Insurance 6 20 License Explained
The term “Insurance 6 20 license” can sound technical and confusing, but at its core it refers to a specific type of insurance producer license that allows agents to sell certain life, health, and annuity products. Many states use numeric designations or exam codes to identify license types, and “6-20” is commonly used in some licensing systems to describe a combined life and health insurance license including variable products. Before you start an application or enroll in a course, it’s important to know that exact code names and the scope of authority can vary by state. This article walks you through what a 6-20 license typically covers, who should get one, the steps to obtain it, realistic costs and timeframes, exam content and study tips, potential earnings, and renewal requirements.
What is the Insurance 6 20 License?
Put simply, the 6-20 insurance license is a producer license that commonly authorizes an agent to sell life insurance, health insurance (including major medical and supplemental plans), annuities, and sometimes variable life and variable annuity products. In states that use this code, it’s effectively a life & health license with the ability to handle investment-linked insurance products under the variable securities rules.
A 6-20 license typically covers:
– Traditional life insurance: term life, whole life, universal life.
– Health insurance: individual and group medical plans, disability income.
– Annuities: fixed annuities and often variable annuities when combined with appropriate securities registration.
Because variable products involve securities, many agents who sell variable annuities must also be registered with the Financial Industry Regulatory Authority (FINRA) and hold the Series 6 or Series 7 registration, depending on the firm and product. This combination is why state licenses and federal securities registrations often overlap in practice.
Who needs a 6-20 license and what does it allow you to do?
If you want to advise clients on life insurance needs, sell individual health plans, or offer annuities as part of retirement planning, a 6-20 license is usually the right credential. Independent agents, captive agents (tied to one insurance company), and financial professionals who include insurance products in their service mix commonly hold this license.
Specifically, a 6-20 license allows you to:
– Sell life insurance policies to individuals and families.
– Offer health insurance options including short-term, major medical, Medicare supplement (where permitted), and disability coverage.
– Place annuity contracts—fixed and often variable annuities—helping clients with retirement income planning.
Who typically does not need this license? Producers who only sell property and casualty (home, auto, commercial) do not need a 6-20; they usually have a different license (e.g., a 2-20 in some states). Similarly, advisors who only give financial planning advice but do not sell insurance products may not need this license—though holding it can expand services and revenue.
How to get a 6-20 license: requirements and step-by-step process
Requirements vary by state, but getting a 6-20 license generally follows these steps:
1. Confirm state-specific rules. Visit your state’s Department of Insurance website to confirm whether “6-20” is the code used and to review pre-licensing hours, fees, and fingerprinting requirements. Rules vary, and the state site has the most up-to-date info.
2. Complete pre-licensing education. Many states require pre-licensing coursework—commonly 20 to 40 hours—covering life insurance fundamentals, policy types, health insurance basics, annuities, ethics, and state-specific law. Online or classroom options are usually available.
3. Register and pass the state licensing exam. The exam tests knowledge on policy provisions, state regulations, underwriting basics, and ethics. Passing scores typically range from 70% to 75%, though exact numbers vary.
4. Submit fingerprints and background check. A criminal background check and fingerprinting are common prerequisites. Expect to pay $40–$75 for fingerprint processing depending on the vendor and state.
5. Apply for the license with the state. After passing the exam (if required), you submit a license application and pay the application fee. Application fees are commonly $50–$150 depending on state rules.
6. If selling variable products, obtain securities registration. To sell variable annuities or variable life products you’ll often need a FINRA registration (Series 6 or Series 7) and an active relationship with a broker-dealer or registered investment advisor firm.
7. Obtain errors & omissions (E&O) insurance (optional but recommended). Many firms require E&O coverage; it protects you if a client claims negligence or mistakes in advice. Annual E&O premiums for new agents commonly run $400–$1,500 depending on coverage limits and prior experience.
How long does it take? From start to finish, plan for 4–8 weeks if you move steadily: 1–2 weeks for pre-licensing, 1–2 weeks to schedule and take the exam, and 1–4 weeks for processing. Busy seasons or backlogs can extend the timeline.
Exam content, study tips, and a sample study schedule
The 6-20 exam is split broadly into life and health sections, sometimes with specific emphasis on annuity contracts and variable product regulations. Exam topics include policy types, riders and provisions, state insurance law, taxation basics for insurance products, underwriting basics, and ethics and agent responsibilities.
Typical exam breakdown (examples):
– Life Insurance: 30–40%—policy types, riders, beneficiaries, contestability, settlement options.
– Health Insurance: 25–35%—policy types, group vs individual, COBRA/COBRA-related rules (state variation), disability, and Medicare basics.
