Before an insurance company can pay commissions to an agent, what must the agent be?

For an insurance company to pay commissions to an agent, the agent must be licensed and appointed.

Being licensed ensures that the agent has met the necessary qualifications and passed the required examinations to legally sell insurance products. This process confirms that the agent understands the relevant laws and regulations governing insurance in the state, which protects consumers and maintains industry standards.

The appointment process is the formal agreement between the insurance company and the agent, which grants the agent the authority to sell the company’s products. Without this appointment, even a licensed agent would not have the permission of the insurance company to represent them or receive commissions from sales.

In contrast, while being certified, accredited, registered, insured, or bonded may have their importance in various contexts, they do not specifically pertain to the necessary prerequisites for earning commissions from an insurance company. These terms relate to different aspects of professional credentials or financial protection, but they do not fulfill the specific requirement of licensure and appointment needed to engage in commission-based selling of insurance.