What is the most important part of an insurance agent's job?

Editorial team Published on

The most important part of an insurance agent's job is to help clients select the proper kind of protection within their financial boundaries while matching people with the right coverage and supporting them through the life of the policy.

Core Responsibilities

  • Assessing Needs: Evaluating a client's finances, family situation, assets, liabilities, and risk tolerance.
  • Educating and Recommending: Explaining policy types, coverage amounts, terms, and exclusions so clients can make informed choices.
  • Guiding Through Underwriting: Helping clients complete accurate applications, manage medical or property evaluations, and name beneficiaries properly.
  • Servicing Policies: Managing annual reviews, billing questions, policy renewals, and guiding clients through claims.
  • Maintaining Compliance: Adhering to state and federal regulations, licensing rules, and ethical disclosures.

What is the main duty of an insurance agent?

An insurance agent acts as the primary link between insurance companies and clients, helping individuals and businesses select policies that fit their needs and budgets.

Core Responsibilities

  • Lead Generation: Find new clients through networking, cold calling, referrals, and digital marketing.
  • Needs Assessment: Consult clients to evaluate their financial situations, risk exposure, and long-term goals to recommend proper coverage.
  • Policy Sales and Explanation: Explain policy features, premium structures, coverage limits, and exclusions in clear terms before closing the sale.
  • Application and Underwriting: Complete and submit accurate applications to secure underwriting approval from the carrier.
  • Claim Assistance: Support policyholders during emergencies or losses by helping them file, track, and navigate claims toward a fair settlement.
  • Customer Relationship Management: Provide continuous post-sale service, handle policy renewals or updates, and process beneficiary or billing changes.

You can read more about these duties and the Role of Insurance Agent on industry resources.

What are the 7 pillars of insurance?

The 7 pillars (or core principles) of insurance are the legal and ethical rules that govern every insurance contract.

The Seven Core Principles

  • Utmost Good Faith: Both the buyer and the insurance company must be completely honest and share all important facts. Hiding information can cancel the policy.
  • Insurable Interest: You must suffer a direct financial loss if the insured item or person is damaged or lost. You cannot insure things you do not own or have a stake in.
  • Proximate Cause: A claim is only valid if the main, closest cause of the damage is a covered risk listed in the policy.
  • Indemnity: Insurance pays to return you to your exact financial state before the loss happened. It does not let you make a profit from a claim.
  • Subrogation: After an insurer pays your claim, they get the legal right to chase a responsible third party to recover the money.
  • Contribution: If you have more than one policy on the same item, each insurer shares the payout cost proportionally instead of you getting paid twice.
  • Loss Minimisation: The policyholder must act sensibly to reduce or prevent further damage, as if they had no insurance at all.

You can learn more about how contracts work via Skillcast's Insurance Principles.

Is it hard to make money as an insurance agent?

Yes, making money as an insurance agent is hard, especially in the first year, because most agents work on a commission-only basis with no guaranteed base salary.

Why It Is Hard

  • No Guaranteed Pay: If you do not sell a policy, you do not get paid, even if you work more than 40 hours a week.
  • High Rejection Rate: You will face constant rejection and people hanging up or shutting doors on you.
  • High Burnout: Many new agents leave the field quickly because they cannot make a steady living.
  • Startup Costs: Many independent agents have to buy their own business leads and cover marketing expenses out of pocket.
  • Predatory Recruiting: As discussed by a consensus on Reddit, new life insurance agents often face misleading income promises and low commission structures.

How You Can Make Money

  • Commissions: You earn a percentage of the policy's premium when you make a sale (usually 5% to 15% for property and casualty, or higher for life insurance).
  • Renewals: You earn passive residual income every month or year a client keeps their policy active, which compounds over time.
  • Bonuses: Companies offer extra cash incentives if you hit specific sales targets.
  • Long-Term Success: As opinions on Facebook show, opinions are mixed, but many note that with strong mentorship and time, experienced agents can build a high-earning, stable business from renewals.

Read the Investopedia Guide to learn more about the pros and cons of this career.

What is not a typical duty of an insurance agent?

Determining the final rate classification or underwriting a policy is not a typical duty of an insurance agent.

Non-Agent Responsibilities

  • Underwriting the contract: Evaluating risk, deciding whether to issue a policy, and setting the final price or rate classification are done by insurance company underwriters, not agents.
  • Assessing medical reports: Analyzing detailed health records to price or approve a risk is handled by medical professionals and underwriters at the insurance company.
  • Representing the client exclusively: Traditional agents legally represent the insurance company (the principal) rather than the buyer, though they provide customer service.
  • Acting as a legal defender: Representing or defending the insured party in a court of law during a lawsuit is outside an agent's scope of work.

What To Expect Your First 90 Days As An Insurance Agent!

9 related questions found

Why do most insurance agents quit?

