Business Overview


A life insurance brokerage meets with current and prospective clients to determine their life insurance demands. They then work with various insurance companies to identify the policy type that best meets the customer’s coverage and financial needs.

Who is this business right for?

While owning a life insurance agency can prove to be quite profitable, those realizing the greatest success enter this field because they truly enjoy helping others. Industry leaders believe in the products they “sell” and are passionate about educating others on the subject.

What happens during a typical day at a life insurance brokerage?

In the insurance industry, no two days are alike and every day offers an opportunity to learn and grow. Your day-to-day tasks include:

  • Meet with clients to determine their unique needs and educate them on life insurance.
  • Assist clients in filling out paperwork.
  • Guide customers through the death claim process.
  • Service your current book of business.
  • Market to your target audience and networking within the community.
  • Research current trends and remain abreast of industry news. (Continuing education is critical in this field.)
  • Work to gain appointments with insurance companies you wish to represent.
  • Handle other administrative duties

The bulk of an agent’s day is spent building and maintaining relationships with both insurance representatives and clients.

What is the target market?

There are a variety of reasons for purchasing life insurance that go beyond paying a death benefit when the insured dies. Get to know the products you sell on a deeper level. Once you’ve gained a clear understanding, identifying the target market will come naturally.

Life insurance products typically appeal to a diverse customer base.

How does a life insurance brokerage make money?

Your brokerage will generate revenue for each policy sold. Upon initial application acceptance, the writing agent receives a commission check for a percentage of the total policy premium. You can also expect to receive a smaller commission for every time a customer renews his or her insurance policy.

What is the growth potential for a life insurance brokerage?

The insurance industry is widely considered a recession proof profession. While life insurance is more vulnerable than other lines of business, today’s consumers are more financially savvy, recognizing the financial need/benefits behind owning life insurance. Your agency’s growth is only limited by your insurance knowledge, willingness to take risks, and drive for success.

Getting Started


What are some skills and experiences that will help you build a successful life insurance brokerage?

Regardless of how large of a role you plan to take within the agency, it is absolutely critical that you gain insurance experience before opening your own establishment. A well-rounded agency offers a variety of financial products. This first-hand experience will educate you on these products and help build your communication skills so you are able to establish a relationship of trust.

Successful agents possess a sound understanding of the intricacies of this dynamic industry. Their passion for this profession puts clients’ minds at ease, softening what many view as a painful, but necessary process. Strong marketing faculties, business acumen, and leadership skills are paramount to the agency’s success. Since this is a commission-based business, agency owners must perform well under pressure and possess the drive to charge forward.

Many agency owners choose to continue their insurance education well beyond the initial licenses. The National Alliance for Insurance Education and Research offers a variety of courses to fit every individual’s needs. The National Association of Insurance and Financial Advisors is also a great resource, offering an extensive curriculum to help every agent reach their fullest potential.

What are the costs involved in opening a life insurance brokerage?

While it’s possible to open an agency with as little as $5,000, the business’ bottom line will benefit from a larger initial investment. Start-up costs include the following:

  • Licenses and certifications - $400-$1,000
  • Office space - Deposit and rent vary, depending upon building size and location. Many new agents opt to eliminate all costs associated with opening an office by working out of their home during the first few years.
  • Agency management system (AMS) - Initial costs range anywhere from $5,000 to $20,000, depending upon the number of users and the capabilities you desire, with a monthly fee thereafter. While it might be tempting to manage your business without an AMS, it is not recommended. Most software packages are designed to ensure legal compliance and keep the agency on track with marketing, sales, and customer service. A list of AMS solutions, along with their ratings, can be found here.
  • Insurance - Meet with an insurance professional to ensure your business needs are met. Business insurance, E&O, and a surety bond are all sound investments. Policy premiums for these policies vary from state to state, with industry experience significantly impacting the annual premium.
  • Insurance company appointments - These fees vary, based on the insurance carriers’ guidelines. $50 - $300
  • Website - In today’s environment, it’s critical that you build an online presence. Depending upon the capabilities you desire, budget $4,000 to $15,000 for your site build.

Many new agents choose to purchase another agent’s book of business - their list of clients. While this can prove to be a worthy investment, entrepreneurs are urged to conduct thorough research and seek counsel to ensure fair pricing.

