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

[DHK]

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?

You're missing a fundamental understanding that I hope you get as you go through pre-licensing:

Licensing is about being held accountable by a government regulatory authority for your actions and recommendations.

Now, apply that understanding to what you're asking:
- An individual must be held accountable by a government regulatory authority, so the individual must be licensed.
- You cannot 'split' a license any more than you cannot split the ability to be held accountable.
- A business entity will need to also be held accountable. Who runs the licensed business entity? At least one licensed individual.

So, you and your business partner must both get your individual resident licenses in your state. You get your business registration done and name approved by your state DOI and get your business licensed as well. That's just in one state. Rinse and repeat for each state you want to do business in. (Although I don't think you need to get your business name approved in each non-resident state as long as it was approved in your resident state.)

Do you need to do all that? Depends on your goals.

 

[swchang]

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

Wow, that's the first time I've heard that (about the variable). Thank you!

 

[DHK]

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.

For non-resident states, you need to be licensed as of the day you want to get an application signed for an insurance sale with a resident of that state.

Regarding where the application is signed, etc., check with the compliance dept of each company. Generally speaking, where the client resides and lives is the determinant factor.

 

[swchang]

You're missing a fundamental understanding that I hope you get as you go through pre-licensing:

Licensing is about being held accountable by a government regulatory authority for your actions and recommendations.

Now, apply that understanding to what you're asking:
- An individual must be held accountable by a government regulatory authority, so the individual must be licensed.
- You cannot 'split' a license any more than you cannot split the ability to be held accountable.
- A business entity will need to also be held accountable. Who runs the licensed business entity? At least one licensed individual.

So, you and your business partner must both get your individual resident licenses in your state. You get your business registration done and name approved by your state DOI and get your business licensed as well. That's just in one state. Rinse and repeat for each state you want to do business in. (Although I don't think you need to get your business name approved in each non-resident state as long as it was approved in your resident state.)

Do you need to do all that? Depends on your goals.

Yes, what you say makes sense.

I live in MD and my partner lives in VA. Our business is registered and HQ'd in VA. Based on what you're saying, and what someone else said above:

1. I have to get licensed in MD. My partner has to get licensed in VA.
2. Our business should get licensed in every state (if we want the fees and commissions to go to business profit).
3. For all states, we only need one individual licensed (either my partner or I) and also the business.
4. Alternatively, if we are okay with being paid individually and not through the business, we would both get licensed in each state and the business itself would not. In either scenario, we must have two entities licensed per state (either 1 individual and 1 business or 2 individuals).

Is that right?

 

[DHK]

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?

This isn't widely known, but you can have two resident licenses - one for your resident address and one for your resident BUSINESS address.

Not entirely sure why you'd want to do that... but you can.

Btw, you can also physically NOT even BE in a state and have a resident license there. As long as you have an address on file for your resident state, you can live anywhere you want in the world and it won't matter.

 

[DHK]

Yes, what you say makes sense.

I live in MD and my partner lives in VA. Our business is registered and HQ'd in VA. Based on what you're saying, and what someone else said above:

1. I have to get licensed in MD. My partner has to get licensed in VA. (Yes)
2. Our business entity should get licensed in every state (if we want the fees and commissions to go to business profit). Do so as you begin doing business in each state. Just keep in mind that you'd need it all done the day you begin doing business in that state.
3. For all states, we only need one individual licensed (either my partner or I) and also the business. Check with your company compliance/licensing department.
4. Alternatively, if we are okay with being paid individually and not through the business, we would both get licensed in each state and the business itself would not. In either scenario, we must have two entities licensed per state (either 1 individual and 1 business or 2 individuals). Sounds right to me. Check with your company licensing department and tax advisor for any unforseen consequences of doing that.

Is that right?

First, my disclosure: I'm not a compliance person, so I may have a well-considered opinion, but it's not advice. My responses are in red above.

 

[swchang]

This isn't widely known, but you can have two resident licenses - one for your resident address and one for your resident BUSINESS address.

Not entirely sure why you'd want to do that... but you can.

Btw, you can also physically NOT even BE in a state and have a resident license there. As long as you have an address on file for your resident state, you can live anywhere you want in the world and it won't matter.

View attachment 8916

Thanks a lot, David. Your responses (and those of the others) have been supremely helpful to us.

I was hoping you would say that I could be just a resident of the state where my business is HQ'd, but your reply above seems to indicate otherwise. Darn!

 

[DHK]

I was hoping you would say that I could be just a resident of the state where my business is HQ'd, but your reply above seems to indicate otherwise. Darn!

You could... but then you'd have to schedule your exam in that state and somehow I think it would just over-complicate things.

Keep it simple: get a resident license where you live and non-resident licenses everywhere else. When you move to another state, get the non-resident license first, then register for the resident license and take their exam.

 

[Tahoe Ray]

Yes, what you say makes sense.

I live in MD and my partner lives in VA. Our business is registered and HQ'd in VA. Based on what you're saying, and what someone else said above:

1. I have to get licensed in MD. My partner has to get licensed in VA.
2. Our business should get licensed in every state (if we want the fees and commissions to go to business profit).
3. For all states, we only need one individual licensed (either my partner or I) and also the business.
4. Alternatively, if we are okay with being paid individually and not through the business, we would both get licensed in each state and the business itself would not. In either scenario, we must have two entities licensed per state (either 1 individual and 1 business or 2 individuals).

Is that right?

All correct.

I have a business partner in another state and this is exactly how we do everything.

Sublicensees of the corp (licensed everywhere), one of us individually licensed in the non-res state, res licenses in home state.

 

[swchang]

All correct.

I have a business partner in another state and this is exactly how we do everything.

Sublicensees of the corp (licensed everywhere), one of us individually licensed in the non-res state, res licenses in home state.

How did you decide to do that vs. both individually licensing in each state (and not the business entity)? Are there tax implications or liability issues to consider?