A Comprehensive Guide To Pros And Cons Of Independent Insurance Agents | 2023

Pros and cons of an independent insurance agent: An independent insurance agent is an agent who is not governed by any particular insurer and has permission to sell insurance policies from different companies.

Insurance is the largest business in the united states. All the People of the united states are directly or indirectly involved in one kind of insurance or another.

There were approximately 2.8 million people employees in the insurance sector in the United States in 2021, According to Statista.

Pros And Cons Of Independent Insurance Agents

If you wanna become an independent insurance agent but are confused between two terms “independent agent and captive agent” then this article is really for you.

In this article, we will differentiate between an independent insurance agent and a captive insurance agent and we will deeply throw light on the pros and cons of an independent insurance agent.

If you are an employee of a company and not satisfied with your current job then becoming an independent insurance agent is the best option.

Because by becoming an independent insurance agent you will have authority over your interests and also have full control over your business projects and the best thing is that you are your boss.

Also, Read: 7 Types Of Mortgage Loans In Texas

What is a self-employed insurance agent?

A self-employed insurance agent is an agent who doesn’t work for a specific insurance company and sells various insurance policies from different insurance companies instead of one company.

An independent insurance agent works like a mediator between sellers and buyers. In this way, the insurance agents make the transaction easy. They got commissions on selling insurance policies to different companies.

Most people like to make contracts with independent insurance agents because they have different rates from different companies simultaneously. They quickly research various companies and got different rates in a single list.

How Do Independent Insurance Agents work?

An independent insurance agent collects all the basic information from the client. This information included the client’s house size and age, his/her home address, history of any accident which could happen in his/her life, and the kind of car he/she drive.

The independent agent provides this information to the agency and the agency offers a policy to the client that is suitable to his/her requirements and budget.

When the client buys the policy according to his/her requirements then the independent agent got a commission.

Why should you become an Independent insurance agent?

Here are some of the key points for an independent insurance agent:

1. First of all this profession is very flexible. In this profession, you are your boss, and you have your work hours, location, and schedule.
2. There is no need for highly qualified degrees in this profession like other professions—the only thing is to have a license to sell insurance in your region.
3. To become an independent insurance agent you must be familiar with your residential city-state or community’s basic information because this information makes your relationship strong with your clients and enhances your counseling skills.
4. As an independent agent, you provide your clients peace of mind by helping them to choose the correct option.
5. You have your brand and your reputation if you are an independent insurance agent.

Captive vs Independent insurance agent

In the United States, the business of insurance is increasing day by day. Million people are employed as insurance agents in the united states, according to Statista.

All these agents fall into two categories: Captive agents and Independent agents.

A captive agent is an agent who works for one company and is paid by that single company either by commission or salary.

Independent Insurance Agents

Whereas, an independent agent works independently and is not tied to a single company. They can sell the insurance policies of multiple companies.

Captive agents work under the company and have to follow the instructions of that company. They focus less on their clients and more on selling their company’s insurance policies.

They have to sell a single product to their clients, which is offered to them by the company. On the other hand, the main motive of an independent insurance agent is to assist their clients and navigate them to choose the right product.

They provide their clients with all the data in one list. The earning potential of an independent agent is much higher than that of a captive agent.

The drawbacks of being in captivity.

There are many drawbacks to being a captive agent:

1. Captive agents haven’t control over their business.
2. Captive agents sell particular products of the company. They are unable to sell more than one product to their clients.
3. Captive agents face trouble in selling a specific product to their clients because this product may or may not be good for their clients.
4. The company under which the captive agent work can change the product at any time. This will make a difficulty for the agent to deal with clients with limited choices.
5. Captive agents have inconvenient contracts.

Pros and Cons Of Independent Insurance Agent

Here are some of the pros and cons of independent agent:

Pros: You have a career of your own.

Being an independent insurance agent you are your boss. You have complete control over your all business activities like your working hours, strategies of marketing, partnerships, and selling the policies of multiple companies.

You have full flexibility to run your business. Because you are not employed by any insurer. No insurer asks you how many hours you work.

When do you come to the office or when do you leave the office? How many calls do you make or how many leaves do you take? Doesn’t matter.

The only thing that matter is the outcomes. This means how many products you sell to your clients. Only the results matter.

Cons: There’s no boss for you.

An independent insurance agent doesn’t have a boss. If you are an independent agent you have to put all your efforts to make your strategies, you don’t rely on the company’s strategies. These strategies help you to catch new clients and satisfy them with their products.

