How Much Money Does an Independent Insurance Agent Make?
Independent insurance sales agents earn more as they build their client bases.
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Many independent insurance agents still work with major insurance companies such as State Farm, Farmers and Aflac. They train with these companies for several months, get their own branch offices and then pay overhead and advertising expenses as independent business owners. These agents contact residential and businesses and sell them car, property, life and health insurance. They also track revenue and expenses and place advertisements in the yellow pages and newspapers. Independent insurance agents earn relatively high incomes compared to most occupations.
Income and Qualifications
Independent insurance agents earned average annual incomes of $85,000 as of 2013, according to the job site Indeed. A large percentage of these agents’ earnings comes from commissions and bonuses. For example, State Farm agents, who usually work independently, earned average annual incomes of $78,700, according to Glassdoor — with average bonuses and commissions of $29,000 and $11,750 per year. Most independent insurance agents have at least high school diplomas. They also must pass a state exam through the American Institute for Chartered Property and Casualty Underwriters to work as insurance agents, according to the BLS. Agents may study up to two months or more for these tests. Other essential requirements include self-confidence, drive and math, communication, analytical, organizational and computer skills.
Income by Region
In 2013, average incomes for independent insurance agents varied significantly in all U.S. areas. In the Midwest region, they earned the highest incomes of $91,000 in Illinois and the lowest of $65,000 in South Dakota, according to Indeed. Those in the West earned between $59,000 and $92,000 per year, respectively, in Hawaii and California. Agents made $72,000 to $99,000, respectively, in Louisiana and Washington, D.C., the lowest and highest earnings in the South. In the Northeast, they made the most in New York and the least in Maine — $102,000 and $73,000, respectively.
Most independent insurance agents earn higher incomes the longer they’ve been working in the insurance industry, because they usually build larger client bases and earn larger commission on renewals. These professionals also earn more in New York and Washington, D.C., because living and housing costs are higher in that state and district. For example, an independent insurance agent who earns $85,000 in Des Moines, Iowa, must make $203,295 in New York City to enjoy the same living standard, according to CNN Money’s cost of living calculator. That same individual must earn $133,558 in Washington, D.C.
The BLS projects a 22-percent increase in jobs for all insurance sales agents in the next decade, faster than the national growth rate of 14 percent for all occupations. Independent insurance agents should find more job opportunities if the economy continues improving — especially since more insurance companies are using independent brokers, according to the BLS. Insurance companies should also need more independent agents because of an aging population, which creates a higher demand for medical and long-term health care insurance.