An insurance producer is licensed to sell, solicit or deal in insurance, specializing in health and life insurance. They must complete a course of instruction, pass an exam, and pay a licensing fee. They earn commissions and provide follow-up services to customers.
An insurance producer is a licensed representative authorized to sell, solicit or deal in insurance under one or more categories. Selling refers to exchanging an insurance contract, soliciting implies convincing a customer to apply for insurance, and negotiating is the process of explaining and offering advice to a potential customer. Health insurance and life insurance are two of the main types of insurance that producers work with, and an insurance producer license must be obtained in the field in which the producer chooses to work.
To receive an insurance producer license, a course of instruction must be completed and an exam passed. This follows an undergraduate curriculum where the producer usually specializes in business, economics or finance and receives a bachelor’s degree in one of these areas. After passing the test, a licensing fee must be paid before he can start selling insurance. The producer is only eligible to practice in the state where he took the exam and in states that have a reciprocity agreement with his home state, and the license must be renewed periodically. This requires several hours of continuing education courses each year to stay current on industry trends and knowledge.
An insurance producer is similar to an insurance agent, but an agent is appointed by the insurer to act on its behalf. The insurer is usually a firm or company rather than an individual customer, and if the producer is working with an insurer, commissions, brokerage and service fees must be paid or allocated accordingly. Insurance producers are typically assigned by at least one company to conduct business, rather than being responsible for finding individual customers. This is how they differ from insurance brokers. Producers, however, are still considered individual entrepreneurs, not employees of companies or firms.
Insurance producers earn a substantial part of their living through commissions. Each time an insurance premium payment is made, the producer earns part of that amount. The producer has two main roles: helping insurance companies sell policies and providing follow-up services to customers. Selling policies involves educating customers on the type of policy that works best for them based on their finances and lifestyle. The follow-up service includes submitting all documentation and providing ongoing service to customers based on their needs and circumstances.
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