Pros and Cons of Becoming an Insurance Agent
Insurance agents act as go-betweens for individuals in need of insurance and insurance companies. Read on to learn the pros and cons of the career to decide if you want to become an insurance agent.
|Pros of Becoming an Insurance Agent|
|High salary potential (average salary was about $64,000 in May 2014)*|
|A high school diploma may be sufficient*|
|Job growth is expected to be average (10% between 2012 and 2022)*|
|Opportunities for self-employment**|
|Opportunities to specialize in different types of insurance (property and casualty, life, etc.)*|
|Cons of Becoming an Insurance Agent|
|Earnings are often commission-based and may be irregular*|
|State license is mandatory and may require continuing education*|
|Must spend a lot of time finding new clients*|
|In the beginning, it may be challenging to build a sufficient client base*|
|May need to work irregular hours to accommodate clients*|
Sources: *U.S. Bureau of Labor Statistics, **California Employment Development Department.
Essential Career Information
Job Description and Career Options
As an insurance agent, you'll help your clients understand their various insurance policy options and select the appropriate plans. That might include looking at a client's current policy and recommending changes and additions, renewing the insurance plan they already have or selling them a brand new policy. You may also help clients settle insurance claims. You'll need to do some marketing to get these clients in the first place, such as calling potential customers and attending networking events. Building your client base can be extremely challenging, and many new insurance agents get discouraged in their attempts to develop clientele. As such, once you get clients, you'll want to go the extra mile to keep them happy so that they'll stick with you for their insurance needs and refer you to other people.
You'll have some flexibility in terms of what you sell as an insurance agent. First, you can choose to sell one or more of the three main types of insurance: property and casualty, life or health. Some agents, especially those who sell life insurance, expand their offerings to include financial planning services. Second, you can opt to work exclusively for one insurance company, work for a brokerage and represent several insurance companies or set up your own business. Regardless of the type of insurance you sell and who you work for, you'll probably work at least 40 hours a week. Since much of the work involves meeting with clients, many agents work extra hours, including nights and weekends, so that they can accommodate their clients' schedules.
Job Outlook and Salary Information
According to the U.S. Bureau of Labor Statistics (BLS), employment of insurance agents was projected to increase 10% between 2012 and 2022, which is as fast as the average for all occupations. Those selling health and long-term care insurance should experience an even stronger demand due to federal health care regulations and the aging population. Individuals with great customer service skills and strong comprehension of insurance and financial products, as well as those who speak multiple languages, will have the best job prospects.
The BLS reported a mean annual wage for insurance agents of about $64,000 as of May 2014. Insurance agents may earn their pay via a salary, salary plus commissions, salary plus bonus or commissions only. Overall, most insurance agents' annual wages depend on commissions, which are based on the type and amount of the insurance policies and the type of transactions (policy renewal or new sale). Because of this dependence on commissions, an insurance agent's pay can vary from year to year.
At most insurance agencies, a high school diploma is enough to get a job as an agent; however, many agents hold bachelor's degrees in business or another related field. Once hired, you'll work with an experienced agent who will teach you the business and show you how to work with clients. You must also have a license to work as an insurance agent, including separate licenses if you want to sell property and casualty insurance or life and health insurance. Most states require you to take special courses and pass an exam to get licensed. To keep the license over the course of your career, you may need to take continuing education courses in such areas as insurance laws, ethics and insurance policy technicalities. You'll need an additional license if you want to include financial planning in your services, which means additional studying to prepare for another exam.
Since this is a sales career, you'll need to be good at selling and communicating with people from various backgrounds. Taking courses in psychology, public speaking and interpersonal communications may help you strengthen your sales skills. If you intend to be your own boss, you'll probably benefit from studying business administration, business law and economics. In addition, cultivating such characteristics as diligence, self-confidence and initiative may help you succeed as an insurance agent.
Real Job Postings
While job listings for insurance agents typically do not emphasize an education requirement, many call for insurance agents who are licensed to sell a specific type of insurance. Employers also stress the need for applicants who are personable and results-driven. To help you get an idea of the requirements for becoming an insurance agent, following are some actual job advertisements that employers posted in April 2012:
- A large insurance company sought a sales agent for its Chicago office. The ideal candidate would show a positive attitude, take responsibility, demonstrate leadership, develop solid client relationships and display strong communication skills. The employer did not specify any educational requirements.
- A national insurance company advertised for a sales consultant in Tennessee. The ideal candidate would have a license to sell property and casualty insurance and a high energy level as well as demonstrated skills in managing client relationships, negotiating and prospecting.
- An insurance company in Mississippi needed an agent with at least a high school diploma and one year of sales experience. The applicant needs an active license in either property and casualty insurance or life insurance, though a dual license is preferred. The employer also prefers applicants who've completed at least some college and have some insurance industry experience.
How to Maximize Your Skills
According to the BLS, certifications can help you get an edge over the competition as an insurance agent. Certifications are not required for employment but can show employers and clients that you have expertise in insurance specialty areas. You might earn certification through the American Institute For Chartered Property Casualty Underwriters, which offers various credentials including the Associate in Insurance Services, Associate in Personal Insurance and Chartered Property Casualty Underwriter designations. The American College also offers certification programs, such as the Chartered Life Underwriter credential.
In order to build a solid client base, you'll need to hone your networking skills. One strategy for meeting potential new clients and getting the word out about your services is to become an active member of your community. For example, you might get involved with local civic and social groups to get to know people and introduce yourself as an insurance agent. Another way to expand your client base is to join professional insurance organizations. You could, for example, join the National Association of Professional Insurance Agents (NAPIA). The NAPIA offers its members services like marketing tools, branding programs and website development tools, all of which can help you better advertise your services.
Learn a Second Language
Successful insurance agents build strong relationships with their clients, and you'll be able to connect with a wider range of customers if you can speak more than one language. In fact, the BLS predicted that multilingual insurance agents would have an advantage over those who speak only one language.
Other Careers to Consider
If you are interested in the insurance industry, but don't want to work closely with clients or get paid by commission, you might consider becoming an insurance underwriter. In this career, you'll analyze insurance applications to determine whether or not the company should provide insurance. You'll also decide what the coverage amount and premiums should be. You'll probably need a bachelor's degree, but some people become underwriters with just insurance industry experience and strong computer skills. You'll also receive steady and generally higher earnings as an underwriter - the BLS reported an average salary of about $68,000 as of May 2011; however, you may face some competition to get the job, since the anticipated job growth for insurance underwriters is just six percent between 2010 and 2020.
Securities, Commodities or Financial Services Sales Agent
If you want to work in sales, but the earning potential of an insurance agent is too low, consider becoming a sales agent of securities, commodities or financial services. These professionals mediate transactions between buyers and sellers in the financial market. You'll need at least a bachelor's degree in business, finance or a related field to enter the profession, but the earnings are much higher than that of an insurance agent - the BLS reports that securities, commodities and financial services sales agents earned an average salary of about $99,000 as of May 2011. Keep in mind that jobs for this field were projected to grow at an average rate of 15% from 2010-2020.