Do insurance agents make money? That is the question being asked by thousands of people across the United States today. As insurers begin marketing their plans and services online, more Americans prefer to purchase insurance plans directly from companies.
This brings us to the second question: are insurance agents relevant in today’s world, where most of us only transact online?
In this article, I will discuss the relevance of insurance agents and give some insights on how much insurance agents earn.
Relevance of insurance agents
Going purely by statistics, there are more than 1.2 million insurance agents, brokers, and insurance service workers in the US as of early 2020. This number might not sound like much. However, if we look at historical growth, it is clear that the number of insurance agents and brokers, as well as other insurance service personnel in the United States, is growing.
And there are strong reasons behind this growth.
- Greater number of companies joining the insurance business. More than 5,965 insurance companies were doing business in the US and US territories in 2018, says the Insurance Information Institute.
- At the end of 2018, the US insurance industry recorded $1.22 trillion worth of premiums. Among these, 51 percent were in the property and casualty sector, while 49 percent were life insurance and annuity plans. These numbers make it clear that insurance of all kinds is big business in America.
- The National Association of Insurance Commissioners says that (2,507) insurers operate in the field of Property and Casualty, 841 in Life and Annuity, 931 in Health, 82 in Fraternal or insurers that serve a specific ethnic group in the community, 60 in Title or purchase and sale of housing as well as protection of titles related to property, 239 Risk Retention Groups (239) and 1,305 various insurers.
- The number of insurance agents in the US is projected to increase by 10 percent each year through 2028, says the US Bureau of Labor Statistics.
Given the size of the American insurance industry, it is obvious that companies require insurance agents to promote their various plans.
In this context, insurance agents and brokers are highly relevant to the US insurance industry as a whole.
That’s because they play a very important role: they serve as representatives and a bridge between the insurer and the client.
Duties of Insurance Agents in the US
Given the large size of the US insurance industry and the many types of plans, as well as the size of the country, insurance agents play a very important role.
- Educate individuals, businesses, and businesses about the various types of insurance products.
- Help individuals and organizations select or customize an insurance policy that suits their specific needs.
- Act as a negotiator or facilitator between an individual, an organization and the insurance company.
- Promote your employer’s insurance products to individual and corporate clients.
- Follow up with clients for payments and premium payments.
Considering that each of these is an important role for an insurance company, there are also quite attractive salary, benefit and commission packages for insurance agents.
So how much money do insurance agents make?
How much do insurance agents earn?
Anything between $27,500 per year to $125,610 per year, says the Bureau of Labor Statistics. However, the median income for an insurance agent was $50,940 per year in 2019, adds the BLS.
Now let’s see how much insurance agents earn.
This depends on the type of work of the insurance agent.
Captive agents work for large insurance companies. Therefore, they do not spend time and effort generating leads to sell insurance plans. As a result, captive agents receive a fixed monthly salary from their company.
In addition, they are also entitled to a small commission for each new policy they sell. Generally, captive agents do not receive any commission for premium charges. However, the employer may offer seasonal bonuses and other incentives.
self-employed insurance agents
Independent insurance agents do not work for any insurance company. In the United States, many of these independent insurance agents are former employees of insurance companies and have adequate knowledge of the field.
However, they need to obtain an independent insurance agent license from the state where they will be working. Selling insurance without proper certification and licensing can land you in serious legal trouble.
Self-employed insurance agents charge commissions. The amount varies depending on the nature of the insurance: life, property and casualty, annuities, etc. However, independent insurance agents earn an average of $24.49 per hour, says BLS.
Strictly speaking, a financial advisor is not an insurance agent. They work with banks, credit unions, and investment firms. However, many financial advisers work as freelancers and have ties to investment and insurance companies.
Although insurance is not a form of investment, they advise clients on how to purchase annuities and retirement plans, among other financial services. In 2019, the median salary for independent financial advisors stood at $42.24 per hour.
The amount of commission they get from companies for selling insurance is usually kept secret.
Other income from insurance agents
There are a few other ways that insurance agents make money as well. One of them for commissions for selling add-ons to an existing plan.
The other is by creating a single package that includes, for example, home, life, auto, and health insurance, among others. Today, most insurance customers opt for a single package as it lowers the overall cost of the premium.
Requirements to become an insurance agent
Since the amount of money insurance agents make seems attractive, you may want to work as one. As I mentioned earlier, you will need to pass an exam and obtain the necessary certification from the state where you live, before becoming a self-employed agent.
Or you can join a big insurer.
In any case, the minimum academic qualification to work as an insurance agent is a baccalaureate degree. And you must possess excellent interpersonal skills, math skills, problem-solving skills, and others necessary for the profession.
If you do, seek certification and licensing as an insurance agent from various concerned authorities.
It is clear from the above facts that working as an insurance agent is quite attractive. They make quite a bit of money and the work is also quite respectable. And you too can become an insurance agent to earn money.