New to insurance industry - need help with questions on getting started

[swchang]

Hi, all. New to this industry but eager to get started. Would love some help with a few (okay, many) questions I have...

1) I'd like to take the life/health/accident insurance exam and get licensed. I think I have to get one resident license as a producer first, and then for additional states would get non-resident licenses in each. Is that right? In other words, I couldn't be a non-resident everywhere, and I can only have at most one resident state?

2) I live in MD and work from home, but my company is HQ'd in VA. Does this mean I can choose to be considered a "resident" of either state, MD or VA?

3) If I am required to register in MD instead of VA, then does anyone have a recommendation for a good pre-licensing course? MD has a 40-hour course requirement. I found the list of approved courses, but some seem maybe a little less reputable or rigorous than others...

4) I see that you can register as an individual or as a business. I have a business partner, so could we just register as a business instead of as individuals so that we can save half the fees? Or would we need to instead both register as individuals in each state?

5) When do we have to get licensed in each state? As soon as we want to begin talking to even a single person who is a resident of that state? (Financial advising has safe harbor rules where if you have fewer than 6 clients in a state, you don't have to register, but so far it seems that insurance does not.) I've also heard there are differences among states about whether the person lives in a state, works in a state, or even signs in the state that would necessitate registration.

6) Finally, what kinds of life insurance and annuities can you sell if you only have a Series 65 (no Series 7, 66, SIE, etc)? I know variable (VA, VUL) is out. I assume term life, whole life, universal life, and fixed annuities are in. What about indexed annuities, FIA, SPIA, and IUL?

I know this is a lot of questions, but if anyone knows the answer to any of these, please chime in about those. I'm continuing to do more research and asking others, but would very much appreciate whatever help y'all can provide.

Thank you so much in advance!

 

[Deborah Armstrong]

I will answer your questions as numbered.

1) You are correct.

2) You are a resident in the state you live in or reside in. You can't live in two states simultaneously even if you have a second home. One of them is your primary residence. If your company is in another state you can get a non-resident license.

3) Most of us prefer ExamFX

4) Not sure I understand question 4, but the business isn't licensed, the individuals are licensed to sell the product.

5) I recommend getting licensed before talking to potential clients. You want to look like an insurance professional not looking to become one.

6) With insurance license and 65 the only thing you can't sell is anything that is a variable.

What is the ambition with you and your partner? Where do you see yourself 5 years from now?

 

[swchang]

Thanks so much, Deborah. Incredibly helpful info.

Re: question 4, I'll try to do a better job of explaining. Many state websites we have looked at include options to apply as an individual or as a business. On MD's site, for example, it has these options:
NAIC Uniform Application Initial Individual
NAIC Uniform Application Initial Business Entity

So we were wondering if we could just apply as a business entity in every state and thereby avoid having to apply as individuals in every state. That would mean only one application and only one fee per state, as opposed to two, or at least so we thought/hoped.

Re: ambition, initially, we were actually looking to be fee-only financial advisors. After some research and deliberation, we decided that while we would not make insurance sales a core part of our business, we would want to advise on it and refer to some trustworthy agents we've worked with, and so might as well get some commission from whatever we refer out.

 

[Todd King]

Thanks so much, Deborah. Incredibly helpful info.

Re: question 4, I'll try to do a better job of explaining. Many state websites we have looked at include options to apply as an individual or as a business. On MD's site, for example, it has these options:
NAIC Uniform Application Initial Individual
NAIC Uniform Application Initial Business Entity

So we were wondering if we could just apply as a business entity in every state and thereby avoid having to apply as individuals in every state. That would mean only one application and only one fee per state, as opposed to two, or at least so we thought/hoped.

Re: ambition, initially, we were actually looking to be fee-only financial advisors. After some research and deliberation, we decided that while we would not make insurance sales a core part of our business, we would want to advise on it and refer to some trustworthy agents we've worked with, and so might as well get some commission from whatever we refer out.

