They have the money to invest but don't have the social contacts, that can make insurance selling possible. To reach the people and potential customers, they need representatives, who can convince the public, about the soundness and utility of their insurance policies and sell it to them. That is where the insurance agents come in.
Introduction to Insurance Field
Insurance is a very broad financial concept. It's providing financial security cover for any possession of a person, including his life. Taking an insurance cover is paying some amount of money called the premium, to an insurance company, in lieu of which, they take your financial risk on their head.
It is about transferring the risk factor and making contingency funds available. Insurance offered could be of many types. This includes, casualty insurance, health Insurance, liability insurance, home insurance, credit insurance, automobile insurance and also disability insurance.
How do the insurers, who are the insurance companies, profit from providing insurance? They have various insurance policies, which vary in the amount of contingency cover they provide, according to the calculated risk, on their part.
There are specialists called actuaries who evaluate the risk for the insurance company and come up with a premium amount which can effectively cover the needs of a customer and is affordable for the insurance company also. The insurance company makes profits by investing the money of the insured in other financial ventures.
Where does the insurance agent come into all this? He is the one who comes up with the customers, in the first place. The job profile involves introducing various insurance policies of a company to potential customers, according to their needs. Many people are not even aware, that they could get an insurance at an affordable price, for their assets.
Insurance Agent Training
If you intend to enter the profession of an insurance agent, a bachelor's degree in commerce or business administration, along with proficiency in accounting is very important. Getting hands-on experience through part-time jobs in insurance companies, during college days is a good idea. Early exposure always helps.
Accounting background helps you with the number crunching tasks which you must perform on a daily basis. To become an insurance agent officially, you need a certification of the central state authority, which gives you a license to operate.
For this certification, you need to appear for an exam which tests your accounting knowledge and understanding of insurance laws and ethics. Life insurance and asset insurance licenses require separate exams to be cleared. The insurance agent associations offer training and expert guidance for every one of these licensing exams.
Always try and tap the 'Old Boys' network of senior agents and try to take tips from them. You also need to update your license periodically through exams and keep up with the latest happenings in the field.
There are many specialized computer software programs, used by agents, to keep track of insurance accounts and carry accounting calculations. So learning to use these software programs is essential if you are entering this field.
Agents need to be good at handling numbers. The reason is that they need to calculate and show the projected monetary returns to customers on a policy premium, that they are buying. They also need to be good at understanding people and effectively conveying the benefits of the policy. In short, they need to have excellent people skills.
The insurance agents can be employed by an insurance company or they may operate independently by starting their own agency. Working in a company, you have their whole resources and machinery at your disposal but perks are limited. Working independently can be more profitable but then you have to develop your own set up, for running the business.
What matters in this field, is developing contacts with people and effectively convincing them of the benefits of buying an insurance. An insurance agent also needs to be sure that a customer he is bringing in for the insurance company, is capable of paying the premium amount.
A failure of payment by the customer is a potential loss for the company and reflects badly on the agent's reputation. So reading and gauging the capabilities of people is important in this profession.
There are even more advanced exams in the field which you can take to rise to the post of a casualty underwriter. This post deals with the evaluation of risk and its policy valuation. Casualty underwriters are especially indispensable to insurance companies.
Agent Commission and Earning
The way agents earn money is through commissions. A slice of the company profit, in terms of some percentage share of the premiums, is offered to the agents. As the premium payment is done in installments, spread over many months, an agent gets a percentage of the premium as commission for every installment paid.
The initial commission amount is high and it drops progressively after that. The agent has an assured income for as long as the installments are being paid. So, once you have a large committed lot of insurance customers, your income is guaranteed for years to come, till their policies mature.
Selling policies to people is a challenging profession. It is a sales job after all and requires constant and consistent effort!