While initial costs can be as low as $5,000, business owners who realized timely success report investing upwards of $50,000.

What are the steps to start a life insurance brokerage?

Once you're ready to start your life insurance brokerage, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

  1. Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
  2. Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your life insurance brokerage is sued.
  3. Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
  4. Open a business bank account. A dedicated checking account for your life insurance brokerage keeps your finances organized and makes your business appear more professional to your customers.
  5. Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
  6. Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
  7. Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
  8. Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
  9. Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for for free.

What are some insider tips for jump starting a life insurance brokerage?

Leading life insurance business owners offer the following advice:

  • Never be afraid to take risks, but always have a backup plan.
  • To assist in your marketing strategy, contact your carrier representative. Most have pre-approved marketing materials available to you.
  • If you decide to create your own marketing materials, seek prior approval from your insurance carriers’ compliance department. Unapproved marketing materials could result in hefty penalties and fines.
  • “Speak less, listen more.” Take the time to truly understand your clients needs. Sell a product’s value, not the price.
  • Make sure your clients have access to the information they need, regardless of day and time.
  • Evaluate and quantify every sales activity, both successes and failures. Those who treat every situation as a learning experience realize the most significant successes.

Growing Your Business


How to promote & market a life insurance brokerage

Life insurance agency owners are urged to develop their brand, with a marketing strategy built around that brand. Remember, potential clients have a variety of options when it comes to purchasing life insurance. Make sure your brand exudes trust and convinces the public that you can best fulfill their needs.

Agents have realized success through a diverse marketing strategy that includes neighborhood newsletters, personalized mailers, radio advertisements, and a strong social media presence. Professional business profiles will also assist in establishing yourself as an industry leader. Lastly, a strong presence within your community is another great way to build relationships.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

It is a common misconception that, once you’ve sold a life policy, the needs of that customer are permanently met. Life insurance leaders build lasting relationships that carry through multiple stages of one’s life. Their needs at age 24 look nothing like their needs at 46. It is your job to guide them along the way. Provide each customer premium service.

Word of mouth spreads, whether we like it or not. It’s up to you whether your reputation is positive or negative.

How and when to build a team

While it is possible to manage the agency on your own, it might prove beneficial to start out with at least one other team member. Each employee must be trained and certified, based on the laws defined by your state.

When considering prospective employees,  remember that this person will represent your organization. They must possess leadership qualities that command trust from a variety of age groups and personality types.

Legal Considerations


State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a life insurance agency. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

In particular, insurance agencies generally should obtain a sellers license as most states require insurance agencies to remit sales tax for certain types of insurance products. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

Reduce Personal Liability

Structuring your business as a limited liability company (LLC) ensures your personal assets are protected in the event your business is sued.

What is an LLC?

Form an LLC in 5 easy steps

Earning Potential


How much can you charge customers?

The insurance carrier sets both premiums and commission, which vary from policy to policy. Commission on policy sales averages between 30% and 70%, with some agents earning 100% of the premium for the first year. Renewal commission is significantly lower, averaging around 5%.

What are the ongoing expenses for a life insurance brokerage?

Your ongoing expenses will vary, depending upon office location and number of employees. In addition to standard overhead costs associated with running an office, owners should budget for the following:

  • Agency management system (AMS) - Monthly fees range from $50 to $300, depending upon organizational needs.
  • Payroll and incentive packages - This will represent your largest expense, but is also your greatest investment. Invest in your employees and you will build a team dedicated to both you and your book of business.
  • Continuing education - Check with your state to determine continuing education requirements. Many of these courses can be taken online, in-person, or during attendance at an industry convention. Encourage your staff members to grow in their careers by funding their continued education.
  • Insurance carrier appointment fees
  • Marketing

How much profit can a life insurance brokerage make?

Agency profits will vary from year to year, with the first few years being the most difficult. After 2-3 years, many life insurance agency owners report a strong book of business that delivers an average of $130,000 in annual profits.

How can you make your business more profitable?

While it is possible to make a living selling permanent and term insurance only, diversity is the key to success. Consider getting the proper licenses to offer financial products such as annuities and variable life policies. Health insurance, particularly policies such as Medicare supplements and Long-term care policies, would help diversify your business portfolio and boost the agency’s profit.

Consider buying into a cluster group, which can help lower new business requirements and ongoing expenses, such as carrier appointments.

Next Steps

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