Earning your life insurance license is your basic step to selling life insurance in your respective state as an insurance agent.
The license is given upon the successful passing of your specific state’s exam and allows the recipient to solicit and build a book of business of life insurance within that state.
It means you can work on behalf of an insurance agency, selling just their brand of products, or as an independent broker with access to several brands of products.
It can be encouraged, like customer service representatives or appraisers, to earn their licenses as well, as they will handle much of the administrative management of these policies.
Life Insurance License
taking your life insurance license distinguishes you as a producer qualified to sell life insurance products within your state. Having your life insurance license gives you the ability to explain, sell and write this line of business.
Do I Have To Get Life Licenses?
You can get your license for health insurance independently of your life insurance license, and vice versa. Many new agents elect to get them at the same time based on their opportunity to write both lines of business for the same client.
States can also group lifelines together into a single pre-license course and exam. It is recommended to check with the particulars of your state to confirm what securing each license permits you to sell.
How Do I Get My Life Insurance License?
Each state has various qualifications to successfully earn insurance licenses, but the most common first stage is preparing for the state’s examination.
Prospective agents will manage in specific education courses, tailored to the content expected on the exam. Every pre-licensing course will be worth a set amount of credit hours. In Michigan, completion of Accident, Life and Health coursework requires forty (40) hours and is awarded a certificate necessary for taking the exam.
From there, prospective life and health insurance agents in Michigan can attempt the exam for a fee of $40 per attempt.
How To Prepare For the Life Insurance Exam
Insurance exam is a proctored, multiple-choice exam that can inform your study habits. The proctored nature of this exam is that an individual is present while you take the assessment, either in person or monitoring via a computer.
Most of the familiar study habits will support you prepare for a multiple-choice exam like the life insurance exam. Allow for the amount of time you know you need to fully understand the material. Recognizing the right answer against other information requires a certain level of familiarity with the content.
Become familiar with your state’s outlines. Update annually, frequently or less, so it is important to know exactly what information your state has provided on your exam.
Is The Life Insurance License Exam Difficult?
The average pass rate for the life insurance exam sits around 50% for first-time test-takers. Developing chances for success will mean budgeting the time you know you need to study and retain the material.
Finding how you best learn and take tests, having the best tools and courses available, and budgeting your study time wisely can increase your chances of passing the exam.
The most successful participants are ones that feel they were reviewing the information, rather than seeing it for the first time and winging it.
What Is On The Life Insurance Exam?
The content of your exam is contingent on the state’s specific regulations and the line of products you are looking to sell. There are test content outlines available per state, and while there will be some variation, there is a shared basic structure.
You can understand the concept of the insurance, how it can vary or become customized with policy riders or tax considerations, and how it is fulfilled to the insured.
First, you will be expected to understand and differentiate the types of life insurance policies, such as:
Traditional Whole Life Insurance
- Ordinary whole life
- Limited-pay and single-premium whole life
Term Life Insurance
- Level premium
- Decreasing premium
- Return of premium
Then, you will also be expected to understand the types of policy riders, provisions, options and exclusions that can modify a policy.
Finally, prospective producers will have to demonstrate an understanding of the application and the underwriting practices needed to deliver the policy. See the entire outline of your state’s exam.
Importance of A Life Insurance License?
Taking a life insurance license permits you to begin selling and retaining life and/or health insurance policies within a specific state. It qualifies you as a life insurance agent legally can explain, sell, and process that line of insurance.
These types of insurance lines serve a claimant from loss relating to medical situation or death. The terms of the life insurance you are selling are heavily dependent on that of the provider of the policy.
Life Insurance License
Life insurance policies confirm their beneficiaries and policyholder will receive a stated benefit upon the event of a death. This insurance policy can vary based on the length of time covered, and with that, the premiums and amount of coverage vary.
What Are The Limitations Of A Life Insurance License?
Your life insurance license confirms you to sell life insurance and health insurance but does not expand to auto, home, title or property & casualty lines. These other types of insurance will have their own licensing exams and requirements as made necessary by the state. See Property and Casualty Insurance License.
Life insurance policies can be tied to securities backed investment vehicles that require a FINRA license to market and sell. See FINRA Series 6 & 63 Licenses.
How Do I Renew My Life Insurance License?
Every state has lots of steps and requirements necessary to complete the renewal of a specific insurance license. Many states have a renewal time period of about two (2) years and have renewal fees ranging from $15 – $200 per line.
All states also need the completion of continuing education courses in order to renew your license. The average number of hours to be full is sixteen (16) – thirty (30) hours per line. These courses must be completed prior to your license’s date of expiration or a penalty fine will be added to your renewal fee.