Starting a life insurance agency can be a very profitable business venture. However, there are several important steps that must be taken in order to ensure success. This step-by-step guide will provide entrepreneurs with all the information you need to get your agency up and running.
Here are the 10 steps you can take to get started on building your very own life insurance agency.
10 Steps to Launching a New Life Insurance Agency
1. Choose Your Type of Life Insurance Agency
The first step in launching a life insurance agency is to identify the type of life insurance business you want to launch. You might choose from the following types among others:
- Independent life insurance agency: You’ll be an independent contractor representing several different carriers.
- Captive life insurance agency: You’ll be contracted to sell products from only one life insurance company.
- Managing general agent (MGA): You’ll contract with a life insurance carrier to administer and distribute its products through a network of sub-agents.
2. Name Your Life Insurance Agency
Give your life insurance agency an identity so people will think of it as a well-known and respected brand. You can take the name of your life insurance agency from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your life insurance agency is to make it sound appealing and trustworthy so that potential customers will want to work with you.
3. Determine Your Life Insurance Agency Business Model
There are several possible types of business models for a life insurance agency including:
- Online life insurance agency: You’ll conduct all business over the internet through a website or portal.
- Brick-and-mortar life insurance agency: You’ll have a physical office location where customers can come to meet with you in person.
- Virtual life insurance agency: You’ll have a physical office, but you’ll also do a lot of business virtually through the internet and other digital channels.
- Hybrid life insurance agency: You’ll have a physical office, as well as an online presence.
No matter which model you choose, make sure that it aligns with your business goals and the products and services you offer.
Read more about choosing the right business model for your life insurance agency.
4. Choose a Legal Form for Your Business
By incorporating your life insurance agency, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your life insurance agency will determine the amount of taxes you pay and which state or federal tax forms you need to file.
5. Write a Life Insurance Agency Business Plan
All life insurance business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
When developing your life insurance agency business plan and strategy, you should think about the following questions your customers might have:
- What is life insurance?
- What are the different types of life insurance policies?
- How do I know which type of life insurance policy is right for me?
- How much does life insurance cost?
- Is there an age limit for buying a life insurance policy?
- Can I cancel my life insurance policy?
- How do I file a life insurance claim?
- How long does it take for a life insurance policy to go into effect?
- What are the tax implications of buying a life insurance policy?
- Do I need a life insurance policy if I have health insurance?
- Do I need a life insurance policy if I have a 401(k)?
- What happens to my life insurance policy if I move to another state?
- What happens to my life insurance policy if I get divorced?
- What happens to my life insurance policy if I retire?
- Can I borrow against my life insurance policy?
- What are the different riders I can add to my life insurance policy?
- What is term life insurance?
- What is whole life insurance?
- What is universal life insurance?
- What is variable universal life insurance?
- How do I compare different life insurance policies?
Answering these types of questions will help you develop a business plan and strategy that meets the needs of your target customers.
Read our article about how to write a life insurance agency business plan.
6. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your life insurance agency.
For example, if you plan to sell life insurance policies, then you will need to obtain a life insurance license from your state’s insurance department. The requirements for obtaining a life insurance license vary by state, but they typically require you to pass an examination and background check.
In addition, if you plan on selling other types of insurance products, such as health insurance, you will need to obtain the necessary licenses for those products as well.
You must also register your life insurance agency as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.
7. Determine Your Budget & Apply for Funding as Needed
In developing your life insurance agency business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your life insurance agency, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your life insurance agency include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about the costs associated with starting a life insurance agency to help you determine if funding is needed.
Read our article about how to fund your life insurance agency.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your life insurance agency, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in a customer relationship management (CRM) system, which will help you manage your clients and prospects. There are many CRMs on the market that are specific to the insurance industry, such as AgencyBloc, Applied TAM and Vertafore AMS360.
In addition to the basic technology needs, you should also have a professional website for your life insurance agency. You can use a platform like WordPress or Wix to create a website on your own, or you can hire a web designer to do it for you.
Your website should include information about your agency, your products and services, and how to contact you. You may also want to include an online quoting system so that potential customers can get instant quotes for life insurance policies.
9. Market Your Life Insurance Agency to Potential Clients
Before you start selling your products and services, you have to let the world know you exist. The first step is to create a website so people can learn more about your products and services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the life insurance industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Life insurance businesses should consider the following promotional strategies for which you should start getting prepared:
- Direct mail campaigns
- Advertising in trade publications
- Sponsoring events
- Creating informative blog content
- SEO and social media marketing
- Email marketing
Read our article about how to market your life insurance agency for more tips.
10. Get New Clients & Grow Your Business
When you promote your products and services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your life insurance agency.
Read our article about how to effectively grow your life insurance agency to learn more.
Starting a Life Insurance Agency FAQs
There are many reasons why you may want to start a life insurance agency. Perhaps you’re looking for a new career challenge, or you want to be your own boss. Maybe you’ve worked in the life insurance industry for years and you’re ready to start your own business. Whatever your reason, starting a life insurance agency can be a very rewarding experience.
The most important thing you need to start a successful life insurance agency is a deep understanding of the industry and the products you’ll be selling. You should also have strong sales and marketing skills so you can effectively promote your business. It’s also important to have the right technology in place so you can run your business efficiently.
There are many ways to market a life insurance agency online. You can start by creating a professional website and promoting it through social media channels, like Facebook, LinkedIn and Twitter. You should also consider networking with other people in the life insurance industry through social media and blogs so they can help share your business. Additionally, you can use SEO and content marketing techniques to attract new visitors to your website.
Here are some tips for starting a successful life insurance agency:
- Deeply understand the life insurance industry and the products you’ll be selling.
- Have strong sales and marketing skills to promote your business effectively.
- Use technology to your advantage by having a professional website and using SEO and social media marketing techniques.
- Network with other people in the life insurance industry to get help promoting your business.
- Be prepared to serve new clients by having systems and processes in place.
- Train the right people to help grow your life insurance agency.
A simple checklist to use when starting a life insurance agency is as follows:
- Choose Your Type of Life Insurance Firm: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your Life Insurance Agency: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your Life Insurance Agency Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Life Insurance Agency Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Life Insurance Agency to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the products and services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your products and services.
Starting a life insurance agency can be a rewarding and profitable business venture. By following these simple tips, you’ll be well on your way to opening a successful life insurance agency.