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What is a health insurance license?

To sum it up...
  • Licensing for health insurance is regulated by each state in America, with minimum requirements being set by respective legislative bodies
  • While specific requirements may vary by state, general requirements across all jurisdictions include a certain level of education, passing an exam, and a successful background check and clearance
  • Maintaining a health insurance license generally requires a certain minimum number of hours of continuing education training courses. These courses must be state approved. Such courses will involve a variety of topics and will generally change year by year

If you have ever wondered what qualifies someone to provide or sell health insurance policies, you might find comfort in knowing that the industry is heavily regulated. In fact, every state in America requires an individual or firm to hold a health insurance license before they are permitted to sell any policy.

While some states only require a general license to be able to sell health insurance, others actually require a specific license to be issued. If any person or firm sells insurance in more than one state, then a separate license must be obtained for each state in which a presence is maintained.

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Health Insurance Licenses Explained

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Health insurance is a serious matter and should be treated as such. People who have purchased a health insurance policy have a reasonable expectation that they will receive coverage in the event that they become ill or injured.

The purpose is to protect the individual from possible financial ruin due to medical issues, while also providing peace of mind that the best possible medical care can be proved under each situation.

People who are assigned the task of simply collecting money in exchange for an insurance policy are not usually considered to be selling the health insurance itself. As such, a license is not typically required under such a situation.

Any individual that is assigned the task of actually explaining the provisions of a health insurance policy to prospective purchasers is considered to be selling insurance. These individuals will need to obtain a health insurance license in order to perform such activities, in accordance with the laws of each individuals state.

Each individual seller is responsible for knowing the rules and regulations of their state in order to legally obtain such a license and to properly maintain it in good standing.

If a person obtains a health insurance license in his or her state, that individual may also be permitted to sell the following types of policies:

  • All types of health insurance policies
  • Disability insurance
  • Long term care insurance
  • Certain types of life insurance

The guidelines for obtaining a health insurance license are subject to change in state, so it is important to stay abreast of the latest industry developments in this area.

Requirements to Obtain a Health Insurance License

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As health insurance licensing regulations are governed at the state level, each state in America has set forth varying requirements for an individual to attain a health insurance license.

The process will typically involve an application whereby each individual must demonstrate that minimum requirements for that state have been met. This typically beings with varying levels of pre-licensing education.

At the end of training, an exam will need to be taken and a satisfactory score earned. Most states will also require all applicants to undergo some level of background check before a license will be issued.

By way of example, the state of California requires that an individual be at least 18 years of age and complete 20 hours of health insurance related education prior to being issued a license. By comparison, Pennsylvania requires 24 hours of educational courses and a passing score on a state-mandated exam.

It is important to note that some states do have similar licensing requirements as others. In such situations, there may be reciprocal licensing agreements in place where if a license is granted by one state, another state may automatically grant one when applied.

In such a situation, the license would be approved without being required to take any additional exams or courses. There are also states that, in certain situations, will grant an exemption to applicants who can demonstrate professional designations that required a similar level of course work and associated exam components.

Maintaining a Health Insurance License

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Getting a health insurance license does not mean that one will hold it indefinitely. There are certain standards that must be met on a regular basis in order to licenses to be renewed.

Most states will mandate a certain number of hours of educational courses, for example, to be completed and verified during each licensing period. These regulations are put into place so that any seller of health insurance is consistently exposed to current regulations important to the industry.

There are a variety of national organizations that provide regular training and they are approved in every state. It is important to engage in this pattern of training in order to ensure that the health insurance being sold nationwide is serving its role and safeguarding the health of the citizenry.

In Conclusion

Any person that is selling health insurance today, regardless of the state, much have a license. This is a measure put in place to protect the public and it is stridently enforced.

Remember that there is a difference between a person that simply collects money for a policy you already own and a person that is actively trying to sell you a policy. The latter is meant to provide you with helpful and accurate information leading you to the exact policy that fits your situation the best.

It is not a perfect system, but it is in place to make certain that there are certain regulations and standards guiding the issuance of health insurance policies throughout America.

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