Some people don’t like to have a boss while others, who are new, wanna have someone whose leadership they like. As an independent agent, you have your business book.

No parent company guides you to operate your business, develop new marketing ideas, and give you support and training on products.

Pros: Your ability to earn is limitless.

An independent insurance agent earns unlimited income. Their potential of earning is much higher than a captive agent.

It is up to you how many products you sell. Because the more products you sell to make more commissions you have.

And this is possible with your skill consistency, your communication tips and tricks, time management, organization, and your commitment.

Most insurance agents make $100,000 in their fresh year. According to the Bureau of Labour Statistics, the hourly wage of 10% of earners is $14.41 and 50% of earners can make $23.96. The Annual wages of insurance agents of 10% earners is $29,970 and 90% earners can make $126,510.

Cons: You hardly know how much your weekends become worth.

Every business faces some downturns. The insurance business has cyclical nature. The premiums, coverages, and profits of insurance sometimes undergo a slump.

Therefore, Independent insurance agents hardly know how much their weekends become worth. Because sometimes they have more clients and make more money. Whereas other times they have to face sudden falls in their clients.

To overcome this situation, the agents must make a good budget and save money during their peak times. So that they won’t face difficulty during their downturns.

Pros: You will get multiple products for all your clients.

As an independent insurance agent, you have multiple kinds of products from diverse insurance companies for your customers.

You don’t need to convince your clients to buy one product and try them to choose the product which is not good for them. You can offer your clients a product that matches their requirements and satisfy them.

Cons: There are plenty of things to learn.

“Learning increases your earnings”

Independent insurance agents don’t need to have highly qualified degrees but must have license insurance in their states.

They must pass the licensing exam of their city. Many insurance companies prefer that an insurance agent must have a graduate degree.

Also, they should be well-educated in finance, marketing, economics, accounting, mathematics, and business administration. Insurance agents must learn selling skills and communication skills to administrate their business.

Their learning must be steady. They have to learn about various products and different insurers. The most brilliant agents keep their studies continuously because they know learning increases skills.

Pros: You’re going to help folks.

In this era, everyone wants to have financial protection. Because any mishappening takes place in anyone’s life at any moment in life.

To secure their lives they buy insurance. There are different types of insurance like Health insurance, life insurance, auto insurance, etc.

The insurance agents help the people to buy the insurance policy. They guide people by offering various types of insurance policies. In this way, they become the most trustable advisor for the folks instead of other salesmen.

Cons: You should persistently acquire new customers.

Independent agents constantly trying to get new clients. Acquiring new clients is not a natural thing. They get more clients through referrals.

They also meet new people and make relationships with them. They cherish their relations with former clients.

Independent insurance agents also make professional partnerships. These partnerships bring new clients for them. They always make new strategies to get new clients.

Pros: your customer list grows as your experience increases.

As you get old in this profession, your experience increases. As your experience increases your client’s list also increases. The requirements of insurance increase with time.

When people trust you they come again and again to you for insurance. They also refer your name to their close friends, relatives, and family members.

cons: But it’s a very tough task financially.

We know that independent insurance agents are in demand nowadays but becoming an independent agent is a bit more expensive rather than being a captive agent.

They have to spend money on purchasing software and traveling to their clients. The burden of all the expenses of business activities is on their shoulders. They have to establish their book of business.

Conclusion

Insurance is a growing business in America, therefor becoming an independent insurance agent means having a bright future.

[faqs] Your career as an independent insurance agent makes you enable to build your own business. And nothing is most profitable than your own business.

FAQ for self-employed insurance agents.

How Can I Become An Independent Insurance Agent?

To become an independent insurance agent you must be educated. You should have a bachelor’s degree in finance, marketing, and administration, and the most important thing you license insurance for your region.

How Is An Independent Insurance Agent Paid?

The independent agents get paid through commissions. Whenever they sell insurance policies to their clients, their clients pay a premium. Their commission is the amount of this premium. Both independent as well as captive agents rely on commissions.

Is It Better To Be A Captive Insurance Agent Or A Self-Employed Insurance Agent?

Genuinely both types of agents ( independent or captive) are good but it depends on you which type suits you. The choice is yours whether you want to become a captive agent or an independent agent.

How Much Do Most Independent Insurance Agents Earn?

The income potential of independent agents is higher. Mostly they earn more than

What Kind Of Insurance Agent Earn The Most Money?

Usually, the independent insurance agent makes more money.