Tuesday, August 15, 2017

Is Pregnancy a Pre-Existing Condition for Short Term Disability?

A common question I get from women at open enrollment time is if pregnancy is a pre-existing condition for short term disability. Usually, this question comes from women who are already pregnant and who aren't currently enrolled in the STD plan. So in this article, I'm going to talk about how pregnancy is treated under most plans.

Pregnancy and the Pre-Existing Condition Limitation

Most group disability plans are guaranteed issue at every enrollment. This means you can enroll without any medical questions and will be approved regardless of health. However, in exchange for the guaranteed approval, any claims may be subject to what's called a pre-ex, or a pre-existing condition clause.

The most common pre-ex clauses are 3/12, 6/12 and 12/12.

Here's is what the numbers 3/12, 6/12 and 12/12 mean:

(Number of Months Look Back Period)  /  (Number of Months Look Back Applies)

A 3/12 pre-ex means that if you file a claim within the first 12 months the policy is in effect, the insurance company will look back 3 months before the policy took effect to see if it was caused by a pre-existing condition. If it's a 6/12, then the insurance company will look back 6 months for a pre-existing condition for any claim filed in the first 12 months.

If the condition was pre-existing during the look back period, then the insurance company can deny the claim.

Keep in mind that if you are enrolling in the disability plan in November but the plan takes effect on January 1 that the 12 months begins on January 1 and the look back period would be the three, six or 12 months before the effective date and not the date you enrolled.

If you are pregnant when you enroll, your claim for short term disability will most certainly come in the first 12 months the plan is in effect and therefore, your claim would be denied.

However, if you enrolled in October and got pregnant on January 10th after the effective date, then your pregnancy would not be considered pre-existing since it occurred after the effective date.

The Difference Between Group and Voluntary Disability Plans

One factor that may come into play is whether the disability plan you are being offered is a group disability plan or a voluntary one.

The difference between a group plan and a voluntary plan is underwriting. While group disability might be guaranteed issue at every enrollment, a voluntary disability plan might only be guaranteed issue when you are first eligible.

If it's a voluntary plan, if you don't enroll the first time you are eligible and want to enroll later, you might have to answer the medical questions to get in. If you are pregnant, this could possibly prevent you from being approved for the short term disability.

In addition, if you have to answer medical questions to qualify for your disability plan, if you have any other medical conditions outside of being pregnant, those conditions might prevent you from getting disability insurance as well.

The best time to enroll is when you are first eligible under those plans.

Options If You Are Already Pregnant

If you are already pregnant, you'll want to check out how much vacation and sick time you have available that you could use doing your maternity leave.

Alternatively, there are some companies that allow you to allow you to buy, sell and donate vacation time. If your company does that, a possible solution to not having short term disability insurance is to buy it or get some one to donate it to you.

As far as donations go, most donations are made for people with serious illnesses and so I wouldn't really count on that as an option.

The other option is to take your maternity leave unpaid.

Sign Up the Year Before You Get Pregnant if Possible

If you are trying to get pregnant, you might consider signing up at the enrollment period prior to the year you want to get pregnant.

If your employer's plan looks back for any claim filed in the first 12 months after the effective date and you satisfy that 12 month time period in the year prior, then your pregnancy won't be considered pre-existing.

If this is a planned pregnancy, that might help you out to remember to do that.


Pregnancy is considered a pre-existing condition if you are a newly enrolled in your disability plan and most likely will be excluded. Try and plan ahead and make sure you enroll when first eligible or the year before to get around the pre-ex clause found in most group disability plans.

As always, in group insurance, every plan may vary in what it covers depending on what your employer negotiated with the insurance company.

Let me know how you handled your short term disability in the comments below to help my readers further understand their options.

Wednesday, August 09, 2017

Don't Throw Away Your Benefits Confirmation Statement

Each enrollment period, you should receive a benefits confirmation statement. This statement confirms what benefits you selected for the upcoming enrollment year. In this article, I'll talk about why you want to make sure you get one each year. Plus, you'll want to keep each and every confirmation you receive for as long as you work for your employer.

Why is the Benefits Confirmation Statement Important?

Your benefits confirmation is your receipt that proves what you signed up for at enrollment time. Without it, if there is any question about what you enrolled in, your stuck. That's because you have no record of what you signed up for if you didn't remember it that way.

Because time passes and people forget things easily, what matters most is what's on paper - or PDF in this day and age. Remember, having written proof of enrollment selections matters a whole more than verbal conversations do.

A Simple Example of Why the Confirmation Statement is Important

Let's say that at your initial enrollment you were offered supplemental group term life insurance on a guaranteed issue basis. The amount you could get at the time without any medical questions was $200,000. You decide you need the additional group term life and ask if you could get more than $200,000.

You learn that you if you want, you could go as high as $500,000 with what's called evidence of insurability. That means you have to qualify for it by answering medical questions.

At the time you don't have any health problems and decide you want to do that. Later you learn you were approved for the higher amount and tuck that fact back in the memory banks for later.

Eight years later, unbeknownst to you, your employer decides they are going to make some changes to the benefit plans and the group term life insurance program changes to another insurance carrier.

Now behind the scenes this is what's called a takeover. This means that the insurance company will again make a guarantee issue offer to new employees and "take over" the group life insurance amounts everyone else has already.

Enrollment time comes, only this time, you are in a hurry. You don't have much time to take care of your enrollment this go around. Since your company has face to face enrollments, you meet with the enroller and let them know I'm in a hurry, I just want to keep everything the way it is. So the enroller, zips through your enrollment and gets you on your way.

However, when the take over of the group life occurred, for some reason your benefits didn't carry over the $500,000. The enroller had no idea what you had last year and assumes the system is correct because they can only go by what they are given and aren't involved in the takeover process.

In fact, it's not unusual for enrollers to have no clue what you had the year before and it's not really their fault. They can only work with the information they have been given.

