Insurance agents manage insurance policies for customers, and help them choose the right type of coverage for their needs. The purpose of an insurance agent license is to ensure that these individuals are qualified to practice in their respective states.
Most states require insurance agents to register with a state regulatory agency and meet certain requirements before they can begin working. States usually require agents to take an exam, pay a registration fee, and maintain certain levels of education throughout their career.
The process differs from state to state, but usually candidates must follow these steps:
- Complete pre-licensing education
- Apply for the exam
- Pass the exam
- Apply for licensing
- Submit fingerprints for background check
Who is an Insurance Broker?
An insurance broker is a licensed professional who represents the interests of their clients. Brokers offer advice on insurance buying decisions and help clients find the best coverage for their needs. They are, in essence, advocates for their customers.
An insurance broker is not an employee of an insurance company, but works independently and is often paid by commission.
What is an insurance agent?
In short, an insurance agent is someone who is licensed to sell insurance. The person must license by the state and must have passed the state’s licensing requirements.
What does an insurance broker do?
Insurance brokers act as advocates for their clients when negotiating with insurance companies. They compare quotes from a variety of insurers to find the best deal for their client’s situation and needs. If requested, they will also help file claims with the insurer on behalf of the policyholder.
Types of products Insurance agent
There are many types of insurance products.
- Life insurance
- Health insurance
- Auto insurance
- Homeowners insurance
- Disability Insurance
Procedure to Apply for Insurance Broker Registration
- For the purpose of carrying out the Insurance agent license registration procedure, it is mandatory to submit documents related to office address and fixed telephone connection, PAN card and its photocopy, which are the basic requirements for any company.
- The person who wants to start an insurance broking business must be a graduate in any discipline from any recognized university or should possess an equivalent degree from any institution approved by the University Grants Commission (UGC) of India. He must also have registered with the Insurance Regulatory and Development Authority (IRDA) as an insurance broker.
- At least three partners or directors of the proposed company should associate with the insurance industry for at least five years.
- Applicant must have a minimum of three years experience in ‘insurance sector’ out of which at least two years must be in ‘insurance broking’ i.e He should have worked as an insurance broker or as an employee of a registered broker or of a general or life insurer during the preceding five years prior to his application for registration.
- In case if applicant employed with any other organization or company and he/she wants to start their own brokerage business then permission letter from respective employer is required along with No Objection Certificate (NOC) and undertaking letter.
To become a licenced insurance agent, what exam do you have to pass?
Every state has its own licensing requirements for insurance agents, brokers, and other professionals. Some states may require you to complete background checks and fingerprinting. Most states will require you to complete a pre-licensing course, followed by an exam that tests your understanding of the basics of insurance.
The exams are multiple choice and are based on information from the pre-licensing books. You can’t bring any reference materials into the testing center, but often there will be some onsite such as a glossary of terms or atlas. The tests are typically between 70-100 questions long and last one to two hours. The pass/fail rate is usually around 70-80%.