3 Types of Insurance Carrier Rating Systems

You’re ready to purchase life insurance, but you just realized that you know next to nothing about the financial strength of the companies you’re about to buy from. That’s a problem. Sure, there are state guaranty associations, but these state-run insurance funds only cover a fraction of your policy, up to $100,000, or in some cases up to $300,000. You want to be certain you’re making the right decision. Here’s how to do that.

The Rating Agencies

Typical rating agencies include A.M. Best, Moody’s, Fitch, and Standard and Poor’s. While these rating agencies do provide ratings for pretty much every financial institution, there’s a problem with the way the ratings are done. First of all, the rating agencies can be influenced by insurers. That’s right, insurance companies can pay rating agencies to rate them.

When you’re looking for a life insurance company to provide you and your family with a lifetime of insurance benefits, the last thing you want is the rating to be tainted by paid ratings. Even if you give insurers the benefit of the doubt, there’s little reason, other than manipulation, to pay for a rating. If the company is solid, a rating agency will rate the insurer as such. Read More

Selling Insurance in the 21st Century

What can you expect as a new insurance agent?

So you’ve decided to take the plunge into the world of insurance.  Nice work.  You now have one of the most challenging, frustrating, but at the same time rewarding career opportunities in front of you.  And the timing couldn’t be better.

Whether you plan to sell life insurance, health insurance or all of the above, major legislative changes are leaving clients confused and many of them will turn to you with questions.  By becoming an insurance agent, you are joining an elite group of advisors who will be on the front lines when it comes to helping clients navigate their insurance choices, be it health, life or retirement planning.  Are you ready?

When I sit down with newly licensed insurance agents or people thinking about getting into the business, I don’t sugarcoat anything.  I tell them exactly what they can expect.  But what I also tell them is that with the right approach to helping your clients, and the right motivation, you’ll find your career in the insurance industry to be one of the most gratifying decisions you’ll ever make. Read More

Determining Penalties for Employers Not Offering Affordable Health Insurance Coverage in 2014

The employer mandate provision of the Patient Protection and Affordable Care Act will begin in 2014. The mandate states that a business with 50 or more full-time employees or full-time equivalents may face penalties if the health insurance coverage that is offered to its employees does not meet minimum standards outlined in the Act.

Below is a flow chart that will help to clarify what requirements an employer must follow in offering affordable health insurance coverage to their employees in order to prevent from a penalty. Read More

3 Licensing Compliance Companies You Should Know

The insurance industry is highly regulated by both the state and federal government, requiring agents and agencies to maintain licensing compliance in each state they solicit and sell insurance.  In addition to maintaining your book of business, your responsibilities as a licensed agent also include maintaining your resident and non-resident state licenses, appointments with carriers in each state you solicit insurance products and annual or biennial continuing education requirements required by your home state.  To further complicate the issue,  if you hold an insurance license in multiple states or you sell more than one line of insurance, the maintenance of your various state licenses is compounded.

For example, if you hold a resident license in Texas and want to maintain your Indiana non-resident license, you must renew it every two years on the last day of the license issue month and pay a fee in an amount of $90.  However, if you hold a resident license in Illinois, for example, and want to maintain your Indiana non-resident license, your renewal fee would cost $250 since the Indiana Department of Insurance imposes a retaliatory fee, in addition to its renewal fee.  And, in the event you forget to renew your license on time and need to reinstate it, you will be required to pay a reinstatement fee of $270 in addition to your renewal fee.  Of course, this reinstatement fee is also increased in those states where retaliatory fees are imposed!

Sounds confusing, right? Read More

How to get Insurance Referrals

Insurance Referrals

As a licensed insurance agent, I often asked myself

How do I ensure long-term success in the insurance industry?

Very simple…If you ask for referrals, you will receive them. This may seem simple, but often times it is the least favorite and most forgotten task to accomplish when selling insurance. Some may think that asking for referrals is intrusive or uncomfortable, others have no problem asking, but are quick to blow it off when they hear any version of “no.” Whatever the case, these individuals often times end their insurance careers prematurely because they just can’t find enough customers to keep selling…and there in lies the dilemma with a successful insurance career. Read More

Selling the Correct Amount of Insurance

When selling life insurance, it is important to understand the client’s needs for protection against financial loss.  One of the primary purposes of life insurance is to provide a stream of income for the surviving family beneficiaries if and when the insured breadwinner dies during the policy’s term.  As such, knowing the correct amount of life insurance to fulfill the family’s living needs is vital to providing the necessary funds to maintain the family’s lifestyle and future financial security.

While we would all love to have multi-million dollar life insurance policies to give to our loved ones when we pass away, the premium costs involved would be quite expensive and unrealistic.  In contrast, not providing financial protection for our families in the event of our premature death is not a situation in which we would ever want to put our family.

