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5 Questions Insurance coverage Brokers Shouldn’t Reply with out a Securities License



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This put up is a part of a sequence sponsored by AgentSync.


Answering consumer questions is vital to constructing belief and strengthening relationships. Many insurance coverage shoppers view their agent because the skilled on the subject of managing their threat. When you’ve been working as an insurance coverage agent lengthy sufficient, you’ve probably already established your self as educated, dependable, and reliable within the eyes of your shoppers. Constructing belief with shoppers takes effort and time, however it’s vital to creating lasting relationships and growing your consumer retention.

As soon as your shoppers belief you sufficient to be an skilled on their particular insurance coverage wants, they’ll really feel extra comfy asking you questions that transcend worth and coverage particulars. Providing recommendation or suggestions to your shoppers to assist them higher handle their threat is all a part of the job, however watch out to not reply any questions that fall exterior your wheelhouse. Particularly, any questions that you just aren’t really licensed to reply – like these involving securities.


Securities require further licensure

Some insurance coverage merchandise, like variable life insurance coverage and variable annuities, are categorized as securities due to their ties to market fluctuations. These merchandise, that are usually leveraged by traders as they plan for retirement, are extra sophisticated and contain an extra degree of regulatory oversight and licensure.

Promoting these merchandise with out finishing the required steps to change into licensed can open insurance coverage brokers as much as regulatory motion like fines, suspension, and in extreme circumstances, jail time. However do you know you may face the identical penalties just by answering securities-related questions with out the right license?


5 questions that an insurance coverage agent ought to NEVER reply with out a securities license.

1. Ought to I buy a variable annuity?

Insurance coverage brokers can inform their shoppers whether or not buying flood insurance coverage is a good suggestion or not primarily based on the situation of their property. They’ll advise enterprise house owners on the correct quantity of legal responsibility insurance coverage to guard their firm from expensive lawsuits. What they will’t do (at the least with out the correct license) is advocate whether or not their consumer should buy securities-based merchandise, like variable annuities.

2. Will buying variable life insurance coverage assist me meet my long-term monetary targets?

In the case of serving to shoppers with their monetary targets, one of the best an insurance coverage agent can do is assist their consumer store round for probably the most aggressive worth on their coverage. Suggesting a consumer put money into any security-based product, like variable life insurance coverage, to set themselves up higher for retirement is a giant no-no for any insurance coverage agent who doesn’t maintain a securities license.


3. What are the advantages of a variable annuity vs. a registered index-linked annuity?

You might be pondering that discussing the worth of various securities merchandise is A-OK because you’re not technically making any suggestions, however you’re nonetheless strolling a skinny line. Providing details about the advantages of sure merchandise may come throughout as providing funding recommendation which may land an agent with no securities license in scorching water with the SEC.

4. Based mostly on present market developments, is now time to take a position?

Whether or not or not an agent feels educated sufficient on present market developments to reply a query like this, they need to by no means attempt to persuade a consumer to put money into securities, or, certainly, to not make investments. When you provide a advice that results in an funding, after which the market plummets, an indignant consumer would possibly place the blame on you. Good luck profitable that lawsuit with out a license to advise and promote securities.


5. What are the precise dangers related to variable annuities?

You’re an insurance coverage agent; threat administration is the title of your sport! Absolutely you may provide shoppers data on the dangers related to buying a variable annuity. Not so quick. Identical to telling your shoppers about the advantages of investing in securities, speaking in regards to the drawbacks of those merchandise might be seen as providing recommendation on whether or not or to not make investments. And we’ve already established that providing any type of funding recommendation with out the right license is off the desk.

What occurs if you happen to reply securities questions with out the fitting license?

Giving out recommendation about securities can have unfavorable results on each the un-licensed agent and the consumer. First off, since these investments cope with folks’s life financial savings, one mistake primarily based on unhealthy recommendation can deal a fairly heavy blow to a person’s retirement plans. A once-happy consumer isn’t going to be so happy after they’ve adopted your recommendation solely to finish up in monetary damage. And with out the correct securities license, you gained’t have a leg to face on if that consumer decides to sue.


Even when your recommendation festivals nicely in your shoppers, you continue to threat getting caught doing one thing that you just aren’t really licensed to do. Breaking the regulation on this manner may put you in danger for fines, suspension, license revocation, or, in excessive circumstances, criminal charges.

If you wish to advise on securities merchandise, simply get licensed!

Whereas the specifics of what you may and may’t say with out a license will get somewhat murky, the underside line is that this: When you’re an insurance coverage agent who desires to promote securities or provide monetary recommendation to your shoppers, your first step needs to be acquiring the suitable securities license.


In the case of securities like variable strains insurance policies, clearly issues can get somewhat sophisticated. When you’re tasked with managing insurance coverage producers with securities licenses, that staying updated with licensing necessities to remain compliant might not be straightforward, however it’s crucial.

AgentSync Handle presents enhanced variable insurance coverage help that unifies FINRA and NIPR knowledge right into a single profile, offering a consolidated view of dealer eligibility for knowledgeable decision-making, accelerated onboarding, and compliance.


When you’re able to take management of your variable strains dealer compliance, book a demo and see what AgentSync can do for you.



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