Starting a life insurance business can be a difficult endeavor, but if you have the resources and dedication to build a successful agency, you can enjoy an income level that is well-above the national average, combined with freedom and flexibility that most other people do not have in their careers. Life insurance can be one of the most important types of coverage you can buy, and the need for policies is substantial enough to ensure that you will never be without new prospects. To start a successful life insurance business, you must dedicate your time to acquiring the proper credentials, and your money to establishing an advertising plan that exposes the community to your availability.
Create a business plan. Before you try to start your own life insurance business, you must establish a formal and comprehensive business plan. This document should detail every possible aspect of your intentions, including why you believe you are capable of running a successful life insurance agency, how you will attract and retain clients, how you will generate income and revenue for the business, and how much money you believe you’ll need for this venture. Without a formal and well-written business plan, your chances of succeeding are reduced dramatically. The business plan should act as your guide throughout the entire process and may also help you to identify potential problems or setbacks that may occur during your initial establishment phase.
Get your state’s insurance producers license. Every state requires that insurance brokers obtain a producers license before soliciting the sale of insurance products. You must successfully pass your state’s insurance licensing examination, which is designed to test your comprehension and knowledge of the laws and industry guidelines. Many states require you to attend classroom educational courses before sitting for the exam, while others allow you to study the material at your leisure and take the exam when you feel ready. Contact your state’s insurance licensing department for instructions on obtaining the self-study material, or arranging for enrollment in an educational course. When you’ve completed the course, or memorized the information, contact a Prometric testing center in your area and take the state licensing exam. Upon your successful completion of the exam, you will be issued a life insurance producers license, which permits you to actively sell and service life insurance policies in your state.
Buy professional liability insurance. All life insurance agents and brokers are required to obtain professional liability coverage, called errors & omissions insurance. This coverage will protect you if mistakes are made during the sale or solicitation of a life insurance policy, and those mistakes cause or exacerbate a financially detrimental situation for your client. You can find a list of approved errors & omissions providers from your state’s insurance department.
Register with life insurance carriers. You cannot sell life insurance until you are appointed as a representative with a life insurance company. Contact the carriers whose products you wish to sell and request an agent appointment kit. When the kit arrives, examine the material to ensure you are comfortable with that insurance company’s products and commission schedule. Complete the enclosed appointment paperwork and return it to the insurance company’s new agent licensing department along with a photocopy of your state insurance producers license and errors & omissions policy. You will receive confirmation from the insurance carrier when your application has been processed, and you will be assigned an agent number. Make a note of your agent number, as this must be added to every life insurance policy you sell to ensure you receive the proper commission credits.
Acquire office space. Your life insurance business will require meetings with prospective life insurance buyers, which necessitates proper commercial office space. Contact Realtors in your area and schedule visits to available locations. Choose an office space that will be large enough for you and your staff to work comfortably, visually pleasing for prospective clients, and in a location that is central to the area in which you want to establish your presence.
Hire support staff. A life insurance agency cannot be efficiently run alone. Place advertisements in the “Help Wanted” section of your local newspaper and in online job recruiting websites. Interview potential support staff personnel and choose at least one or two competent individuals who will compliment your business methods and goals. Ideally, try to hire staff members with prior insurance industry experience so you can spend more time focusing on expanding your business rather than teaching your workers about life insurance practices.
Develop marketing material. Once your office is set up properly and your staff is prepared to begin working, you must inform the local community of your presence and your ability to assist them with life insurance. Consider your available advertising budget and choose marketing methods that will yield the highest positive results with the money you are able to spend. Evaluate the potential pros and cons of direct mail, telemarketing, radio and television commercials, newspaper advertisements, and online marketing. Be sure to accurately track the progress and results of your advertising efforts so you can weed out those methods that produce little or no new business.
Most life insurance carriers have pre-approved marketing material that you can use immediately. Contact your insurance carrier’s agent support team and request samples of the pre-approved advertisements for your consideration.
Life insurance advertisements and marketing material must be approved by your insurance carriers before you are permitted to use it with the public. After you create an advertisement, send it to your insurance carrier’s compliance department for approval. If you are caught using unapproved marketing material, you risk severe penalties and fines from the insurance carriers and your state’s insurance department.
- InsureMe.com: Starting Your Own Insurance Agency
- The Guardian Life Insurance Company of America. "Why You're Not Too Young for Life Insurance." Accessed May 14, 2020.
- Nationwide. "Mortgage Protection Insurance: Use Term Life Insurance to Pay Off a Mortgage." Accessed Sept. 17, 2020.
- Federal Trade Commission. "Debts and Deceased Relatives." Accessed Sept. 17, 2020.
- Farmers Insurance. "Life Insurance for Small Business." Accessed Sept. 17, 2020.
- Mass Mutual. "Buying Life Insurance for Your Parents." Accessed Sept. 17, 2020.
- Mutual of Omaha. "Our Solutions for Children's Whole Life Insurance." Accessed Sept. 17, 2020.
- Prudential. "How Can Life Insurance Help Manage Taxes in Retirement?" Accessed Sept. 17, 2020.
- Allstate. "Life Insurance and Retirement." Accessed Sept. 17, 2020.
- Most life insurance carriers have pre-approved marketing material that you can use immediately. Contact your insurance carrier's agent support team and request samples of the pre-approved advertisements for your consideration.
- Life insurance advertisements and marketing material must be approved by your insurance carriers before you are permitted to use it with the public. After you create an advertisement, send it to your insurance carrier's compliance department for approval. If you are caught using unapproved marketing material, you risk severe penalties and fines from the insurance carriers and your state's insurance department.
Gregory Gambone is senior vice president of a small New Jersey insurance brokerage. His expertise is insurance and employee benefits. He has been writing since 1997. Gambone released his first book, "Financial Planning Basics," in 2007 and continues to work on his next industry publication. He earned a Bachelor of Science in psychology from Fairleigh Dickinson University.