Insurance Business License

Insurance is a great business to start. Whether you specialize in life insurance, health insurance, or car insurance, you’ll certainly find customers because everyone needs insurance at some point in their life. Before you can start talking about permanent and term policies, HMO and PPO policies, or motorcycle and boat coverage, you’ll need to obtain an insurance business license.

As an agent or broker, you must obtain a business license to discuss and sell insurance policies with clients. Failure to do so can result in fines, loss of commissions, license suspension, business closure, and even felony charges.

Note: Clerical employees who answer phones, process paperwork, or provide follow up information to clients do not need a license.

Three main types of insurance licenses include:

• Resident insurance – operating within your state
• Non-resident insurance – operating outside your state
• Policy-specific insurance – operating with specific lines/types of insurance

The Producer Licensing Model Act also lists eight different types of insurance licenses which include:

• Life
• Accident and health
• Property
• Casualty
• Personal
• Credit
• State specific

Each state will have different requirements for how you become a licensed insurance broker or agent. Most states will require:

• Pre-exam education – Before receiving your insurance license, you’ll first need to take one or more exams to qualify. There are several programs designed to teach you what you need to know to work in insurance and sell it. You may be required to have several hours (20-40 hours) of education under your belt before you can take the exams.
• An in-office licensing exam – Exam requirements vary by state. In some states you can take the exam multiple times, where other states will limit you. When taking your exam you will do so at a secure location managed by a third-party proxy.
• A background check – A background check is often required prior to license approval. This may also include proof of US citizenship and fingerprinting.
• Obtain a surety bond – You may also be required to have other items before you can start an insurance business, such as a bond, for certain types of work. You may also need an endorsee if you plan to get into work as a Life-Only, Accident and Health, Property Broker-Agent, or others.

Note: If you sell insurance in multiple states you will need an insurance license for any state you will operate.