Life Insurance Agents

Life insurance agents sell life insurance policies that protect the financial well-being of their clients. Their primary responsibility is to match the right type of life insurance product with their clients’ needs. For example, a young couple just starting out might be better suited to an inexpensive term life insurance policy. The death benefit of such a policy would be enough to cover a mortgage and any other debt incurred during the marriage. The premiums, however, would be low enough that the couple would be able to make them comfortably.

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How They Work

For a person or couple who has built substantial assets or who wants to make sure that his or her estate is passed to an heir with minimal tax liability, a permanent policy, such as whole life or universal life, may be the best choice. Life insurance agents must be able to recognize the specific needs of each of their clients and be able to provide advice not only about a current situation, but also be able to envision how the future death benefit will provide for a family. They should also understand how the policy fits into the overall financial situation of each family.

Life insurance agents can work directly for a life insurance company or they can be independent brokers and represent several companies. Either way, life insurance agents are likely to be paid a commission for each policy they sell. The amount of the commission varies by company and by product.

What Degrees or Licenses Must Life Insurance Agents Have

While a college degree is not mandatory to become a life insurance agent, it probably comes as no surprise that insurance companies and independent agents prefer to hire college graduates with degrees or emphasis in finance, economics, business law or marketing. Coursework in statistics and mathematics can also be highly beneficial.

Each state regulates life insurance agents and life insurance companies. Agents who are licensed in more than one state may be able to sell a product in one state but not in another, depending on state regulations. While state requirements and licensing vary, most require that life insurance agents complete insurance-related coursework and pass exams. Continuing education is also mandatory in most states.

As laws, products and ethical concerns change over time, life insurance agents must always make sure they have the most up-to-date information. Further, a focus on consumer protection and conduct is often at the forefront of continuing education.

Over the past several years, as the line that separated insurance companies and banks have blurred, life insurance agents are increasingly becoming involved in the sale of financial products such as universal life insurance policies and annuities. Selling these types of products, or any product that involves stocks, bonds and mutual funds, requires life insurance agents to pass the Series 6 or Series 7 exam, which are both administered by the National Association of Securities Dealers (NASD).

The Series 6 exam is for those life insurance agents who sell mutual funds and variable annuities. The Series 7 exam is for those who sell securities. Consumers are always advised to ensure their agent has not only passed the proper exams but also that he or she has not been disciplined by any professional organization.

Many life insurance agents also find that their clients ask them for advice regarding financial and estate planning. As life insurance, especially permanent life policies that have an investment component, can be used as estate planning tools, some clients prefer to get their investment and insurance advice from one source. Life insurance agents who are also certified financial planners can provide this service.

Several organizations exist to help life insurance agents with continuing education and certification. The National Alliance for Insurance Education and Research offers voluntary courses that may be appropriate. The Certified Financial Planner Board of Standards also requires its members to pass comprehensive exams.

It’s important to note that products sold by certified financial planners must meet different criteria than products sold by life insurance agents. Certified financial planners have a fiduciary responsibility to their clients while life insurance agents do not. That means that a certified financial planner has both a legal and ethical responsibility to his or her clients. Life insurance agents, however, must make sure that the products they are selling are suitable for their clients.

How Do Life Insurance Agents Quote Policies

Life insurance agents most often rely on the Internet or their company’s Intranet to provide quotes to new customers. In order to prepare a quote, an agent will most likely ask several questions about an individual’s current financial situation, such as the amount of mortgage payments, credit card debt, student loans, educational costs for children and all other money matters. Then, he or she will most likely discuss the amount of the death benefit that would be sufficient to cover all of the costs.

The client’s application, which will also include information regarding personal and family medical history, tobacco use and activities such as dirt bike racing or skydiving, is then submitted to the insurance company’s underwriting department. If the life insurance agent is an independent broker representing several companies, he or she will submit the application to all of the companies in order to find the lowest premium for the client.

What is the Best Way to Find a Life Insurance Agent

The Internet is a great starting point when it comes to finding life insurance agents. Customers can search by company, by product or by location. Those in the market for life insurance agents who sell securities or who offer financial planning services can also search the NASD database or local organizations that list certified financial planners.

It’s always best to speak to several life insurance agents in order to get quotes. One agent may have access to a product or service that another does not. He or she may also have more experience dealing with certain situations or may better understand a potential client’s financial requirements.

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