Most insurance agents quit within their first few years due to financial pressure from commission-based pay and unrealistic income expectations.

Industry data shows that up to 80% to 90% of new agents leave the field within the first three years. The main causes behind this high turnover include:

Financial and Income Pressures

  • Unrealistic expectations: New agents often expect fast six-figure incomes, ignoring that building a client base takes years.
  • Income inconsistency: Commission structures mean earnings fluctuate wildly from week to week, causing severe anxiety for those used to steady paychecks.
  • Running out of cash: Many agents exhaust their savings before their residual income and client book become profitable.

Operational and Sales Challenges

  • Rejection fatigue: Hearing "no" dozens of times a day leads to mental exhaustion, especially for agents who take rejection personally.
  • Lack of reliable leads: Without a steady, sustainable strategy to find prospective buyers, agents quickly run out of people to pitch.
  • Poor training and support: Many companies throw new hires into the field with minimal mentorship, bad tools, or unhelpful multi-level marketing (MLM) structures that strain personal relationships.

Burnout and Lifestyle Factors

  • Overwhelming workloads: Many agents increase their hours to chase quotas, leading to chronic stress and burnout.
  • Isolation: Working independently or from home removes peer support systems that normally buffer against daily stress.
  • Family strain: Long hours, evening calls, and weekend appointments often create friction at home if family support is lacking.

What not to tell your insurance agent?

Never say "I'm sorry" or admit fault after an accident, as insurance companies can use this as a legal admission of liability to reduce or deny your compensation.

Statements to Avoid

  • "I'm fine" or "I'm not hurt": Adrenaline can mask pain, and saying you are okay early on makes it difficult to claim injury later.
  • Guesses or speculation: Do not estimate your speed, the distance of another car, or the exact time of impact if you are not 100% sure. Inaccuracies can destroy your credibility.
  • "It was just an accident": Downplaying the event can be used to minimize the seriousness of the situation.
  • Detailed early or recorded statements: You do not have to give an immediate recorded statement to the other driver's insurance company.

Disclosures and Actions to Avoid

  • Full medical history: Do not grant broad access to your medical records or discuss prior injuries, which insurers can blame for your current pain.
  • Quick settlement offers: Do not accept early payout offers before knowing the full extent of your vehicle damage or medical costs.
  • Social media posts: Do not post photos, status updates, or activity logs about the crash or your recovery, as adjusters monitor these profiles to find contradictions.

What are the five basic principles of insurance?

The five basic principles of insurance are Utmost Good Faith, Insurable Interest, Indemnity, Subrogation, and Contribution.

💡 Core Principles of Insurance

  • ✅ Utmost Good Faith (Skillcast)
    • Complete honesty between both parties.
    • Full disclosure of all material facts.
  • ✅ Insurable Interest (Skillcast)
    • Financial stake in the insured item.
    • Must suffer direct financial loss from damage.
  • ✅ Indemnity (Skillcast)
    • Restores original financial position.
    • No profit allowed from a loss.
  • ✅ Subrogation (Skillcast)
    • Insurer pursues responsible third parties.
    • Recovers payout costs after settling.
  • ✅ Contribution (Skillcast)
    • Shared liability across multiple policies.
    • Prevents duplicate claims exceeding total loss.

What are the four key characteristics of insurance?

The four key characteristics of insurance are the pooling of losses, payment of fortuitous (accidental) losses, risk transfer, and indemnification.

Core Characteristics of Insurance

  • Pooling of losses: Many individuals share the financial risk together. This collective sharing replaces a huge individual actual loss with a much smaller, predictable average loss.
  • Payment of fortuitous losses: Coverage applies to unexpected or accidental losses caused by chance. It does not cover planned or intentional losses.
  • Risk transfer: The financial responsibility for a potential loss moves from the individual policyholder to the insurance company.
  • Indemnification: The policyholder is restored to their exact financial position prior to the loss. The insured is made whole again without profiting from the event.

What are the six basic principles of insurance?

The six basic principles of insurance are insurable interest, utmost good faith, indemnity, proximate cause, subrogation, and contribution. These rules form the foundation of legal insurance contracts.

The Six Principles

  • Insurable Interest: You must have a legal or financial stake in what you insure. You must suffer a direct financial loss if the insured event happens.
  • Utmost Good Faith: Both the buyer and the insurance company must act honestly. Both sides must fully disclose all important facts before making the contract.
  • Indemnity: Insurance replaces what you lost to put you back in your original financial place. It does not let you make a profit from a claim.
  • Proximate Cause: This is the primary or direct cause of a loss. It is used to figure out if the specific cause is covered by the policy.
  • Subrogation: Your insurance company can pursue a third party that caused your loss to recover the money they paid you.
  • Contribution: If you have more than one policy covering the exact same risk, the insurers share the cost of the payout proportionally.