This particular year, you also attained a new five year age band and so the premium was more for the $200,000 than before and you don't notice much difference in your paycheck so nothing seemed out of the ordinary.

That is until a few enrollments later, you finally notice that your benefit confirmation shows you only have $200,000 and so you question it. You are told that's what it shows you have. If you want more than that amount, you'd have to provide evidence of insurability again. But unfortunately, you found out last year, you had type 2 diabetes and can't qualify for the higher amount.

In this situation, you'd probably be upset and rightly so. But this is where the benefit confirmation statements from each year can help. It's your proof that when the takeover occurred, someone goofed.

Now technically, it might not be possible to fix this problem. That's because, it's really up to you to make sure everything is done the way you want. It'll depend on the agent the company has. But without the confirmation, you could definitely be out of luck.

Check your confirmation at each enrollment carefully and compare it to last years

At every enrollment, you want to get a confirmation. And it's a good idea to compare it to last year's statement. This will help you confirm that you have what you wanted and also see how it differs from last year.

Check you payroll deductions to make sure they are correct

Once the year begins, take a look at your payroll deductions and make sure they match your confirmation statement as well. These days with all of us on direct deposit, it's easy to never look at your pay stub and just look at the net amount in your bank account and move on.

Paying attention to your payroll deductions can help you spot a problem when it happens.


So, my advice is that each enrollment, get a confirmation statement. Compare it to last years once you receive it. When the new deductions start, confirm your deductions are correct.

It's much easier to correct a problem when it occurs than several years later with no record of what you had before.

Let me know in the comments, if your employer provides you with a benefit confirmation statement at enrollment time. And also let me know if you have had anything similar happen to you.

Tuesday, August 08, 2017

Best Way to Prospect for Life Insurance Clients

The most important skill you'll need to build your life insurance agency from scratch is to find the best way to prospect for life insurance clients. Unfortunately, in the life insurance business, it's not what you know that matters. It's marketing that knowledge to the people who need it that does. That marketing is called prospecting.

In this article, I'm going to walk you through how I approach prospecting. Are there other approaches that will work? The answer to that is yes, of course. This is just the way I do it.

So with that, let's get into my philosophy and approach.

Find prospects who want to work with you

The goal of my prospecting method is to find people who want to work with me. Life is too short to waste my time trying to twist someone's arm to become a client. So the very first thing I want to stress to you is that my prospecting system isn't designed to fight with people in order to get them to work with me.

I've always thought that the life insurance industry's bad reputation was well earned with all of the objection handling and high pressure sales tricks to get people to buy policies.

Because of that, I've tried to be the exact opposite and you should too.

Find prospects who love people

As silly as this sounds, life insurance is really about love. Let's face it. Love is hard to find and a lot of people in this world just might not have anyone in their life that they care about enough to buy life insurance.

Bottom line is that people buy life insurance because they don't want the people they love to struggle if they died.

You are in search of those people.

Build a large database of prospects that look like people who buy your product

The first step is to build a database of individuals and businesses that look like your target clients. For your life insurance agency, you'll be targeting individuals and businesses. Let's talk about what type of prospects you'll be looking for in both cases.

  • Individual life insurance policies (3,000 prospects) For individual policies, you will be looking for families with children. You'll also target executives and individuals with good incomes. That doesn't mean that prospects who might be single or have other types of jobs won't buy life insurance. They will. Just when we are building our pool of prospects, we want to fill them with the people most likely to buy the policies we are selling.
  • Group life insurance prospects (1,000+ employers) Small, medium and larger employers of all kinds almost all have group life insurance. I'd suggest targeting employers with at least 50 employees for group life insurance. To make things easier, you might want to make your pool of employer groups all over 100 employees as needed for the next target.
  • Worksite permanent life insurance prospects (1,000+ employers) For our worksite program, you'll be targeting employers of more than 100 employees. Specifically, we also be looking for employer groups that have employees who aren't targeted by our individual sales efforts. The ideal worksite clients are manufacturing groups, government groups and hospital groups.
  • Insurance brokers who work with employers (as identified) You'll also want to target brokers who work with employer groups that you want to work with.

The reason you want to build a large database is because you want to have plenty of people to call so that you don't feel so "married" to specific prospects that you put pressure on them. More prospects in the pipeline relieves sales pressure.

The Prospecting Strategy

Your goal is to get out of the sales mentality and instead get into the offer making business. To do that, you'll first figure out what those offers are, then you'll do the best you can to get that offer in front of as many people as you can and then work with those interested in the offer you make.

As you do this, you want to focus on getting people to at least hear your offers and then make a yes or no decision. You don't want to get wrapped up in what the decision is. Whether it's yes or no, accept it and move on. For the yes's, we'll start working with them. For the no's we'll recontact them at later dates.

Let's break down these steps:

  • Craft an offer that solves a problem your prospects are likely to have The first step is to craft an offer. This will be the hard part. In future articles, I talk more about how to craft your offers that get interest and discussion started. These offers will be different for individuals and employer groups since they are different targets.
  • Contact your prospects and make the offer Once your offer is crafted, you want to impress upon your prospects that all you want to do is make sure they hear your offer - whatever it is. Further, you want to stress that whether they become a client or not isn't what's important at this stage. You are indifferent to whether they buy or don't buy. But it is important to you that they at least hear the offer out.
  • Work with those prospects who are interested in your offer For those that "raise their hand" so to speak, these are your real prospects and you'll take them through a predetermined set of steps to facilitate a yes or no decision.
  • Do an awesome job and ask for their help identifying future prospects Deliver more than your clients expect and ask them to help you find more clients.
  • Keep making offers and refilling your database Over time, your database or prospects will need to be cleaned and refilled to keep enough prospects. 

Now the hard part of the prospecting strategy that I've laid out is that there are still a lot of holes we need to fill out in the process I've outlined.

There's what you say on the phone. There's what you put on your website and direct mail. And when you have prospects interested in your offer, there's a specific set of steps you'll still need to know. These are all things I'll expand on either here or in future articles that I have planned.

