What Does an Insurance Agent Get Paid?

Insurance agents are licensed professionals who perform a needs analysis and help their customers find the right insurance products to fit their needs. They play a vital role in ensuring their customer’s family is protected from unpredictable financial loss in the future.

If you are considering a career as an insurance agent, having detailed salary information can help you decide if it’s the right career path for you. In this article, we discuss the states with the highest average salaries for insurance agents and discuss how to become insurance agents.

What is an insurance agent?

An insurance agent is a professional who is licensed by their state and appointed by at least one insurance agency to sell insurance products to consumers.

The role of an insurance agent typically involves making contact with leads either by phone or in-person, completing a customer needs analysis, discussing insurance products that meet the customer’s needs, and completing insurance applications and screenings.

Insurance agents may sell health insurance, life insurance, property and casualty insurance, variable annuities, and ancillary products such as dental, vision, accident, disability, and critical illness insurance.

There are two types of insurance agents: independent and captive. Independent insurance agents are often appointed with several insurance agencies and can usually offer a wider variety of insurance products than captive agents.

Captive insurance agents are appointed exclusively with one insurance agency and can sell only the products offered by that agency.

Overview of the Insurance Field

While there are many kinds of insurance (ranging from auto insurance to health insurance), the most lucrative career in the insurance field is for those selling life insurance.

Agents focusing on this end of the insurance market help families, businesses, employers, and other parties protect against a financial loss when someone dies.

Insurance agents selling this type of coverage are either “captive” agents, which means they only sell insurance from one company, or “non-captive” agents, meaning they represent multiple insurance carriers. 

Either way, the typical insurance agent is going to spend the majority of their time engaging in some type of marketing activity to identify people who might be in need of new or additional insurance coverage, providing them with quotes from the companies they represent, and persuading them to sign the new insurance contract.

Typically, a life insurance agent receives anywhere from 30% to 90% of the amount paid for a policy (also known as the premium) by the client in the first year. In later years, the agent may receive anywhere from 3% to 10% of each year’s premium, also known as “renewals” or “trailing commissions.”

Insurance Sales Commission Example

The insurance agent sells Ryan a whole life insurance policy that covers him for the rest of his life (assuming they continue to make their premium payments).

Uni’s insurance company pays a 90%/5% commission on whole life policies, which means the selling agent receives 90% of the first year’s premium and 5% of future renewals.

The policy costs Ryan $100 per month or $1,200 per year. Thus, in the first year, Uni will make a $1,080 commission on selling this life insurance policy ($1,200 x 90%). In all subsequent years, Uni will make $60 in renewals as long as Ryan continues to pay the premiums ($1,200 x 5%).

An agent selling one or two policies per week at this commission level could make $50,000 to $100,000 in their first year as an agent.

Life Insurance Agent Qualifications

As mentioned before, being a life insurance agent is not a profession for the thin-skinned or faint of heart. In fact, more than any other factor, including education and experience, life insurance agents must possess a fighting spirit.

They must be people who love the thrill of the hunt, the rush of a sale, and see rejection as a stepping stone to eventual success. A career in life insurance sales is not ideal for those who view themselves as introverted, soft-spoken, or afraid of conflict.

The vast majority of life insurance companies have no formal education requirements for becoming an agent. While many prefer college graduates, this general rule is constantly overlooked in favor of the “right” candidates.

Previous experience in the insurance industry is not required because most medium and large insurance carriers have internal programs to train their salespeople about the products they’re going to sell.

While it may prove easy for a tenacious go-getter to get hired at a reputable insurance company, there is one non-negotiable hurdle that stands between a potential insurance agent and their commissions: state licensing.

Insurance agents are currently licensed by the individual state or states in which they’ll be selling insurance. This generally requires passing a state-administered licensing exam as well as taking a licensing class that typically runs 25-50 hours.

100%

The sales commission life insurance agents might earn in the first year if they are on a commission-only salary is the highest commission for any type of insurance.

Getting Hired to Sell Insurance

If you feel like a career in life insurance sales is for you, there are a couple of steps you need to take in order to find your first job. First and foremost, you’ll need to put together a resume that highlights your entrepreneurial spirit.

You’ll want to include anything that shows you taking initiative to make things happen, whether it was starting your own business or taking someone else’s business to the next level.

Life insurance agents have to be driven and have the ability to be self-starters. Resumes that show a track record of that kind of behavior will help you get your foot in the door.

Once you’ve got your resume polished, you’ll want to begin finding positions and applying. It’s imperative that you don’t feel pressured to take the first position that comes along because working for the wrong company can both burn you out and haunt you for the rest of your insurance career.

Ideally, you want to work for a well-known company with a good reputation among consumers, other agents, and insurance rating agencies.

Perhaps the best place to start in deciding where to apply is to visit the insurance company rating websites for A.M. Best, Moody’s, or Standard & Poor’s. From there, you’ll be able to build a list of companies that have ratings of “A” or higher in your state.

These companies will typically offer the most-secure products at reasonable prices, with an emphasis on compensating and keeping quality agents.

The work of a life insurance agent is grueling; most agents don’t last more than a year. On the upside, this means that there are constant vacancies and it can be relatively easy to get started as a new hire.

Be Sure to Follow Up

Once you’ve created this list, begin by looking at each company. Due to the high turnover rate of insurance agents, most companies prominently post their job listings by geographical area, which makes them easily searchable for you.

When you find a company in your area that seems to fit your personality, apply for the position and make sure you follow the company’s instructions on its site. 

Follow up with phone calls on a weekly basis until you hear an answer either way. Many insurance company recruiters will decline to interview a potential agent who doesn’t first make a follow-up call; this is considered to be a strong indicator of a potential agent’s tenacity.