At the very least, you have to have your individual license. If you want the business to get paid from the insurance companies, you'll have to get the business an insurance license as well. You'll need your Articles of Incorporation or Articles of Organization (LLC) as well.

 

[Tahoe Ray]

That would mean only one application and only one fee per state, as opposed to two, or at least so we thought/hoped.

You're paying for both, unfortunately.

 

[PrivClientSG]

Congratulations on your new career decision -- and all the best to you!

As far your questions...

1) Yes, you have one "resident" state and license, and the rest are non-resident.

2) No, your resident state is (typically) where you live.

3) No, I have no idea and can't help you at all on this one.

4) I would suggest you speak with the general agent(s) who you will be doing all your business with, and your accountant. Getting licenses as a business does not automatically mean that each of you don't have to get licensed as an individual producer as well. It's not as simple as saying, we dhould just save half the money. Getting an entity licensed, with a partner, and then each of you getting individual licenses, etc., and all that goes along with it, is an administrative PITA for someone just starting out.

5) Don't split hairs and get caught up in minutia. If you are going to solicit business, and plan on doing business -- get licensed! You will spend more time trying to stay inside the lines and the rules, and all the dancing of pre-app, with app, and so on. Get licenced, write the business, and handle the rest next!

6) Talk to your general agent(s) and their compliance people about what licenses you need to sell what products.

All the best!

 

[Deborah Armstrong]

Thanks so much, Deborah. Incredibly helpful info.

Re: question 4, I'll try to do a better job of explaining. Many state websites we have looked at include options to apply as an individual or as a business. On MD's site, for example, it has these options:
NAIC Uniform Application Initial Individual
NAIC Uniform Application Initial Business Entity

So we were wondering if we could just apply as a business entity in every state and thereby avoid having to apply as individuals in every state. That would mean only one application and only one fee per state, as opposed to two, or at least so we thought/hoped.

Re: ambition, initially, we were actually looking to be fee-only financial advisors. After some research and deliberation, we decided that while we would not make insurance sales a core part of our business, we would want to advise on it and refer to some trustworthy agents we've worked with, and so might as well get some commission from whatever we refer out.

I thought of doing the same exact same thing, but that can be extremely expensive. I decided to take the alternative.

If you have that ambition, think about talking to an attorney about setting up a Delaware LLC/Trust. I am not an attorney so I can't give advice, but you might want to go that route. If you do this, will you be able to compete with the big players on that kind of level? Why should someone want to join you instead of a larger corporation?

Or there is the alternative you can make by connecting with a larger corporation and piggybacking off them which allows you to run your own business and recruit without being in an MLM. That's what I decided to do instead.

 

[swchang]

At the very least, you have to have your individual license. If you want the business to get paid from the insurance companies, you'll have to get the business an insurance license as well. You'll need your Articles of Incorporation or Articles of Organization (LLC) as well.

Thanks, Todd. Do you know if we could do one individual per state (either my partner or I) and the business? Or would we both need to be licensed and the business? Or, a third option, could we just do the two of us individually and not the business? The goal is to evenly split any commissions between the two of us, no matter what.

 

[No1billsfn]

You could license one individual per state, but you’d have to be paid as individuals. If you want to save on fees, but still have the money go to the business then you could license the business in every state and then split the states per individual.

 

[DHK]

6) Finally, what kinds of life insurance and annuities can you sell if you only have a Series 65 (no Series 7, 66, SIE, etc)? I know variable (VA, VUL) is out. I assume term life, whole life, universal life, and fixed annuities are in. What about indexed annuities, FIA, SPIA, and IUL?

You don't need a securities license to sell term life, whole life, universal life, or fixed annuities. You also don't need a securities license to sell fixed indexed annuities (FIA), SPIAs, or IULs.

If you wanted to sell variable annuities or variable universal life using a Series 65, you'll need the fee-based versions of those policies, not the commission based versions. Jackson National is probably the leader in fee-based variable policies for those who hold a Series 65 license.

https://www.jackson.com/ria-and-wealth-managers.html