For now, the main thing I want you to focus on is that you need a large database of prospects, you want to start contacting those prospects to make your offers and work with those that say yeah I'll hear you out. Those that don't want to hear you out, move on and recontact them at a future time.


Prospecting is the key element to your success as a life insurance agent. If you don't do it, you won't succeed. Prospecting takes a certain mindset and isn't pressure. It's about identifying people who will work with you and moving them forward.

This is the prospecting roadmap I use to build a life insurance agency from scratch. As always, I love to hear from you about your prospecting philosophy and strategy.

Let me know in the comments your thoughts and suggestions.

Monday, August 07, 2017

Is It Better to Be a Captive or Independent Insurance Agent?

As you start your insurance career, one of the questions you will eventually ask is whether it's better to be captive or independent insurance agent. In this article, I'm going to talk about the differences between these two types of agents. I've been both a captive and independent agent and so I'll give you my take from both sides and maybe that will help you decide what you want to do.

What is a Captive Insurance Agent?

A captive agent is an agent that has a contract to work specifically through one and only one agency. They can only write insurance policies that agency allows them to write and those policies have to be written through them.

What is an Independent Agent?

If you are an independent agent on the other hand, you are in control of what companies you want to work with it. You can work direct with an insurance company, partner up with other agents and general agents or write business through independent marketing organizations (IMO's).

Captive vs Independent Agent

Captive agencies are more like traditional employers. An independent agent is like owning your own business. So let's talk about some of the other differences between captives and independent agents.

  • Salary and commission With a captive agency, you might be paid a salary or have an incentive plan that helps you financially while you are getting started. As an independent, you'll be straight commission only. Most likely, that commission will be paid as earned. This means you don't get paid until your client pays the insurance company. However, as an independent, you'll receive the total commission you earn. Captives share their commission with the agency they work with.
  • Formal training and assistance Agencies that hire captive agents may have a good training program or other agents that can mentor you. If you are and independent, you'll have to learn how to do everything on your own. 
  • Expenses Being an independent agent means you'll be responsible for paying everything. As a captive, you might have help paying for your everyday business expenses. They may even pay for the cost of your life insurance license and e&o insurance.
  • Benefits At a captive agency, you might be able to participate in benefits like retirement plans or health insurance that your agency contributes to. Independent agents on the other hand have to pay for all of that.
  • Existing clients If you are lucky, you might be handed a book of business to service if you start at a captive agency. But as an independent, you'll need to build everything from scratch.
  • Ownership Independents own their book of business whereas captive agencies own their clients not the agent. This means if you ever think you might want to go from being a captive to an independent, you most likely will have to start the new agency from scratch.
  • Control If you are an independent, you have complete control over how you want to run your business. As a captive, you surrender that control to a large degree to the agency you work for.
  • Competitive advantage I think you could argue that an independent has a competitive advantage in some cases because they can make decisions faster sometimes. They also don't have the overhead a captive agency might have. In addition, you could argue that a captive agency might have a competitive advantage if for example, they have name recognition on their side.
  • Freedom Probably the best thing about an independent agent is the freedoms it brings. As a captive, you can still have a lot of freedom, but will still have to always answer to the agency for somethings. Things like quotas, expenses and other things like who you can and cannot write business through.
Those are some of the differences I see in between captive and independent agents.

Which is Better - Captive or Independent?

Whether you choose to go as a captive or independent will be tied somewhat to your tolerance for risk. A captive might provide you with a better starting financial safety net or might teach you the business quicker than going out on your own. And if you are more risk averse that will appeal to you.

Many agents choose a captive because that's how they were introduced to the idea of being an insurance agent. Agents also might be drawn to the training programs captives have in place. Again, this would also appeal to you if you prefer an agency to help get you going. This is especially true if you need help getting appointed to insurance companies that they work with like in the property and casualty business. In the P&C business, you might not be able to get appointed to certain insurance companies without their help.

An independent agency on the other hand is appealing to those who want complete ownership and control of their operation. People with strong independent personalities and higher risk tolerance would also be better suited to going the independent route.

Which is better will also be determined a lot by your financial situation at the time you begin. It's a lot harder start as an independent with no resources although it can be done.

How I Got Started and My Experience with Captives and Being Independent

I first started with one of the big mutual insurance companies as a captive. I answered a help wanted ad and didn't really know that being independent was an option. I worked at that insurance agency for five years before going out on my own.

Once I became an independent, I still worked with another general agent. But the difference was that I was more in control of what I was doing than before. To me, having more control over how I worked with my clients made a huge difference to me personally as far as mindset.

Since I think the training programs at the big mutuals and some other captives are overrated, I'd say the hardest part of being independent is just like any other business you might start. At first it's hard because you aren't making anything and you have to build every aspect of it.

If I had to choose to start my career over again, I'd definitely be an independent agent. That's because it suits my personality better. But my advice would be, be prepared to struggle financially to begin with.

The reality of the insurance business, it's not so much how much you know about insurance as it is how many people you meet with. If you don't become an expert on how to find clients, then either is a bad idea.

Conclusion - People Buy You

In the end, your clients are really buying you. If you trust the insurance agency or companies you are working with, they will too.

Insurance is a people business. What it comes down to is that people say yes to people they want to work with. So while name recognition and training are important and might get you in the door to talking with prospects, in the end they buy you.

For that reason, I always suggest people be independent agents over captive agents all day long.

Let me know in the comments how you started and what your feelings are about which you think is better, captives or independent agents.

Saturday, August 05, 2017

Errors and Omissions Insurance for Life Insurance Agents

Once you get your insurance license, the next step is to purchase errors and omissions insurance for life insurance agents. It's also sometimes called E&O insurance. In this article, I'm going to talk about why you need to have E&O, how much you need to get as well as where you can get it and how much it cost. For the purposes of this article, I'm going to assume you are a one person shop.