During your interview, continue to communicate your entrepreneurial and “never-say-quit” personality; most managers will hire someone based on these factors over all the others combined.

If you’re lucky enough to land the job, you can expect your first 12 months to be spent handing out a lot of business cards and making a lot of phone calls. Your sales manager will be the first to remind you that your only “purpose” in life is to find potential clients.

In fact, they’ll be far more interested in how many contacts you’re making each week than how well you know their product line. 

You can expect to struggle financially for the first few months until your first sales commissions start rolling in. While some companies offer a salary to keep new hires from starving, this is becoming rare. Many agents are now lucky to be compensated for one to two months of training before being put on a “commission-only” basis.

Insurance agent average salary

When considering the national average salary for a position, it is important to consider the average salary and salary range. There are also other compensation factors to think about when considering a job offer, such as overtime pay, bonuses, and benefits packages.

The national average salary for an insurance agent in the United States is $79,965 per year with a salary range between $17,000 per year and $188,000 per year, although salary rates by profession and region throughout this article will always be fluctuating. For updated salary information, refer to Indeed.

The salaries of insurance agents are often made up of a base salary plus commissions and/or bonuses. Independent insurance agents are usually paid commission only, while captive insurance agents are usually offered a base salary and smaller commissions or bonuses.

Insurance agent salary by state

When comparing the average salary of each state, it is important to consider the average salary, the salary range, and the cost of living comparison for each state to make sure you are getting an accurate picture that will help you choose which location is right for you.

Since insurance agents are licensed professionals, it is also important to compare the educational and licensing requirements of each state. Here is a list of the top ten states with the highest average salaries for insurance agents:

  1. Minnesota
  2. Maine
  3. Alaska
  4. Kansas
  5. Vermont
  6. North Dakota
  7. Nebraska
  8. Utah
  9. Iowa
  10. South Dakota

1. Minnesota

Average salary: $91,199 per year

Percent above the national average: 30%

Salary range: $27,000 per year – $192,000 per year

2. Maine

The average salary is $92,024 per year.

Percent above the national average: 31%

Salary range: $22,000 per year – $210,000 per year

3. Alaska

Average salary: $92,514 per year

Percent above the national average: 32%

Salary range: $22,000 per year – $210,000 per year

4. Kansas

Average salary: $93,235 per year

Percent above the national average: 33%

Salary range: $28,000 per year – $194,000 per year

5. Vermont

Average salary: $93,371 per year

Percent above the national average: 33%

Salary range: $22,000 per year – $212,000 per year

6. North Dakota

Average salary: $93,719 per year

Percent above the national average: 34%

Salary range: $47,000 per year – $154,000 per year

7. Nebraska

Average salary: $94,002 per year

Percent above the national average: 34%

Salary range: $43,000 per year-$163,000 per year

8. Utah

Average salary: $94,369 per year

Percent above the national average: 34%

Salary range: $47,000 per year – $157,000 per year

9. Iowa

Average salary: $95,010 per year

percent above the national average: 35%

Salary range: $36,000 per year – $181,000 per year

10. South Dakota

Average salary: $97,188 per year

percent above the national average: 39%

Salary range: $49,000 per year – $160,000 per year

How to become an insurance agent

If you believe being an insurance agent is the right career for you, follow these steps to become an insurance agent:

  1. Research your state’s licensing requirements. The licensing requirements for insurance agents vary by state. So it is important to research your state’s requirements to ensure you know what you will need to do to become eligible for licensing.
  2. Take an insurance licensing preparation course. Most states require candidates to complete a pre-licensing education course prior to taking the state’s licensing exam. This course should cover the state’s laws and regulations for the sale of insurance and general information about the different types of insurance products. This pre-licensing course typically takes about a week to complete.
  3. Study for your licensing exam. You will need to use the information you learn in your pre-licensing course to study for your state’s licensing exam. You may also want to consider additional study materials. Most candidates spend at least one week after completing their pre-licensing course studying and taking practice exams before sitting for their licensing exam.
  4. Pass your licensing exam. The most important step toward becoming an insurance agent is passing your state’s licensing exam. Once you pass your exam, you will receive a copy of your state insurance license and can begin applying to jobs.for
  5. Get appointed with an agency. Next, you will need to decide whether you want to work for a company as a captive insurance agent or as an independent broker. Once you have decided which type of insurance agent you want to be, you can begin looking for open positions with an agency. The agency you are hired with will help you through the application process to become appointed with the insurance carriers you will sell products for.
  6. Maintain your license. You will also need to take continuing education (CE) courses and pass a renewal exam every couple of years to maintain your insurance license. The number of continuing education credits you are required to take and when you need to renew your license varies by state and may also vary by the number of years you have been licensed as an agent.

A Few Warnings

While the life insurance industry promises great rewards for those who are willing to work hard and put up with a good amount of rejection, there are two pitfalls you need to be aware of. First, you will most likely be expected to market to your friends and family.

While that might be tempting and seem like a great idea to get you started, it can also burn a lot of bridges with people you care about.

Second, you should visit your state insurance commissioner’s website and check out the complaint history against companies that you’re considering working for.

What you’ll typically find is insurance companies that maintain less than an “A” rating, as well as those that sell insurance using a multilevel marketing scheme, have a much higher incidence of complaints than the larger, more established companies.

Accepting a job with the wrong insurance company can potentially burn you out and ruin your dreams of a promising career.

If a career in life insurance sales is something you truly desire, take your time and wait for the right opportunity at the right company. Doing so will maximize your chances of long-term success.

Also Read:

Leave a Reply

Your email address will not be published.