Insurance sales agents help insurance companies generate new business by contacting potential customers and selling one or more types of insurance. Insurance sales agents explain various insurance policies and help clients choose plans that suit them.
Insurance sales agents typically do the following:
- Call potential clients to expand their customer base
- Interview prospective clients to get data about their financial resources and discuss existing coverage
- Explain the features of various policies
- Analyze clients’ current insurance policies and suggest additions or changes
- Customize insurance programs to suit individual clients
- Handle policy renewals
- Maintain electronic and paper records
- Help policyholders settle claims
Insurance sales agents commonly sell one or more types of insurance, such as property and casualty, life, and health and long-term care insurance.
Property and casualty insurance agents sell policies that protect people and businesses from financial loss resulting from automobile accidents, fire, theft, and other events that can damage property. For businesses, property and casualty insurance also covers injured workers’ compensation, product liability claims, or medical malpractice claims.
Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Life insurance agents also sell annuities that promise a retirement income.
Health and long-term care insurance agents sell policies that cover the costs of medical care and assisted-living services in old age. They also may sell dental insurance and short-term and long-term disability insurance.
Agents may specialize in any one of these products or function as generalists providing multiple products.
An increasing number of insurance sales agents offer their clients comprehensive financial planning services, especially for clients approaching retirement. These services include retirement planning, estate planning, and help in setting up pension plans for businesses. In addition to 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. For more information on agents who sell financial products, see the profile on securities, commodities, and financial services sales agents.
Many agents spend a lot of time marketing their services and creating their own base of clients. They do this in a variety of ways, including making “cold” sales calls to people who are not current clients.
Clients often learn about policies by themselves, by comparison shopping online and getting information from the insurance companies. They then contact the company directly to buy a policy, so the client comes to the agent ready to buy.
Insurance agents also find new clients through referrals by current clients. Keeping clients happy so they recommend the agent to others is a key to success for insurance sales agents.
Insurance agents may work for a single insurance company or an insurance brokerage.
Captive agents are insurance sales agents who work exclusively for one insurance company. They can only sell policies provided by the company that employs them.
Independent insurance agents work for insurance brokerages, selling the policies of several companies. They match insurance policies for their clients with the company that offers the best rate and coverage.
Insurance sales agents held about 443,400 jobs in 2012. In 2012, about 78 percent of insurance sales agents worked in the insurance carriers and related activities industry, and about 19 percent were self-employed. Although most insurance sales agents, 53 percent, worked for insurance agencies and brokerages, which sell the policies of several companies, others worked directly for a single insurance carrier.
Most insurance sales agents work in offices, although some may spend much of their time traveling to meet with clients. Their work environment may vary depending on the type of company that employs them. Because some companies are small, agents may work alone or with only a few others.
Insurance sales 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. Most agents work full time, and about 1 in 5 worked more than 40 hours per week in 2012.
Most employers require agents to have a high school diploma. Agents must be licensed in the states where they work.
A high school diploma is the typical requirement for insurance sales agents, although a bachelor’s degree can improve job prospects. Public speaking classes can be useful in improving sales techniques, and often agents will have taken courses in business, finance, or economics. Business knowledge is also helpful for sales agents hoping to advance to a managerial position.
Insurance sales agents learn many of their job duties on the job from other agents. Many employers have new agents shadow an experienced agent. This allows the new agent to learn how to conduct the company’s business and how the agency interacts with clients.
Employers also are increasingly placing greater emphasis on continuing professional education as the variety of financial products sold by insurance sales agents increases. 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 or by attending conferences and seminars sponsored by insurance organizations.
Licenses, Certifications, and Registrations
Insurance sales agents must have a license in the states where they 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 courses and who pass state exams covering insurance fundamentals and state insurance laws. Most state licensing authorities also require agents to take continuing education courses focusing on insurance laws, consumer protection, ethics, and the technical details of various insurance policies.
As the demand for financial products and financial planning services increases, many agents also choose to get licensed and certified to sell securities and other financial products. Doing so, however, requires substantial study and passing an additional exam—either the Series 6 or Series 7 licensing exam, both of which are administered by the Financial Industry Regulatory Authority (FINRA). The Series 6 exam is for people who want to sell only mutual funds and variable annuities. The Series 7 exam is the main FINRA series license that qualifies agents as general securities sales representatives.
A number of organizations offer certifications that show an agent’s expertise in insurance specialties. These certifications are not required for employment, but they can give job candidates an advantage over other applicants. Certifications can also be a source of continuing education credit. For details on specific designations, contact The Institutes and The American College of Financial Services.
Analytical skills. Insurance sales agents must evaluate the characteristics of each client to determine the appropriate insurance policy.
Communication skills. Insurance sales agents must be able to communicate effectively with customers by listening to their requests and suggesting suitable policies.
Initiative. Insurance sales agents need to actively seek out new customers to maintain a flow of commissions.
Self-confidence. Insurance sales agents should be confident when making “cold” calls (calls to prospective customers who have not been contacted before). They must speak clearly and persuasively and maintain their composure if rejected.
The median annual wage for insurance sales agents was $48,150 in May 2012. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $26,120 and the top 10 percent earned more than $116,940.
Many independent agents are paid by commission only. 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 whether the transaction is a new policy or a renewal. When agents meet their sales goals or when an agency meets its profit goals, agents usually get bonuses. Some agents involved with financial planning receive a fee for their services rather than a commission.
Insurance sales agents usually determine their own hours of work and often schedule evening and weekend appointments for the convenience of their clients. Some sales agents meet with clients during business hours and then spend evenings doing paperwork and preparing presentations to prospective clients. Most agents work full time, and about 1 in 5 worked more than 40 hours per week in 2012.
Employment of insurance sales agents is projected to grow 10 percent from 2012 to 2022, about as fast as the average for all occupations.
The insurance industry generally grows with the economy as a whole. Overall economic growth will continue to create demand for insurance policies. Direct online purchases of insurance are not expected to negatively affect employment of traditional sales agents, because they will continue to have a critical role in the insurance industry. Because the profitability of insurance companies depends on a steady stream of new customers, the demand for insurance sales agents is expected to continue. Employment growth will likely be strongest for independent sales agents, as insurance companies rely more on brokerages and less on captive agents as a way to control costs.
Many clients do their own Internet research and purchase insurance online. This somewhat reduces demand for insurance sales agents, as many purchases can be made without their services. Agents are still needed to interact with clients regarding more complicated policies, however. Also, many people lack the time or expertise to study the different types of insurance to decide what they need. These clients will continue to rely on the advice from insurance sales agents.
Employment growth should be stronger for agents selling health and long-term care insurance. As the population ages over the next decade, demand will likely increase for packages that cover long-term care. The number of individuals who have access to health insurance will increase due to federal health insurance reform legislation. Insurance companies will rely on sales agents to enroll people from this new customer base.
College graduates who have sales ability, excellent customer-service skills, and expertise in a range of insurance and financial services products are likely to have the best prospects. Multilingual agents may have an advantage, because they can serve a wider customer base. In addition, insurance terminology is often technical, so agents who have a firm understanding of the relevant technical and legal terms should 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 who 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 demand increases from clients for more comprehensive financial planning.
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Information about insurance sales agent licensure is available from state insurance department websites.