by Guest » Sat May 01, 2010 07:33 pm
I like to become a independent agent in California. I have no experience in this field. I have a bachelor degree in a unreleated field. Currently have a good paying job but would like to make a career change. Any suggestions on the challenges and cost to starting from scratch.
Posted: Sun May 02, 2010 10:59 am Post Subject:
You must apply for your license(s) through the Dept of Insurance (see: http://www.insurance.ca.gov/0200-industry/0010-producer-online-services/0100-flash/how-complete.cfm). How you choose to apply will affect your cost. There are several possible paths to licensing, depending on the type of insurance you intend to transact. The three primary licenses are Fire & Casualty Broker-Agent, Life-Only Agent, and Accident & Health Agent. There are also limited license types, such as Personal Lines (Personal Auto & Homeowner's) and Part-time Fraternal Agent.
Simply saying "I want to be an independent agent" is vague. Do you want to offer homeowners and auto or commercial property and casualty coverage or both? Do you want to market life insurance and annuities, or disability insurances, or both?
The Fire & Casualty Broker-Agent license will currently allow you to transact all lines of insurance except LIFE & ANNUITIES. If you intended to do all forms of insurance, then the proper path currently is to be licensed as a Life-Only Agent and a Fire & Casualty Agent. However, there is likely going to be a change in 2011 that would require F&C agents to also hold the Accident & Health license to be able to transact disability forms of insurance, so eventually you would need all three licenses -- F&C, LO, and A&H (there will probably be a "grandfathering" clause in the legislation for F&C licensees who are licensed prior to Jan 1, 2011).
You will pay the cost of licensing for two years plus the examination fee for each license. Currently the Fire & Casualty, or Life-Only, or Accident & Health licenses are $68 per year ($136 for two years). Those fees are being reduced by 6% on July 1 to $128 for two years.
You must also take and pass the license exams, and the fee for each exam is $39 ($37 effective 7-1). And you'll need to submit fingerprints via "Live Scan" at a minimum cost of $60.95 for CA Dept of Justice and FBI checks to see if you are a known criminal.
If you file for both the Life-Only and Accident & Health licenses at the same time, you don't pay separate license or test fees, it would be a total of $175 for your exam and licenses. It would be an additional $175 for your Fire & Casualty license. Do it differently, and it would cost you an additional $175 to add the Accident & Health license later.
There is a prelicensing education requirement. 52 hours for Fire & Casualty, 32 hours for Life-Only or Accident & Health only (52 hours for both LO and AH combined), or a total of 72 hours for F&C and LO. Prelicensing courses are available from a number of authorized providers, both live classroom (like the classes I teach) and online. Fees for these courses range from $75 to $250 depending on provider and format.
So your initial cost to become an "independent agent" could be anywhere from $250-$300 to more than $1,000, depending on the sequence and method(s) you choose.
Then you'll need errors & omissions insurance which can be as low as $500 per year for coverage as a Life-Only and Accident & Health agent not transacting variable products. Add F&C or securities licenses to the mix and your E&O cost could escalate to over $2000 per year. You don't want to be in business without E&O coverage.
If you want to transact variable life or annuity products, you'll also need securities licenses (FINRA Ser 6 or Ser 7, AND (depending on your Broker-Dealer affiliation), a Ser 63, or Ser 65, or Ser 66). So figure another $300-$500 for those licenses.
And then you have continuing educations expenses. There are mandatory requirements for ethics and other product-specific courses (such as annuities and long term care). CE costs can be as little as $39 per year or as much as you choose to spend.
You'll probably need sales training, since you have no experience in the field. Who knows what that would cost, because there are no regulations governing that. You could spend a few hundred dollars, or several thousand dollars, and still not be able to close a $100/month life application, and if you can't close, you will starve and have spent thousands of dollars for what?
Starting your "new career" as an "independent agent" on your own with no prior exposure to or experience in the industry is a highly risky adventure. You may be better off finding an independent agent willing to train you (if you can find one) or starting with a major full line insurer (such as a State Farm or Farmers or Allstate -- and please don't take that as a "recommendation" of either company, just mentioning names you might recognize) who will train you in products and services and sales, and later go independent if that's what you choose to do.
Proper training is going to be critical to your success, beginning with your prelicensing education. If you would like some more specific advice, feel free to send me a private message or an email by click the link below.
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