Can You Sell Insurance Independently? A Complete Guide

Selling insurance independently can be an attractive career path for those looking to be their own boss and benefit from the flexibility and earning potential of working for themselves. But is it possible to sell insurance on your own outside of working for a larger insurance company?

The short answer is yes! You absolutely can sell insurance independently if you obtain the proper licensing and take the necessary steps to start your own agency.

Below we’ll explore in detail how the independent insurance agent business model works, what’s involved in getting started, how much independent agents can earn, and tips for successfully selling insurance independently.

What is an Independent Insurance Agent?

An independent insurance agent, also known as an insurance broker, is licensed to sell insurance policies from multiple insurance carriers rather than just working for one company. This gives independent agents a few key advantages:

  • Flexibility to offer more policy options: With appointments from multiple carriers, independent agents can shop around to find the best policies and rates for their clients. A captive agent selling for only one carrier is limited to that company’s offerings.

  • Ability to specialize: Independent agents can focus on specific lines of coverage or offer a wide range of policies based on their business goals and expertise. For example, an agent could specialize in home insurance or offer property, casualty, life, health, and other policies.

  • Opportunity to build their own brand: As a business owner, independent agents have more control over building their brand and marketing their services. And because they don’t represent just one insurance company, they can establish expertise as an objective insurance advisor.

  • Potential for higher earnings: Independent agents typically earn higher commissions than captive agents since the insurance carrier doesn’t have to cover their overhead as employees.

How Does an Independent Insurance Agency Work?

Independent insurance agents function as business owners rather than employees of a larger insurance company. Here’s an overview of how an independent insurance agency operates:

  • Obtain required licensing: Agents must pass state exams and apply for producer licenses for the types of insurance they want to sell. Most states require a separate license for property/casualty and for life/health insurance.

  • Get appointed with insurance carriers: Agents need appointments with insurers to sell their products. Carriers will review an agent’s credentials, business plan, and target market before appointing them.

  • Set up the agency: Independent agents need to establish their business entity, obtain necessary commercial insurance, setup office space, hire staff if needed, and handle legal and tax compliance.

  • Market services: Agents rely on marketing and lead generation to find new clients. This can include digital marketing, events, referrals, and other strategies.

  • Sell policies and service clients: The core role of an insurance agent is to sell policies, advise on coverage, and deliver support to ensure client satisfaction and retention.

  • Grow the book of business: Successful agents continually prospect for new clients and seek more carrier appointments to expand their range of offerings over time.

How Much Do Independent Insurance Agents Make?

Independent insurance agent income will vary based on factors like experience, sales volume, client base, and geographic location. However, here are some averages:

  • Median pay for insurance sales agents in 2020 was $51,120 per year according to the Bureau of Labor Statistics.

  • Average annual pay is around $47,600 for newer independent agents, $68,600 for agents with 5-9 years experience, and $99,200 for veteran agents with over 20 years experience according to Integrity Marketing Group.

  • Top performing agents can earn well into six figures. The top 10% of life insurance agents make over $212,030 according to the BLS.

It’s important to note that as a business owner, an independent agent’s salary is their revenue minus expenses. Costs like licensing fees, office space, marketing, and taxes need to be accounted for. But the earning potential is much higher without a corporate salary cap.

Steps to Becoming an Independent Insurance Agent

If starting your own independent insurance agency sounds appealing, follow these steps to get your business up and running:

1. Get Licensed

You must pass your state’s licensing exams for the types of insurance you want to sell. Most states require 20-40 hours of pre-license education from an approved provider. Then you must pass the exam and apply for a resident producer license through your state department of insurance.

2. Research Insurance Carriers

Finding the right insurance carriers to partner with is key to success. Look for reputable companies that are appointing new agents, offer competitive commissions and products, and have positive ratings for financial strength and customer service.

3. Craft a Business Plan

Your business plan is your roadmap and helps you convey your goals to potential carrier partners. Include sections on your target market, experience, products offered, marketing strategy, and five-year projections.

4. Secure Carrier Appointments

Carriers will review factors like your business plan, market, experience, and licensing status before appointing you. Getting appointed with at least three major carriers is recommended when starting out.

5. Establish Your Business Entity

Most independent agencies operate as LLCs or S-corps. Consult with legal and tax professionals to decide on your optimal business structure.

6. Obtain Necessary Insurance

As an insurance professional, it’s extra important to have adequate coverage. Seek quotes for general liability, E&O, property, workers’ comp, and other business insurance.

7. Get Your Office Set Up

Your home or rented space will be your agency hub. Make sure it enables you to effectively conduct sales meetings and administrative work. Having a professional appearance also builds credibility.

8. Invest in Marketing

A marketing budget is crucial for insurance agents dependent on commissions. Print ads, digital strategies, events, and other tactics should be rolled out to continually generate new leads.

9. Stay Up to Date on Industry Changes

Ongoing education is key. Take advantage of industry resources to stay current on regulations, carrier offerings, and insurance topics. This ensures you can best serve your clients.

Tips for Selling Insurance Successfully as an Independent Agent

Here are some top tips for independent agents looking to build a book of business and maximize their insurance sales success:

  • Specialize in specific products or niches to establish expertise that attracts leads. For example, focus on condo insurance or coverage for nonprofits.

  • Provide top-notch customer service to earn loyalty and referrals. Return calls quickly, resolve claims efficiently, and offer ongoing policy reviews.

  • Diversify lead sources. Don’t rely on just one lead channel. Use digital marketing, referrals, events, direct mail, and more to reach prospects.

  • Master objection handling. Brush up on overcoming common insurance buying objections like coverage not being needed or premiums being too expensive.

  • Leverage testimonials and reviews. Client stories, Google reviews, and testimonials build trust and credibility for prospective customers.

  • Stay organized. Use agency management software and organization systems to efficiently handle large amounts of prospects, clients, policies, and insurance carrier details.

  • Join industry associations. Groups like the National Association of Insurance and Financial Advisors provide networking, education, and resources for insurance agents.

With the proper dedication and business acumen, independent insurance agents can build very successful careers selling policies on their own terms. The critical first steps are getting properly licensed, appointed with carriers, establishing your brand, and executing marketing strategies to start generating leads. If you take the initiative to get your insurance agency going, the freedom and income potential of being your own boss awaits.

How to start selling life insurance: The complete beginners guide.


What do most independent insurance agents make?

As of Jan 29, 2024, the average annual pay for an Independent Insurance Sales Agent in the United States is $72,458 a year. Just in case you need a simple salary calculator, that works out to be approximately $34.84 an hour. This is the equivalent of $1,393/week or $6,038/month.

How profitable is selling insurance?

For auto and home policies, captive insurance agents earn about 5% to 10% of the entire premiums paid for the first year, while independent agents receive about 15%. Commission rates for renewals range between 2% and 15%, averaging around 2% to 5%, regardless of the type of agent.

Is it tough to sell insurance?

If entrepreneurship is your goal, there is plenty of opportunity for someone seeking a career in insurance sales. That said, it’ll be tough going, especially at first. Agents have to have thick skin and be able to handle rejection. After all, they’re all selling the same products, for the most part.

Can you make passive income by selling insurance?

First, life insurance sales jobs are abundant and easy to find. Second, commission percentages are very high compared to other insurance sales, such as health insurance. Best of all, life insurance agents get paid commission renewals for as long as a sold policy is in force. This creates a passive income stream.

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