What is E&O Insurance?

E&O insurance is a policy that covers the cost of legal protection in the event you make a mistake and one of your clients sues you for it. These days E&O even offers coverage for reasonable expenses in the case of a data breach of personal identifiable information. As I wrote in my article about employer sponsored identity theft protection, data breaches costs millions every single year.

Why Do I Need It?

A data breach alone is serious business and reason enough to have some E&O protection in the unlikely event it will occur. But as you probably already know, we live in a pretty litigious society and while the risk is low it is a possibility.

In addition to the risk of liability, you are going to need an E&O policy to get appointments with any insurance companies you might want to work with. Most require it these days anyway.

How Much E&O Insurance Do I Need?

Most appointments are going to require a minimum amount of E&O insurance. As I write this, it seems the minimum coverage per act most require is $1 million. You might want to consider getting at least $2 million.

How Much Does E&O Insurance Cost?

The premium for your E&O policy will depend on whether you or not you also sell variable products. If you don't sell variable products and stick to just fixed products like life and health, the annual premium at this time will probably be $600 or $700 dollars for $1 million policy. My friend who also writes variable products and has $5 million in coverage pays about $2500 per year for his at this time.

Where Do I Get E&O Coverage?

For most of my new life and health agents, one option that I give them is AgentEOProgram.com that's offered through Arthur J. Gallagher Risk Management Services as part of NAILBA. You can get $1 million or $2 million of coverage from them and can include variable products if you need that to be included.

They can also get your E&O policy in place pretty quickly which will help you get appointed sooner.

Some insurance companies will have E&O insurance arrangements with certain carriers if you do get appointed to them. Also, if you have a captive insurance agent contract, the contract may have an E&O policy for those that work for them which you might be added to as part of your employment.

But for independent agents, you'll want to get your own policy suited to the risks you face. There are other carriers out there besides the one I mentioned and you should check around. As a side note, I don't receive anything for suggesting the NAILBA sponsored program to you.


In today's world, you need to have errors and omissions insurance to protect yourself as you start to build your agencies book of life insurance business from scratch or if you are already established.

If you have any questions about E&O let me know in the comments. I, and my readers, would be interested in where you got your coverage and how much it costs. Plus, if you've ever had to file a claim and can share what the claim process is like, that might be interesting to hear about.

Friday, August 04, 2017

How to Get Your Life and Health Insurance License

To begin your career as a insurance agent, you have to get an insurance license. This license allows you to sell insurance and receive commission from the insurance companies you represent. In this article, I'm going to walk you through the steps you need to take to get your life and health insurance license as well as property and casualty if you want. I will also answer some of the most frequently asked questions people ask about getting licensed.

What Kind of an Insurance License Do I Need?

Different kinds of insurance require require different kinds of licenses to sell them. There are three primary types of insurance licenses that are the most common. They are:

  1. Life Insurance A life insurance license allows you to sell life insurance policies.
  2. Accident and Health An accident and health license allows you to sell other types of insurance like accident and health insurance policies.
  3. Property and Casualty (P&C) A property and casualty license allows you to sell home and auto insurance.
To get start your life insurance agency from scratch, I recommend that you go ahead and get your life, accident and health license right from the start. If you are interested in selling home and auto insurance, then you'll want to get your property and casualty license. 

I personally have all three but never use my property and casualty license.

What's the Difference Between a Resident and Nonresident Insurance License?

Before we begin going through the steps you need to take to get your license, you need to know that insurance licenses are handled at the state level in the United States. If you want to sell life insurance in a particular state, you have to be licensed in that state first.

You have to get licensed in the state you live in first before you can get licensed in other states that you don't live in. Here's how both licenses work:

  • Resident insurance license A resident insurance license allows you to conduct insurance business in the state you live in. It is issued by the department of insurance in the state in which you live. If you don't conduct any business outside of your state, it could be that you will never need the next type of license.
  • Non-resident insurance license A non-resident insurance license allows you to conduct insurance business in the other states you do not live in. It is issued by the department of insurance in those states. In order to obtain a non-resident insurance license in any state, you must have a resident license in the state you live in first. 

While your resident license requires several steps, the nice thing is that once you obtain your residence license, getting your nonresident licenses in other states is basically just paying a fee and filling out some paperwork for that state.

Alright. Now that you know what kind of license you need and that you have to have a resident license first, let's walk you through exactly what you have to do to get that resident insurance license.

Step 1: Visit the Department of Insurance Website for the State You Live In

In my case, I live in Indiana and so I want to go the Indiana Department of Insurance website. I found the website I needed by going to Google and typing in "Indiana department of insurance". Just substitute whatever state you live in for "Indiana." Chances are you'll see a link to your state's department of insurance will be one the first listing in the search results.

Once on the department of insurance website, I located a link for "licensing" and then looked for information on resident licensing. This took me to a page that had several sections on it that had all of the information and requirements needed to get a resident license.

Step 2: Complete the Pre-Licensing Requirements

The next step is to figure out what requirements you need to complete in order to get your license. Usually this is some sort of education that you can do by going to class or studying on your own online. The companies that provide this education need to be approved by the insurance department.

In Indiana's case, they list the requirements on a website called Sircon.com. I looked through a few of them and looked for one that offered online courses through webinars. That would be important to me as it probably would be to a lot of people because it's a lot easier to fit into your schedule. But if going to class is your preferred method of study, be sure and look for approved providers who offer in person classes instead.

There were a lot of providers but I found one that I liked called ExamFx.com. Because I got my license many, many years ago, I can't say personally how good it is. I have had other people tell me it is ok. When I did mine I actually went to a week long class.

As I mentioned above, you want to take the Life and Health insurance pre-licensing.

After you've completed the required pre-licensing courses, you'll be ready for the next step.

Step 3: Take and Pass Your Insurance Exam

Now you are ready to take your exam. Just like the courses had to be offered by approved providers, the exams are also only given by those approved by your state.