– Annuities & Variable Products: 15–25%—fixed vs variable annuities, suitability, prospectus requirements, and disclosure rules.
– State Law & Ethics: 10–20%—licensing rules, unfair trade practices, privacy and HIPAA basics, agent conduct and fiduciary duties.
Study tips that work:
– Use multiple resources. Combine a state-approved pre-licensing course with practice exams and flashcards. The course gives structure; practice exams build exam readiness.
– Schedule frequent, short study sessions. Four 45-minute sessions per day for two weeks outperforms one long session. Short sessions aid retention.
– Take timed practice exams. Mimic test conditions and aim to finish with 10–15 minutes to spare. If your practice score is under 80% after a week, revisit weak sections.
– Focus on state law. Questions on state regulation can be a deciding factor in passing. Make sure you understand state-specific terms and processes.
– Review wrong answers carefully. Understanding why you missed a question helps prevent repeating the same mistake.
Sample six-week study schedule (for someone starting from scratch):
– Week 1: Complete 40% of pre-licensing coursework; read life insurance chapters; take basic practice quizzes.
– Week 2: Finish pre-licensing course; focus on health insurance chapters and annuities; complete one full-length practice exam.
– Week 3: Review weak areas; take two timed practice exams; meet with a study group or mentor to discuss challenging topics.
– Week 4: Drill on state law and ethics; flashcards for definitions and policy provisions; take two more timed practice exams.
– Week 5: Review every incorrect practice question; finalize understanding of variable products and suitability rules; simulate test day once.
– Week 6: Light review and rest; exam day at the middle of the week; after the exam review, start application process if you pass.
Costs, timeframes, and typical fees
Costs vary across states and by provider, but here are typical figures you can expect when pursuing a 6-20 license. These are realistic estimates to help you budget.
| Item | Typical Cost (USD) | Notes |
|---|---|---|
| Pre-licensing course | $75 – $300 | Online courses cheaper; classroom more expensive. Some include practice exams. |
| State exam fee | $50 – $120 | Paid to the testing vendor (e.g., PSI or Prometric) at scheduling. |
| Fingerprinting / background check | $40 – $75 | One-time fee; required by many states for licensing. |
| License application fee | $50 – $200 | Varies by state and license type; some states charge per-line. |
| Errors & Omissions (E&O) insurance (annual) | $400 – $1,500 | Depends on coverage limits and your experience level. |
| FINRA registration (if selling variable products) | $100 – $300 initial | Series exam fees, and potential firm sponsorship requirements. |
| Continuing education (per cycle) | $50 – $300 | Depends on the number of hours and provider; some insurers reimburse. |
Total first-year upfront costs for a new agent typically run between $300 and $1,500 when you include pre-licensing, exam fees, fingerprints, and the state application. Add E&O insurance and securities registrations if applicable, and your realistic first-year outlay could be between $800 and $3,000.
Timeframes to budget for:
– Pre-licensing: 1–2 weeks full time, or 3–6 weeks part-time.
– Scheduling exam: often within 7–21 days depending on test center availability.
– Processing: 1–4 weeks for the state to issue the license after application submission (times vary by state).
Comparing license types
To put the 6-20 in context, here’s a comparison table showing how common license types differ. Note that license codes vary by state — this table uses common associations for clarity.
| License Code | Common Name | Lines of Authority | Typical Uses |
|---|---|---|---|
| 6-20 | Life & Health (incl. annuities) | Life insurance, health insurance, annuities, variable products (with securities registration) | Individual life and health sales, retirement planning, annuity sales |
| 2-20 | Property & Casualty | Auto, home, commercial property, general liability | Personal lines and commercial lines property and casualty insurance |
| 4-40 | Surplus Lines | Non-admitted insurance for unique or high-risk exposures | Specialty placements for risks not insurable in the admitted market |
This comparison helps clarify that a 6-20 license is focused on personal financial protection and retirement products, while a 2-20 is for property and casualty. If you plan to cross-sell or build a full-service agency, you may eventually hold multiple license types.
Career paths, earnings, and real-world examples
An insurance professional with a 6-20 license can work in several roles: independent agent, captive agent, financial advisor with insurance products, or within an agency as a business development representative. Earnings depend on experience, location, company structure, client base, and product mix.
Typical earning ranges (U.S. estimates):
– Entry-level licensed agent: $35,000 – $50,000 annually (base salary plus commissions).
– Experienced agent or small agency owner: $60,000 – $120,000+ annually (commissions and renewals increase earnings).
– Top producers or senior advisors: $150,000 – $500,000+ annually (in large markets with high client volume).
