Pros and Cons of Having Your Own Independent Insurance Agent

There is always great pride in having your own company, but there is also a lot of responsibility, work and hassle. Here’s how to tell if owning an insurance agent has enough benefits to get you past your obligations.

Every employee has had the experience of looking at their boss and/or owner and thinking, “I can do this much better than you.” If you find yourself thinking about this a lot, you may soon find yourself really thinking about starting a business. And if you have experience working in the insurance or financial products industries, as many people do, you are probably considering starting your own insurance agency.

Let’s start with some explanations. Any small business will either be an independent insurance agent (selling the policies of a number of large insurance companies) or simply a “captive” agent selling policies from one company. To truly start providing insurance to people requires something called a “corporate insurance license” and can cost $50,000 or more to purchase. It actually takes more than a million dollars in capital to create an insurance policy, just to get started, so what most small business people want is to sell insurance, not create the policies themselves.

To sell insurance, you must be licensed in your state for the types of policies you want to sell. There are three main types of insurance policies: health, liability and life insurance. Many insurance licenses also allow you to sell financial products. Because insurance is such a financial product, there is a lot of overlap in both services and licensing.

See also  Self Employed Disability Insurance - Protecting Business Owners

The advantages of owning your own shop are that you can choose what hours you work – but only to a certain degree because you have to be at work long enough to stay in business. You decide how long and when you take vacation – but still, only to a certain degree, because you have to keep your business afloat while you’re away. Another important professional is that if the business is successful, you will own it and have a valuable asset that can generate income for years to come. Also, as the business owner, you decide when and how to hire and fire people. If you’re brave, you can even decide which clients and clients you want to fire.

While the pros may sound great, here are the downsides: You’ll likely work more than 60 hours a week in the first years. If your agency isn’t successful in the first year (and many fail), you may not be paying yourself anything to balance the books. Also, until your agency can afford to hire people for different jobs, you will wear many different hats – accountant, computer guru, secretary, marketing manager, printer repairman, and more. You will almost always have five to ten times more things to do in a day than you can possibly do.

Owning a home is stressful, and so while having your own insurance agent has dozens of benefits, you need to be flexible enough to handle challenges. But if you can, I hope you can give yourself a raise.

About Lily Hammond

I have been working as an insurance consultant in my own insurance agency since 1998. Because I've been doing this for so long, I know every detail and I'm here to help you. You can find my e-mail address and work phone on the contact page.

Leave a Reply

Your email address will not be published. Required fields are marked *