When it comes to deciding whether to work as an employee or as an independent contractor in the insurance field, there are several points to keep in mind. The most important thing to ask yourself is whether you want your role to be full-time sales agent, who will move up to managerial positions later on, or if you want your role to be consultant/sales person who is in the field working with clients.
If you work as an employee, this usually means you are working with one major insurance company only, and focusing on the products they have, rather than products from a variety of companies. If you are full-time employee, you may be entitled to a number of benefits including a 401(k) retirement plan, health insurance or life insurance at a reduced rate, and other perks. You may also get a “base salary,” as opposed to working on commission only. You do not have to worry about taxes and other deductions, as most of the payroll and paperwork is done for you by your employer.
The downside to working as an employee is that you are tied to just that one company and cannot work for others. So, make sure you like who you’re working for and are willing to make a dedicated commitment to them.
If your status is an independent contractor, you are not limited to just one company. Your role is more like a consultant to your potential clients, since you are able to show them different rates and policies, and attempt to find them the best deal among all of the options. In addition, you may leave your current company at any time and go to another one. As a free agent, you can represent many companies at once.
The downside to being an independent contractor is that you have to keep up with all the accounting yourself, and be responsible for all of your earnings. You will have to pay your taxes on your own, since none will be taken out automatically. This means you will either have to be an efficient bookkeeper, or hire someone you trust to do this for you.
In addition, it can sometimes be confusing if you represent more than one company at once so it is important to be very careful. People may not know where your allegiance lies. One option is, as an independent contractor, you may represent only one company, making you an expert with that company and their policies, if you so choose.
Also, your own personal retirement plan, insurance plans, or other benefits have to be handled by you as these are not offered to independent contractors.
The choice to be an employee or an independent contractor is not an easy one. While there are advantages to both, you have to consider whether you want to work for one company as a full-time employee and dedicate all your time to them, or work as an agent for one or more companies, and be in business for yourself. The most important question to ask is how important it is for you to have the freedom of being an independent contractor. If you choose this option, you will have to make all your own money, and this is usually commission-based only. Employees usually make a base rate plus commission, based on performance. Think carefully about this choice. Either way, an insurance career can be rewarding and lucrative if you are dedicated and driven to succeed.