If you chose a good provider for your course work before the exam, you should be prepared and be able to pass the test.

I use to always joke with new agents that no one with the firm had ever failed the licensing exam. I did this because of the movie The Firm with Tom Cruise. Before he took the bar exam, all of the associates of the firm came by and reminded him no one with the firm had ever failed it.

The test use to be pass fail in my state back in the 1990's when I took it. I found out immediately after I took it if I passed. If you don't pass, then you can take it again after a set amount of time.

Once you pass your exam, you are nearly there and ready to take the next step.

Here's a video I did about the process if you want to watch it as well as read the rest of my instructions.

Step 4: Submit Your License Application to the Department of Insurance and Pay Your Licensing Fee

Once you pass, you'll go back to your department of insurance website to apply for your license. You'll have to submit your pre-licensing requirements along with the licensing fee. Most of this is done electronically these days.

After a short period of time, and a few dollars later, you'll be legal in the eyes of the department of insurance and can now get legally get paid commission from insurance companies

Congratulations! But you aren't finished yet. There's one final important thing to remember.

Step 5: Follow the Law, Complete Your Continuing Education Requirements and Renew Your License When Required

Each agent is responsible for follow the insurance laws in the states you are licensed in. Those vary by state. Your home state usually requires you to complete so many hours of continuing education every year or two. That education carries over to non-resident states as far as I know.

You don't want to skip the continuing education requirement or forget to renew your license. I know one agent who forgot to renew his license and continued to write insurance after his license expired. He was disciplined by the department of insurance, put on probation and had to pay a hefty fine. Now every time he applies for a non-resident license, it's a huge hassle to document what happened to that state's satisfaction.

How Much Will It Cost Me to Get Licensed?

To get your licensing completed, besides the time you need to invest in completing the steps, you can expect to pay between $300 to $500 to your life and health insurance license.

How much exactly will depend on the fees in your state and whether you take classes instead of self study.

Here's a short breakdown for Indiana to give you an example.

  • Pre-licensing $150 self study
  • Exam $50-$100
  • License fee $40

To get a better idea, just check out the resources I mentioned above from your state's department of insurance website.

Should I Take Classes in Person or Self Study?

This is a tough one. In general, if you retain things easily and are a good test taker, you won't have any problem getting licensed and self study might work for you. However, if it's harder for you to retain stuff, then in person sessions might be a better way for you to go.

I will say the nice thing about in person classes is if you have a good instructor, they'll make sure you know what you need to know to pass.

Remember, all you have to do is pass. After you pass no one thinks about it anymore or remembers what you got.

As far as how hard the tests are, I'd say the P&C exam is little tougher than the life and health exams if you decide to take it but there's no reason you can't pass it.

Will I Know Everything I Need to Know to Be a Successful Life Insurance Agent After I Am Licensed?

Unfortunately, the study you do for the exam helps you to pass the exam. And while it's definitely important, the licensing process doesn't teach you what you need to know to be successful agent. The real learning starts once you are licensed.


The steps involved in becoming an independent insurance agent are really easy and are pretty similar from state to state. It just takes a little bit of time, a little bit of studying and a few hundred dollars.

Once licensed in your home state as a resident agent, you can then apply to be a non-resident insurance agent in state in the country. I know I'm licensed in double digit states and have worked all across the country over the years.

You can eventually too. After you follow these steps to begin your journey as an agent, you'll be well on your way.

If you have any problems, remember you can always call your the department of insurance and they will be glad to help.

Let me know if you if you pass your exams and what your experience was like in the comments. Also let me know if you have any questions!

Good luck!

Thursday, August 03, 2017

How to Build a Successful Life Insurance Agency from Scratch

In this article, I want to share with you how you can start and build a successful life insurance agency from scratch. Building an ordinary life insurance agency is a lost art. There are fewer agents serving fewer people who need life insurance. Building an agency is both something that is tougher and easier to do than at any other time in history.  I'm going to walk you through what you need to know about how to do it below.

Why Start a Life Insurance Agency?

Obviously, becoming a life insurance agent isn't something most people want to be when they grow up. But a life insurance agent is a pretty good job if you learn how to do it right. That's the tricky part.

I'm not going to lie to you and tell you that it isn't challenging. It is. But it's a lot easier than hard manual labor is. That's for sure. Aside from the challenge of finding clients, there are a number of reasons why starting a life insurance agency might make sense for you.

Here they are:

  • Low startup costs The costs to get started are low. You can probably get started for under $1,000-$1,500.
  • Easiest line of insurance to start Many agents want to start by writing other types of insurance like property & casualty insurance also called P&C. This allows you to write auto, homeowners or other types of insurance. But getting started as a P&C agent has stiffer requirements than life insurance only does and many people can't meet those requirements. The main one is that it might require more money to run an operate.
  • Low fixed operating costs Unlike many businesses that might require significant fixed costs that you have to cover each and every month, like inventory and office space, you can get started with a phone, a computer and basic office supplies.
  • No office required While you can have office space if you want, I've ran my own life insurance agency from home since 1995 right from my own home office.
  • No employees required Unless you want to go big, you'd be amazed at how much you can do with no employees. I recommend starting as a solo operation.
  • Not as competitive as you might think Let's face it, the number of life insurance agents is dwindling and will continue to do so.
  • Set your own hours I work pretty much when I want to but I make myself available 24/7.
  • Work from anywhere You can set up shop wherever you are licensed.

Those are just a few of the reasons that starting a life insurance agency is something to strongly consider.

How to Get Your Life Insurance Agency Started

OK. So you've decided you want to start a life insurance agency. What do you have to do to get started? Let's walk through the steps to get set up.