So, how does a life insurance agent know what amount of life insurance is necessary to satisfy the client’s financial needs?

While everyone has different lifestyles and respective financial needs, several general factors should be considered when providing a client with a financial assessment and respective life insurance recommendation.

The following financial factors should be considered:

  • Medical bills and final expense costs (burial) of the deceased insured
  • Home mortgage and estate or property taxes (these payment don’t stop when the breadwinner dies!)
  • Ongoing utilities and other home maintenance costs
  • Any debts incurred by the deceased breadwinner or surviving family (car loans, college loans)
  • Cost-of-living needs including food, clothing, and home supplies, health and life insurance payments for the surviving family, medical bills, schooling costs, and any other common ongoing family expenses

In addition to providing financial security to surviving members’ cost-of-living expenses, an insurance agent should also assess the family’s long-term financial needs such as: Read More

Job Opportunities for Licensed Insurance Agents

Obtaining an insurance license is the first step towards a career in a robust and growing American industry.  While the current U.S. economy is trying to recover from our recent recession, the insurance industry has remained unscathed.  In fact, quiet the contrary.  The  employment rate for licensed insurance agents is projected to increase 12% over the next 7 years and will be in demand as the population continues to increase in size, as well as age.

A Health and Life Insurance sales agent, as defined by the U.S. Bureau of Labor Statistics, is often

The first contact a consumer has with an insurance company.  The purpose of the agent is to help individuals, families, and businesses select insurance policies that provide the best protection for their lives, health, and property.

In short, an insurance agent, also known as a ‘producer’ is the key person between the applicant and insurer.  How well the agent interacts with the potential client, the depth and professionalism of the presentation, and the accuracy in collecting health information and filing a complete application all determine the outcome of the insurer’s relationship with the general public.  Acting as a fiduciary, the agent plays a vital role in the success of the insurance company.

A licensed agent has many options from which to choose when searching for employment in the insurance industry.  Let’s examine several of the opportunities available to licensed insurance agents.

Read More

Selling the Correct Health Plan

Health insurance is a vital component to the financial security of any American citizen.  Without it we take the chance of severely and permanently disrupting our financial well-being in the event of a major or catastrophic medical event.

The entire purpose of health insurance is to prevent financial ruin due to a catastrophic medical event such as a heart attack, stroke, catastrophic injury, or any other event that leads to major medical expenses.  It is important to choose the correct type of health plan to prevent this financial scenario and it is the job of the licensed insurance agent to help the applicant apply for the best health plan to fit the applicant’s needs.

A major medical policy includes the following:

  • Lifetime benefits maximum
  • Deductible
  • Coinsurance
  • Stop-loss and out-of-pocket maximums
  • Co-payments
  • Policy limitations and exclusions

In soliciting the correct health insurance policy to clients, it is important to research the correct insurance carriers.  The most popular carriers provide for national coverage, meaning that they protect the insured anywhere they may travel throughout the U.S.  While there are hundreds of insurance companies that offer health coverage, generally it is best to select among the largest, most prominent carriers available. Read More

The Insurance Agent

Life and health insurance is commonly transacted through insurance Producers known either as insurance agents or insurance brokers.  An insurance Agent is authorized by and on behalf of an insurance company to transact life and health insurance.  The insurance company is often referred to as the Principal or Insurer.

An insurance Broker works on behalf of, and is compensated by, the client to transact insurance with, but not on behalf of, an insurance company.  Life and health insurance can be transacted through both agents and brokers, though most states only allow for the licensure of insurance agents, while brokers are more common with property and casualty insurance.

Passing an insurance licensing exam and obtaining an insurance license are the first steps into the insurance industry.  The next step an insurance agent must take is to obtain ‘express authority’ by contracting with each insurance company the agent intends to sell insurance on behalf of and becoming ‘appointed’ by those insurance companies.


Producer Appointments

An Appointment is a legal contract between an insurance company and a licensed agent by which the insurance company gives an agent the Express Authority to conduct insurance business on behalf of the insurer in exchange for compensation, referred to as Commission.

An agency contract defines the terms in which both the agent and insurance company will interact with each other as well as to the industry.

This generally includes the advertising and solicitation guidelines for the company, medical underwriting guidelines to help ensure correct application submission from the field, commission structure for the agent and any other specific regulations of the company, as well as the rights of the agent, under the contract.

In addition to the ‘express authority’ given to an agent through the company’s contract, marketing and selling insurance products, as well as maintaining clients is often performed on a ‘presumed authority’ basis.  Two types of presumed authority are ‘implied’ and ‘apparent’ authority.


Types of Agent Authority

1.  Express Authority – Defined as the contractual agreement between an insurance company and an agent to market and sell the insurer’s products.  An agent’s express authority is clearly defined in words through the company’s contract, or appointment, with the agent.

2.  Implied Authority – Defined as the general Read More