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Insurance Licenses and Certification

Insurance Licenses

Most states issue insurance licenses to those individuals deemed qualified to sell either life and health or property and casualty insurance policies. The state-specific licensing process is necessary in the absence of a federal insurance charter.

The licensing process screens people seeking insurance careers to ensure that the state insurance laws are understood, and the person can perform the duties and responsibilities of an insurance agent effectively. The exams typically cover basic insurance concepts, laws, legislations, and regulations. They require an understanding of insurance, securities, and finance definitions and concepts. They also usually include an expected code of conduct and ethics.

Each state has its own process that needs to be followed to obtain an insurance license. Most often, candidates must take a state-approved training course. Upon completion of the course, an examination is administered. If you pass the exam, you will get your insurance license.

An insurance license is valid for a specified amount of time. Many state insurance departments required licensed insurance agents to take a certain number of continuing education credits annually to maintain good standing. If the continuing education requirements are not met, your insurance license can be revoked.

Other reasons that insurance departments may revoke an insurance license include if someone commits a felony, defrauds a policyholder or insurance company, or engages in "twisting." Twisting is when an insurance agent allows a policy to lapse so that he or she can sell the client a new policy (and make another commission). Most states will also revoke an insurance agentís license if they have engaged in rebating. Rebating occurs when a policyholder is offered gifts or incentives to buy a policy (thus generating a commission for the agent).

In most instances, agents must be licensed to sell insurance where the policy is sold. For example, if you live in Massachusetts and have clients who live in Connecticut and New Hampshire, you may want to get licensed in all three states so that you can go to where the clients live to sell insurance. Some states have reciprocity, which means that dual licenses are not required.

License eligibility requirements vary by state. Most states require that the person be eighteen years or older with no record of felony convictions. Many states do not have any academic requirements beyond those imposed by the training and exam needed to earn the license.

The best source of information about the insurance licensing examination and its associated requirements and costs is your state insurance department or commissionerís office.

Continuing Education in Insurance Careers

When you choose a career in insurance, in many instances, you are committing to lifelong education.

Although insurance, in one form or another, has been around for thousands of years, it continues to evolve. Legislative, regulatory, economic, technological, and societal forces all play highly influential roles in shaping how insurance is manufactured and distributed in this nation. It is critically important for those in the field to stay up-to-date with respect to all of these forces and how they impact the industry.

There is a number of ways to keep abreast of what is happening in the industry. You could read trade publications, participate in networking groups and professional associations, attend workshops, classes, webinars, or review literature provided by carrier affiliates. All of these are important.

Insurance Licenses

Certain licenses and professional designations require a certain number of continuing education "credits" or "hours annually in order to remain in good standing." This is an attempt to mandate that the professionals meet their high standards of knowledge no matter when they attained their license, certification, or designation. It is also an opportunity for the industry to reinforce messages of high ethics and a code of conduct.

Continuing education in the field of insurance is big business. Many vendors offer a wide array of learning tools to help insurance professionals meet their continuing education requirements. Online courses are popular. At the end of the course, often a test is administered to ensure that the material was understood.

The continuing education you are required to take depends upon the type of license, certification, or designation you hold, and the state in which you reside. Some states do not permit insurance agents to do initial continuing education training with online courses, but they can do so later in their careers. Because the requirements are state and license specific, it is best to contact your state insurance department to ensure you are enrolled in the appropriate activities.

Other ways to obtain continuing education credits is to attend industry seminars, workshops, and webinars. The meeting agenda will often include a listing of how many continuing education credits are available if attended. Some trade publications offer continuing education credits as well. For example, the last page in the Trusts and Estates tests the reader on the contents of the publication.

Carriers usually provide continuing education workshops to ensure that all employees are meeting their requirements. The obligation to maintain favorable status, however, is on the insurance professional. Certifications, licenses, and professional designations are portable. They are the professionalís responsibility for keeping up, not the employerís. Therefore, it is important for the insurance professional to keep a record of all continuing education activities.