  1. Satisfy your resident state's pre-licensing requirements Every state has a process in place to get licensed. That process starts with what's called pre-licensing. Pre-licensing is the required amount of study you need to do prior to taking the state's licensing exam. I recommend taking both the life, accident and health.
  2. Pass the licensing exam Once you've done your pre-licensing requirements, you need to schedule, pass and take your state's license exam. While your pre-licensing requirements prepare you to take the exam, they don't prepare you to succeed as an agent. 
  3. Pay your licensing fee Once you pass your exam, you pay your state the required fee and they give you a license to write life insurance. You'll have to renew it periodically. As part of that, you'll also have some continuing education as well.
  4. Satisfy any other state requirements to operate You may have to register with your secretary of state and satisfy other requirements in order to conduct business. Every state is different so you'll have to research those additional requirements that may apply. I suggest starting as a sole proprietor at first and at the very least, you might register a doing business name with your state. Keep it simple to begin with. It can be your name and then "insurance" after your name. You can always change the name later and incorporate later.
  5. Purchase errors & omissions insurance (E&O insurance) Insurance companies these days require you to carry insurance in the event you make a mistake. At the time I write this, a $1 million dollar policy is the minimum you should get which will cost you between $600 to $700 a year. Consider getting $2 million in coverage. You can read more about errors and omissions insurance for life insurance agents.

I wrote a whole article that expands more on the how to get your life and health insurance license you might want to check out.

Once you have taken these steps, you can officially write life insurance policies and earn commission but you need an insurance company to write business through. That's the focus of the next section.

Decide What Kind of Life Insurance You Want to Sell

Once you get all set up, it's time to figure out what kind of life insurance you want to sell. When it comes to life insurance there are three specific types of life insurance that you should focus on. A good place to begin reviewing types of life insurance is my guide to life insurance.

The three types are:

  1. Individual life insurance The first type of life insurance you can sell is individual life insurance. This would be term life and permanent life insurance such as universal life and whole life. You could choose to focus on final expense policies, mortgage protection and income replacement. And within these types there are different types of underwriting from no exams to full underwriting. In the end though, you would be focus on individual clients who would buy life insurance directly from you. Learn more about the types of term life insurance and permanent life insurance policies.
  2. Group term life insurance The next type is group term life insurance. Group term life insurance is life insurance that is offered through employers like basic group life and supplemental life insurance. Your target clients would be businesses. (Read more: How does group term life insurance work?)
  3. Worksite permanent life insurance The final segment of life insurance you could offer is what is called worksite permanent life insurance. This is life insurance that is offered to employees of businesses with reduced or eliminated underwriting. The employees pay their premiums through payroll deduction or premium direct deposit. Your target client here would also be businesses.

You could personally build a life insurance agency on one of any three of these lines of life insurance but I think what you should try and do is set up your life insurance agency to build each of these lines of business.

Get Appointed to the Life Insurance Companies You Want to Sell For

The next step in building your agency is to get appointed to the insurance companies you want to sell for. An appointment is an agreement with the insurance company that allows you to represent them. Once they "appoint" you, you can then offer their products.

Appointments to an insurance company can be direct, through a general agent or through independent marketing organizations (IMO's). Another option is that you can be captive to one specific life insurance agency instead of becoming an independent insurance agent.

When I first started I was a captive agent, then I worked through a general agent for a long time and now I am a general agent. Over the years, if I have needed something special, I have also worked with a couple of IMO's.

If I had to do it all over again, I think I would skip being a captive agent and work through a general agent instead. That's because I could work at my own pace and not at the captive's pace. Getting started in the life insurance business has a learning curve and some people can't learn fast enough at a captive to write enough insurance to satisfy the captive production requirements. What this does is basically shut them down before they can get going.

I personally also like to work with one company and give as much business to one company as I can. As a general agent that's what I do.

As an agent, you can take the approach that you want to be able to write whatever life insurance policy your prospect needs or find the prospects that the insurance company you want to work with targets. I prefer the latter of those two.

When I was researching an insurance company I wanted to represent, I looked for one that offered all three product lines I wanted to offer, had a solid reputation and was a mutual company as opposed to a stock company.

Getting appointed is pretty simple once you choose the insurance company. You contact that insurance company to obtain the paperwork, fill it out, provide your license, E&O insurance and anything else they might request. Once they review to make sure you are the kind of agent they want, you'll most likely get appointed unless you have some issues in your financial or personal background.

Review the Insurance Company's Portfolio of Products

Once you get appointed, the next thing you want to do a complete review of the products that company offers. Usually they have a product guide of the products you can sell. You want to look at the suite of products.

At this point, you aren't looking to know everything about each individual product in the portfolio. You want to identify potential products that fit with the three product areas I listed above. 

While the insurance company you get appointed with may offer every insurance product under the sun, you want to keep it simple and stay focused.

Select the products you want to offer

The next step is to select the products you are going to offer. As an example, in my case, on the individual side, I was interested in offering term and whole life insurance but I did not want to offer universal life. 

Even though the insurance company offered universal life, I did not include it the portfolio of products that I wanted to sell.

Choose only the products within the insurance company you want to offer and move onto the next step.

Learn All About the Specific Products You Chose

Once you know which products fit your guidelines, it's time to dig in and learn everything you can about only those specific products. Identify all of the sales material, product specs and any other information you can get your hands on.

In addition to learning about how the products work you also want to learn how to submit clean business to the company and understand their operating procedures.

Now when you do this, it's easy to get hung up on the fact that you might want to know everything before you try and sell everything. Just keep in mind you want to have a good foundation of knowledge when you first start. Once you start getting out there talking to people, you'll expand on that foundation of product knowledge.

Two other important tips I'd give you are to start with one product at time. Term insurance for example is easy to learn than whole life. Start with one product and move on. The second tip is that compliance is important and you want to follow the rules the insurance company gives you

If material is marked "agent use only", then you don't use it with prospects. So in addition to learning about the products, you'll have to stay compliant in how you market those products.

Build and Organize a Database of Prospects

Armed with products and foundation of product knowledge, it's time to identify what type of client you are looking for. What I do is break down each product area and think about the ideal prospect that those products are suited for.