Commission structures vary widely. Life insurance first-year commissions are often a percentage of the first-year premium; renewal commissions are smaller but provide ongoing income. Annuities commonly pay a percentage of the premium, sometimes structured as a commission or a surrender-charge-funded payout, depending on the company.
| Product | Average Annual Premium / Purchase | Typical First-Year Commission | Typical Renewal / Trail |
|---|---|---|---|
| Term Life (20-year) | $600–$1,200 | 30%–60% ($180–$720) | 5%–15% annually ($30–$180) |
| Whole Life | $2,400–$6,000 | 50%–70% ($1,200–$4,200) | 2%–10% ($48–$600) |
| Fixed Annuity | $25,000–$100,000 | 1%–3% ($250–$3,000) | Usually none or small trail payments |
| Variable Annuity | $25,000–$250,000+ | 3%–8% ($750–$20,000+) | 0.25%–1% annually ($62–$2,500+) |
Example scenarios:
– A new agent sells six term-life policies in year one with average annual premiums of $800. If first-year commissions average 50%, the agent earns about $2,400 in first-year commissions from these policies, plus small renewals in subsequent years. Over time, renewals and increased production drive income growth.
– An agent places two variable annuities with total premiums of $50,000 and earns a 5% commission; that’s $2,500 in upfront commissions. If the annuity pays a 0.5% trail each year, that’s $250 annually in recurring revenue. These recurring amounts scale as the book grows.
Keep in mind: some carriers reduce first-year commission rates for captive agents but offer higher renewal rates, while independents may receive larger first-year payouts. Also, corporate compensation (salary + bonus) is common for agency managers or captive agents, which smooths income versus pure commission-based agents.
Continuing education, renewals, common pitfalls, and FAQs
Once licensed, you must maintain the license through continuing education (CE) and renewals. CE requirements vary by state but generally require 8–24 hours every 1–2 years, including a component on ethics and a state-specific update course. Missing CE or the renewal deadline can lead to license lapse and reactivation fees.
Common pitfalls and how to avoid them:
– Failing to check state-specific rules: Licensing codes, required courses, and fees change. Always confirm on your state insurance department website.
– Neglecting securities registration: If you plan to sell variable products without FINRA registration, you can get into legal trouble. Coordinate with a broker-dealer early.
– Poor record-keeping for CE: Keep copies of certificates and transcripts in case of an audit.
– Not understanding suitability: Selling annuities or replacement policies requires a documented suitability analysis. Use forms and document conversations.
– Underestimating startup costs: Budget for E&O insurance, marketing, lead acquisition, and CRM tools in addition to licensing expenses.
Frequently asked questions:
Q: Is the 6-20 license national?
A: No, the numeric code isn’t universal. Many states use their own numbering system. “6-20” is a commonly referenced code in certain jurisdictions; always verify your specific state’s code and authority.
Q: Do I need a securities license to sell variable annuities?
A: Yes—variable products are securities. Agents typically need FINRA registration (Series 6 or Series 7) and must be associated with a broker-dealer or RIA to sell them.
Q: How long is the license valid?
A: License validity ranges—common terms are 1 or 2 years before renewal. Check your state for the renewal cycle and CE requirements.
Q: Can I work as an independent agent with a 6-20 license?
A: Yes. Many agents operate independently, selling products from multiple carriers. Independent agents must manage carriers’ appointments and adhere to each carrier’s contracting rules.
Q: Is a degree required?
A: No degree is required to obtain a 6-20 license. The requirements are primarily pre-licensing education, passing the state exam, and meeting background checks. That said, degrees in finance, business, or related fields can help in career progression.
Final tips and next steps
Getting a 6-20 license opens many doors in the insurance and financial services fields. To maximize your success:
– Confirm exact state requirements on your Department of Insurance website before enrolling in any course.
– Budget for both upfront and ongoing costs—licensing fees, E&O, CE, and marketing are real expenses.
– If you plan to sell variable products, secure broker-dealer sponsorship early and prepare for the additional exams and paperwork.
– Build a simple CRM and client intake process from day one. Documentation and follow-up are critical to building durable revenue through renewals and referrals.
– Consider mentorship or a bootcamp program from a successful agency to accelerate real-world skills like prospecting, needs analysis, and policy placement.
With proper preparation, a 6-20 license allows you to provide valuable financial protection and retirement solutions to clients while building a scalable income stream. Take the first step by confirming your state rules, signing up for a reputable pre-licensing course, and scheduling your exam. The path is clear—many agents have built stable and rewarding careers beginning with this exact license.
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