Massachusetts State Life Insurance Practice Exam

What is a characteristic of the career agency system in insurance sales?

1. Agents work independently for multiple insurers

2. Agents are employees of the insurer

3. Agents operate as independent contractors

4. Agents focus solely on recruitment

The correct answer is: Agents are employees of the insurer

In the career agency system of insurance sales, agents are indeed employees of the insurer. This system typically involves agents who are contracted exclusively with a single insurance company, allowing them to represent that company's products and services directly. Being employees means that these agents often receive salaries or commissions from their employer, and they may also receive additional support such as training, marketing resources, and administrative assistance from the insurer. This structure creates a strong allegiance and alignment between the agent and the insurance company, as agents are expected to fully understand and promote the company's offerings to potential clients. This differentiates them from independent agents who may represent multiple insurers and have more freedom in terms of the products they sell. Therefore, the unique characteristic of the career agency system is the direct employment relationship with the insurance provider, which can lead to a more cohesive sales strategy and focused representation of the insurer’s products.