Let's take at look again at the three products lines and what these prospects might look like:

  • Individual life insurance Target families and executives.
  • Group term life insurance Target employer groups with at least 100 employees.
  • Worksite life insurance Target employer groups with at least 100 employees.

Once I've formulated the type of prospect I am looking for, I need to create a database of those prospects that's large enough to work on a daily basis.

This might be 3000 or 4000 individual prospects and 1000 companies that fit my criteria. For each prospect, I will want contact information. Building a database of prospects will take some time and effort. It might be that you buy some lists or research your own. There are people who buy leads of "hot" prospects but I am not a real believer in those.

I then keep this database in a spreadsheet. Nothing fancy because at this point, I want to keep everything simple. 

Create an Offer that Might Appeal to Your Targets and Start Contacting Your Prospects

Up until now, all of the steps we have talked about so far are a piece of cake. The real challenge once you know what you want to sell and who you might want to sell it to, is to start calling people and making offers to them.

So you'll need to sit down and give some thought to what problems you can solve for you clients. That way when you call them, you'll have something specific to say.

Assuming you have a complete database of prospects, the way it will work is you will call each of the prospects and make your offer and let them decide what they want to do. You'll get a lot of voice mails, no answers and no's but you don't want to worry about that. You just want to make your offer to as many people on your list as you can. If they tell you no, then you just move on.

With a large database, you'll try and contact each prospect every three months.

Eventually, you'll warm up your list and people will start talking with you about their life insurance.

Develop a Sales Process that Converts Prospects to Clients and Then Service Those Clients

Once you get people talking to you, you have to figure out how to convert them into buyers. What's involved here is doing a detailed fact finder that helps you understand what life insurance they have, work out how much they think they might need and determine the best policy to help with that.

Now you won't be able to help everyone you get to talk to. That's normal.

What I typically do is find out what they have and if I notice a problem with what they have or a need they might want to fill, I figure out how I would recommend.

The way I approach it is like this. I just want to make sure my prospects know why I would do what I suggest and then I don't get wrapped up into whether they do it or not.

I just focus on making offers.

Those that accept, I write the business, submit it to the company and review what I've set up with on an annual basis.

Keep prospecting and prospecting and prospecting

After you get your first client, you just have to repeat the prospecting step again and again until you get another client and then another. It's simple, yet hard to do at the same time.


To sum things up, a life insurance agency is low cost business you can start. You can offer life insurance to individuals and businesses. It's fairly easy to get set up and get appointed. Once you learn about the products you want to sell, the hard work is finding clients.

In fact, finding clients is what your whole day will be.

Hopefully, this outline of how to build a life insurance agency from scratch was helpful and as I get time, I'll go into more detail about each step.

If you start your own life insurance agency, I want to hear about how it is going. Let me know in the comments how it is going or if you have any questions. I am always looking for agents to work with and am happy to help.

Tuesday, August 01, 2017

8 Type 1 Diabetes Blood Sugar Monitoring and Adjustment Tips

A few years back, my son was diagnosed with type 1 diabetes. During that time I've learned a lot about type 1 diabetes blood sugar monitoring and adjustment. I thought I would share a few tips that might help either you if you have type 1 or for your children if you are parents of children with type 1.

A couple of notes here before I begin. Remember, I'm not a doctor. These suggestions are just my experience with my son's type 1 and he uses an insulin pump with the fast acting insulin Humalog. If you are on injections using long lasting and fast acting insulin or a type 2 diabetic, these suggestions may not necessarily apply to you.

OK. Let's cover my tips.

1. Figure out how long your fast acting insulin stays in your system

The first thing my son and I noticed was that his Humalog peaked at about an hour and a half. By peaked, I mean that he was most likely to go low at an hour and half after a bolus. We estimated just based on experience that a dose of his fast acting insulin lasted about two hours. While not an exact science, we just assume he has no insulin on board from a bolus or corrective dose after two hours.

2. Set your pump's basal, bolus and corrective dose time intervals to how long your fast acting insulin lasts

After our discovery of how long a dose of insulin lasts in his system, we decided to set the time intervals in his pump to every two hours which is how long we figured hist fast acting insulin lasted for all types of doses. Doing this allowed us to more closely figure out when a dose was taken affected his blood sugar.

For example, if his blood sugar was normal at 8:30 pm and at 10:30 pm he was low. Then we know it's most likely his basal insulin was too high and it might need adjusting. If we adjust his dose in this situation, we would adjust it for the prior two hour time slot from the reading. Since the blood sugar reading was taken at 10:30 pm, we would consider changing the two hour time slot prior to the reading which was 8:00 to 10:00 pm.

We also set his insulin on board (IOB) setting on his pump to 2 hours as well.

3. Check every two hours (or however long your insulin remains on board)

Because his insulin on board is approximately a two hour window of time, I have him check roughly every two hours whenever possible.

By doing this, this allows you to keep on top of all your highs and lows, treating them more frequently as well as considering making small adjustments in your doses.

Treating highs as they occur rather than waiting hours with a high blood sugar is crucial to getting a lower A1C.

4. Treat highs as seriously as you do lows

A lot of times it's easy to get scared of lows and feel good when blood sugars are higher than they should be just because you know you won't go low. What tends to happen is you relax and don't treat the high's as they occur and this will inflate your A1C.

Always treat highs as seriously as you do lows.

5. Treat highs and lows based on your current IOB

While you want to treat highs and lows seriously, make sure you consider how much insulin you have on board when treating them. There's no sense over treating a low by loading up on carbs if you are near the end of the IOB period where it will spike your blood sugar higher than needed. Eat more carbs prior to a peak and less after.

When in doubt if my son feels really low, I tend to be a little more aggressive in treating serious lows.

On the high blood sugars, factor in your insulin on board when taking corrective doses. Your pump should help keep track of that.

Just keep in mind serious highs may also require more insulin and a check for ketones.

