The Fun World of Licensing Understanding Terminology with

The Fun World of Licensing Understanding Terminology with Christy Pelikan

Interconnected but not Interchangeable State Appointment State License Carrier Appointment

Why do I need a State License? What is a State License? A resident or non-resident life insurance license obtained through the State Department of Insurance in order to conduct and sell insurance products in that specific state. Needed prior to soliciting any type of Fixed or Variable product. The agent cannot solicit new business or service existing policies in any state where he/her is not currently licensed. The license must be fully effective, not just in process before solicitation or service.

Why do I need a State License? It is important to obtain a license with all the lines of authority the agent plans to solicit, sell and service. Example: If the agent wants to sell LTC, the Health Line of authority is needed. Wants to sell Variable, the Variable line of authority is needed. It is also critical to ensure the agent has taken the necessary Continuing Education (CE) for the license and product type prior to solicitation. Such as LTC and Annuity. The agent can contact the State’s Department of Insurance for assistance with any of the above.

Why do I need a State License? A Securities Registration is different. This is handled by the back office and fees are deducted for the agent’s commissions. Please see Kristy Wiegand for exact details. Both a Variable State Life Insurance License and a Securities Registration are needed in order to conduct Variable Business.

Interconnected but not Interchangeable State Appointment State License Need a State License to get a Carrier Appointment

What is a Carrier Appointment? A selling agreement with a particular carrier that allows an agent to sell that carrier’s products and service existing policies held by that carrier. All agents must have a state license in order to be setup with the carrier. All the carriers require current E&O Coverage and AML from the agent. Some carriers have restrictions on the amount of E&O required or what vendor can be used for the AML. You can ask Licensing on particular carrier requirements.

What is a Carrier Appointment? Some carriers will allow you to solicit and submit new business before you have become appointed. However, since other carriers have pre-appointment states or additional training needed prior to solicitation, it is a great idea to check with Licensing a couple days before the agent heads to that client meeting.

Interconnected but not Interchangeable State Appointment State License Need a State License to get a Carrier Appointment Need a Carrier Appointment so carrier can request State Appointment

How do I get a State Appointment? What is a State Appointment? Confirmation from the state in question that an agent is in good standing and has permission to sell products in that state. Once appointment paperwork is submitted/processed, the carrier must reach out to the agent’s licensed state(s) to obtain confirmation on that agent’s standing. Example: David wants to become appointed with Protective in MO and IL. His appointment paperwork is submitted. After Protective approves the background check for David, they will reach out to MO to check his standing and ask permission to add the state to the appointment.

How do I get a State Appointment? On the initial appointment, the agent doesn’t have to do anything except be patient and wait. If the appointment is older and the carrier doesn’t have current licenses on file, a current license may be needed by the carrier before they can request the state appointment. Example: The agent becomes licensed in a new state or the agent’s appointment is many years old and the licenses have been renewed since the initial paperwork was submitted. This process is usually fast, but sometimes the states like to take their sweet time.

How do I get a State Appointment? Most carriers will only contact the agent’s resident state upfront for the state appointment. Those carriers wait until new business is submitted in non-resident states before contacting those states of approval. Why? Since most states charge a fee for the state appointment, the carriers don’t want to pay for all the agent’s licensed states if the agent is not actively doing business in those states with that carrier. Example: David is licensed in 50 states, his new Banner appointment will start with MO only. Once he submits new business in IL, Banner will contact IL to request the IL state appointment.

How do I get a State Appointment? Most carriers will cover this fee if the agent has conducted new business within a set time frame. (ie 1 year, 18 months, etc. – depends on the carrier’s procedures) If the agent hasn’t conducted new business within that time frame the carrier will either remove the state appointment in that state OR ask the agent to pay the state fee to keep that state on the appointment. If the state is removed, it does not affect any other states on the appointment. The agent will still be appointed in the other states that had been added to the appointment. Once new business is submitted the carrier will re-contact that state and pay the fee to add the state back to the appointment. A new license copy may need to be submitted.

How do I get a State Appointment? Example 1: David hasn’t submitted new business with Nationwide in IL in the last 18 months. Nationwide sends a notice that David needs to paid the $20 state fee or they will remove IL from his appointment until he submits new business. David doesn’t think he will write any new business in IL any time soon. So he doesn’t pay the fee. Nationwide removes IL from the appointment. David’s state appointment in MO & CA are still active with Nationwide since he submitted new business recently in those states. Five months later, David has the chance to write an application with Nationwide in IL. He tells Licensing, who submits his renewed IL license. The new business is also send to Nationwide will contact IL and pay the fee to add the state back to the appointment.

How do I get a State Appointment? Example 2: David hasn’t submitted new business with Banner in IL in the last 12 months. Banner sends a notice that IL has been removed from David’s appointment. David’s state appointments in MO and CA are still active with Banner since he submitted new business recently in those states. Five months later, David has the chance to write an application with Banner in IL. He tells Licensing, who submits his renewed IL license. The new business is also send to Banner will contact IL and pay the fee to add the state back to the appointment.

Interconnected but not Interchangeable State Appointment State License Carrier Appointment

Questions?