How Much Does it Cost to Become an Insurance Agent? (List of Costs)

How Much Does it Cost to Become an Insurance Agent?

Jun 10, 2022

Considering a career as an insurance agent? Great choice! There are so many benefits to insurance sales including job security, steady income growth, flexibility, freedom over your work, and the rewarding feeling of connecting individuals with important services that directly make an impact on their life.

If you’re just starting your journey to becoming an insurance agent you likely have a ton of questions. One question many individuals like yourself have is, “how much does it cost to become an insurance agent?”

Steps and Costs to becoming an Independent Insurance Agent

Before we get started, it is important to note there are many types of insurance sales including property and casualty, life, health, etc. The most common licenses new insurance agents get are the property & casualty license (P&C), and life and health insurance license (L&H) with many insurance professionals choosing to obtain both types of licenses.

This article will primarily focus on the costs associated with becoming a health insurance agent (a steadily growing career with high earning potential). Keep reading to find out the steps and costs of becoming an insurance agent in 2022.

1. Get Health Insurance License (Insurance License Cost)

Getting a health insurance license is the first step to becoming an independent health insurance agent. Depending on the state you apply in, you may be required to complete a pre-licensing insurance education course. Courses can vary in price and content. Even if your state doesn’t have education requirements many individuals still choose to take a course to prepare for the exam.

Once you have completed a course or prepared for the exam, you will need to take and pass the insurance license exam. Prices for state licensing exams vary, but typically run between $40-$150. Once the test is completed the next step is to apply for your insurance license. Each state has its own license application process. Generally, there is an application fee ranging from $30-$200 and a background check that could run around $30.

It is also important to note that some insurance carriers require agents to have a life insurance license as well. Regardless of the requirement, many agents choose to get both licenses at the same time so they are able to provide their clients with other insurance products later down the road.

Example of Estimated Cost for Health & Life Insurance Agent License in California:

Education Course: $80.00
Background & Fingerprints: $59
Health Application Fee: $188
Health License Examination: $55.00
Life Application Fee: $188
Life Licensing Exam: $55.00

Total Estimated Cost: $625

*Source:  California Department of Insurance

2. Purchase Errors & Omissions Insurance

Errors & Omissions insurance is intended to protect an insurance agent from legal action should they unintentionally provide misleading or incorrect information to a client. While E & O insurance is not required to become an insurance agent, most insurance carriers require it in order to sell their products. A typical E & O policy can cost around $300-$700 a year.

Estimated Cost of Errors & Omissions Service: $500/year

3. Pass AHIP & Individual Carrier Certifications (Medicare Insurance Sales)

This step/cost is specifically for those interested in a career in Medicare sales.  Licensed insurance agents are required to complete and pass an annual exam on the rules and regulations of selling Medicare plans as stated by the Center for Medicare and Medicaid Services (CMS). This test is called America’s Health Insurance Plan (AHIP) Certification. The cost of the test typically runs around $175, however, some insurance carriers, FMOs, and IMOs offer a discounted rate.

In order to begin selling Medicare plans, you will need to be appointed with various insurance carriers. Each insurance company requires insurance agents to complete an annual certification exam and a contract. Carrier certifications and contracts need to be completed for each carrier you wish to sell. For example, if you want to sell Medicare plans from Aetna, Blue Shield, and Cigna you will need to complete carrier certifications for each provider.

Agents partnered with AGA have access to a full list of insurance carrier certification guides, monthly carrier training courses, and continuous hands-on support.

Estimated Cost of AHIP Certification: $175

4. Marketing

Now that you’re a licensed insurance agent what comes next? Well for starters, you’ll need leads and that’s where marketing comes in. Leads are the lifeblood of every independent agent and broker’s business. There are multiple marketing channels in which you can reach your target market such as:

  • Website
  • Direct mail
  • Email Marketing
  • Social Media Marketing
  • Radio Ads
  • Paid Ads
  • Events & more.

Marketing costs can vary depending on different channels, duration of the campaign, competition within the channel, etc. For example, a direct mail campaign of 1000 pieces can cost around $600 while a single social media ad can cost between $25-$100. Marketing is a monthly expense you will need to budget and plan for in order to keep receiving leads. Many agents find it easier to partner with an FMO that provides marketing assistance. You can read more about the various ways to market yourself as an Independent Insurance Agent in our blog post, “How to Market Yourself as an Insurance Broker.”

Estimated Cost of Marketing: varies

5. Contract with an FMO

Many insurance agents find success in partnering with a Field Marketing Organization also known as an FMO. A Field Marketing Organization is an entity that provides independent insurance agents and brokers the opportunity to offer insurance products from multiple carriers in order to be as competitive as possible. FMO’s essentially help take the day-to-day load away from an independent insurance agent by offering assistance in lead generation, marketing, training, contract writing, and more.

There are many perks to joining an FMO for example, at AGA we offer our agents a 50% co-op marketing program that covers half of their marketing cost. This is extremely beneficial as marketing costs can be very expensive. While there are no monetary costs to joining an FMO, partnering with the wrong one may cost you in other ways. Be wary of FMO’s that offer partial commissions, captive contracts, and little to no lead programs or marketing assistance.

Estimated Cost of partnering with an FMO: $0


While there is a bit of an upfront cost to joining the insurance industry as an insurance agent, the benefits outweigh the costs. A career as an Independent Insurance agent can be extremely lucrative and rewarding. So now that we’ve answered the question, “How much does it cost to become an Insurance Agent,” are you ready to start your career? We hope so!

Seize the Opportunity - Get Started in a Fast Growing and Lucrative Career Today


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