When you apply for an insurance license, you must meet your state's regulations on getting licensed. This might prevent you from getting an insurance license in your state if you've got a personal tax lien outstanding. It could be especially troublesome if you haven't paid your tax debt off or have not made arrangements to pay.
A tax lien is a government claim on your property for the payment of back taxes. If you've failed to repay your tax debt, you'll have one of these issued against you. The Internal Revenue Service or your state revenue department may allow you to pay off your debt at any time, but until you do, a lien means the government has a first claim against your property.
When you go into the business of insurance, you're handling people's money. This may present a problem for you if you can't pay your own debts. Your state may restrict the type of license you can obtain or it may prevent you from obtaining an insurance license altogether until you satisfy your tax debts. The tax lien is one step away from a levy. If forced collection is necessary, this may also mar your credit report. This, in turn, could make it difficult to be licensed with your state.
In some instances, you may still have a tax lien and obtain a license. Your state may allow you to obtain the license if you agree to a payment arrangement before obtaining your license. A payment arrangement signifies that you do pay your debts and may be just enough for the state to allow you to get licensed.
Once you become licensed, you'll need to be appointed with an insurance carrier. This can be difficult with bad credit and might even prove to be a problem when you have unpaid tax debts. Insurance companies sometimes pay annualized commissions. This means that they pay commissions before the client has fully paid for her insurance policy. If you have outstanding debts, bad credit or otherwise show the insurer you don't pay your financial obligations, the insurer may refuse to appoint you, even if the state did grant you a license. The decision to appoint you is up to the insurer. Without an appointment, however, you can't sell insurance.
- "Life & Health Insurance, License Exam Manual, 6th Edition"; Dearborn Financial; 2004
- "New York Guide to Life and Health Insurance Law"; Dearborn Career Development; 2004