How to Start a Life Insurance Brokerage

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.

Learn how to start your own Life Insurance Brokerage and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services.

Start a life insurance brokerage by following these 10 steps:

  1. Plan your Life Insurance Brokerage
  2. Form your Life Insurance Brokerage into a Legal Entity
  3. Register your Life Insurance Brokerage for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Life Insurance Brokerage
  6. Get the Necessary Permits & Licenses for your Life Insurance Brokerage
  7. Get Life Insurance Brokerage Insurance
  8. Define your Life Insurance Brokerage Brand
  9. Create your Life Insurance Brokerage Website
  10. Set up your Business Phone System

We have put together this simple guide to starting your life insurance brokerage. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Life Insurance Brokerage Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

Want some help naming your life insurance brokerage?

Business Name Generator

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 - Learn how to get your Life Insurance License here.
  • 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 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

Who 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.

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%.

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.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your life insurance brokerage is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history, which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 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.

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 seller's 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.

Life insurance agents will also need to obtain a life insurance license, which is administered at the state level. In order to sell securities-backed insurance products, an agent will also need to get their FINRA securities licenses, generally the Series 6 and Series 63 licenses.

Learn more about becoming an insurance agent on

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, read our article, Sales Tax for Small Businesses.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Life Insurance Brokerage needs and how much it will cost you by reading our guide Business Insurance for Life Insurance Brokerage.

STEP 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.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

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.

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.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

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.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

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 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 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.

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Take the Next Step

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.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

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.

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.

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