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


The Importance of Life Insurance

When planning for the future, there is perhaps no single product more important than life insurance. Whether it’s to cover current debts and liabilities, or to provide surviving loved ones with a source of supplemental income, life insurance is a source of sanity and fiscal stability that helps millions of families stay afloat each year after a loved one has unexpectedly passed away.

Estate Taxes and Planning: When Life Insurance Becomes Essential

The usefulness of life insurance doesn’t become obvious to many people until they begin to plan their estate and they learn about the potential taxes, expenses, and fees that will be incurred by their spouse, children, and others, after they have passed away. Life insurance helps to offset or eliminate those costs by using its payout to the beneficiary as a main source of income and inheritance. The amount of the benefit paid out to the life insurance beneficiary can help offset estate planning fees, asset distribution fees, and more. 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


Life Insurance Beneficiaries

An important topic taught through our insurance license school is understanding what happens to a life insurance policy once an insured dies and what laws govern who receives the death benefit monies provided by the life policy.

A life insurance beneficiary is an individual who receives the policy’s benefit proceeds upon the death of the insured.  The insured has chosen this individual, or individuals when he or she purchased the life insurance contract.  The amount of benefit proceeds as well as distribution percentages are also chosen by the insured and can or cannot be altered during the insured’s lifetime, depending on the designation type that the insured has chosen at the time of policy issuance.

The life insurance beneficiary, designated by the insured, gains control of the death benefit after the insured dies.  This beneficiary can be a person, institution, or charity and though insurable interest is not required to be a beneficiary, family members of the insured are usually named.

Distribution by Descent

 

Per stirpes rule – Death proceeds from an insurance policy are divided equally among the named beneficiaries.  If a named beneficiary is deceased, his or her share then goes to the living descendants of that individual.

Per capita rule – Death proceeds from an insurance policy are divided equally among only the living primary beneficiaries. Read More


National Association of Insurance Commissioners (NAIC)

Outside of federal and state legislature, insurance companies also abide by non-governmental associations that unify the states and help protect consumers.  Industry associations such as the National Association of Insurance Commissioners impose major influence on insurance companies to maintain common industry standards.

Industry Regulation

A major form of self-regulation, the National Association of State Commissioners (NAIC), is widely recognized as a major influence in the insurance industry.  NAIC is not a federal or state legislative body, nor does it regulate insurance law, even though its members are the insurance commissioners (i.e., the chief insurance regulators) of each state in the U.S.

Founded in 1871, the National Association of Insurance Commissioners was created as a non-governmental organization that has since created and maintained a uniform set of laws for states to follow in an attempt to standardize multiple-state insurance laws.  Though it has created a set of ‘by-laws’ to help centralize the state-run insurance industry, NAIC, itself, does not actually regulate insurance law.  The states regulate their respective insurance laws as well as abide by any relevant federal laws. Read More