unique voice for your business and ensure that you are providing valuable content to your followers. With the right approach, social media can be a powerful tool for growing your agency’s presence in the insurance area. 

Effective Insurance Marketing Ideas to Stand Out in the Crowd 

A pair of hands typing on a laptop

FAQ Frequently Asked Questions & Answers About Insurance Licensing

What is required to obtain an insurance license in Delaware?

To become a licensed insurance distribution agent, you will need to meet the requirements set by your state, which may include a certain number of hours of pre-licensing education, passing a state-administered exam, and submitting a license application with the required fees.  

What is the cost of obtaining an insurance license in Massachusetts? 

The cost of obtaining a life and health insurance license will vary by state. Generally, you will need to pay pre-licensing course fees, exam fees, and license application fees.  

What is the license exam in MS like? 

The license exam will vary by state, but generally it will cover topics related to the principles and practices of insurance. It will usually be a multiple-choice exam with a time limit.  

How do I renew my insurance sales license in SC? 

Your insurance license must be renewed every year or two, depending on your state. You will need to meet certain continuing education requirements and pay the required fees to renew your license.  

Are there any tips for passing the license exam? 

Yes, there are several tips that can help you pass the insurance license exam.

1. Make sure to study thoroughly and use practice tests to familiarize yourself with the format of the exam.

2. Additionally, make sure to arrive early on the day of the exam and take breaks between sections if needed. 

What are the state-specific requirements for insurance licensing in Florida? 

Each state has its own requirements for obtaining and renewing a life and health insurance license. It is important to research your state’s specific requirements before beginning the licensing process.  

What certifications are available for life and health insurance agents?  

Certified Financial Planner (CFP):
This designation is suitable for professionals who want to specialize in comprehensive financial planning.

Chartered Financial Analyst (CFA):
This designation is well-suited for individuals interested in investment management, financial analysis, and related fields.

Experior Financial Group Logo

Build Your Independent Insurance Agency with Experior Financial Group, Inc.

Experior Financial Group, Inc. can be the perfect place for independent minded individuals to start their career. We offer a tri-brid model, unique in the industry, and agents have access to a plethora of insurance partners. We offer low monthly fees for agents to have administrative support and our CRM is included for no additional cost. To find out more about our advancement opportunities, how you can be awarded shares in the company and how our Legacy certificate could work for you and your family. Reach out to us today!

Shelden Smollan
Shelden Smollan, Experior Financial Group's Chief Experience Officer, has spent more than 45 years working in the fields of Life Insurance and finance. He is an excellent insurance sales and management executive with exceptional strategic thinking, marketing, and leadership abilities. He has been Experior Financial Group Inc.'s Chief Experience Officer for the past six years, and his vision and expertise have been instrumental in the company's growth and development. By arranging meetings between agents and carriers so that our team of associates can learn from them and draw inspiration from them, he has assisted our IMO in expanding.