6. Don't be afraid to adjust your own doses

I think it's pretty common for people with type 1 diabetes to expect the doctor to monitor and change their doses. In real life though, the doctors don't have time to worry about it and doses often don't get adjusted until a check up requires a visit to the doctor.

If you want to have a better A1C, you have to get comfortable adjusting your own doses.

7. Adjust your basal, boluses and corrective doses in small increments based on the blood sugar readings

We adjust doses in the smallest increments when we make changes. Rather than make big changes, if we notice something out of wack, we look to the prior two hour time period and make a small adjustment in the dose.

It's a challenge to know whether you need to change a basal, bolus or corrective dose. I always focus on basal's the most because they are the easiest to figure out because you have no boluses in your system.

The main thing I want to stress is just start thinking about what your blood sugar number means each time you see it and ask yourself why the number is what it is. If it's high or low, you'll want to consider making an adjustment in the prior interval.

8. Don't make changes when equipment has malfunctioned or you feel you didn't estimate carbs right

Insets leak, pumps run out of insulin and sometimes we are flat out wrong on our carb estimate or when those carbs affect our blood sugar.

When those things happen, you don't want to adjust your doses since you would be changing them based on inaccurate data.


Unfortunately, a lower A1C happens is only possible if you are monitoring and checking your blood sugar frequently and making adjustments based on your blood sugar numbers when they occur.

These tips have worked for us and I hope they work for you. Let me know in the comments if you have tips you can share for type 1 diabetics.

Ditch the Payroll Deduction for Premium Direct Deposit

In order to offer voluntary benefits, the employer you work with has to collect the employee's premiums through payroll deduction. However, while some employers might not have a problem with you seeing their employees, they might not want to do the payroll deduction for you. In those cases, you could collect the premiums through premium direct deposit instead. In this article, I'm going to go through what premium direct deposit is, how it works and some other things you need to know.

What is premium direct deposit?

Premium direct deposit is an alternative way to collect premiums. Instead of the employer setting up a payroll deduction slot, deducting the premiums and forwarding those premiums to the insurance company, an employee fills out a direct deposit form that is given to the employer. Each paycheck, the amount of the premium direct deposit is forwarded to the insurance company just like a paycheck is.

How does premium direct deposit work?

Premium direct deposit works a little differently behind the scenes than a regular direct deposit does. A normal direct deposit goes into the employees bank account. In the case of a premium direct deposit, the money is deposited in an account created by a third party administrator. Once in the account, the third party administrator sends the money to the insurance company. The third party administrator.

Requirements to make premium direct deposit work

There are few things that are needed to make premium direct deposit work. Let me go through of few of those items.

  • Direct deposit slot While most employers are already direct depositing their employees paychecks, employees may already be splitting to multiple accounts. If an employer is limited to two direct deposits slots, and the employee is using both, then it's not possible to direct deposit any more accounts.
  • Third party administrator A third party administrator is needed to manage the premium direct deposit accounts.
  • Added administration costs The third party administrator will add additional costs to enrollments that will need to be paid by the employee, the benefits broker or the insurance company.
  • Individual products Only products that are offered as individual contracts are best suited for premium direct deposit. Group insurance, since it's an agreement between the employer and the insurance company, should be payroll deducted if it requires employee contributions. Permanent life insurance is a type of product that would lend itself better to premium direct deposit since the actual contract is between the employee and insurance company.
  • Approval from the insurance company If it's an insurance product, the insurance company will need to ok the collection of premiums via premium direct deposit. Their guarantee issue underwriting offer is contingent on how you set up your case.
  • Deductions that stay the same from month to month Premium direct deposit won't work well if payments vary. A fixed amount per direct deposit is that only needs changed once a year or so is ideal.
  • A backup collection method The ability to collect premiums via electronic funds transfer at the same frequency of the employees paycheck as an alternate collection method if the employer will not allow premium direct deposit.

Those are a few of the requirements needed to make premium direct deposit work.

Advantages to premium direct deposit

It is easy to see the advantages of premium direct deposit. It reduces the employer's administration.

Another advantage is that the employee's deduction is now completely portable. If the employee leaves their employer, they can request the new employer to set up their premium direct deposit out of a completely different employer's paycheck.

Also, most insurance companies require a certain number of participants to make a bill. This eliminates smaller employers from being prospects. Through premium direct deposit, smaller employers can be pooled into one larger group.

Premium direct deposit would also be a way to work with association, unions or other employers where negotiating a payroll deduction slot is not possible.

Finally, another nice advantage to the premium direct deposit is the fact that it's an employee choice. While an employer may decided to stop deducting for premiums, premium direct deposit provides some insulation that your deduction may being terminated by the employer.

Disadvantages to premium direct deposit

The main disadvantage with premium direct deposit is the added cost to implement it. A larger employer might also view a sizable number of direct deposit initiated at one time just as they would a payroll deduction even though once it's initiated it requires little additional maintenance.

Another disadvantage would be that premium direct deposit is still an employee initiated transaction. You'll need to be proactive in the initial setup of an employee's premium direct deposit as well as any future adjustments.


As health care cost continue to spiral out of control and downward pressure on wages continues to grow, I think it's entirely possible that the day may come when employers find a way to get out of the benefit business entirely.

In fact, today there are already some employers who refuse to do any payroll deductions for employees at all. It's an isolated situation now but as employers and employees can no longer afford health insurance premiums, that minority of employers could grow.

Premium direct deposit would still be available though.

Let me know in the comments if you have any experience with premium direct deposit.

Monday, July 31, 2017

17 Step Roadmap to Cut Your College Costs Big Time

In this article, I'm going to give you a complete 17 step roadmap to cut your college costs big time. When I say "big time", I mean it's possible to save as much as one year or more on college costs. While this roadmap is designed for kids in high school who are preparing to go to college in the future, anyone can use the steps below if they choose.

With that let's not waste any time and get right into what you need to do.

1. Pick a few colleges you might want to attend

Step one in the process is to pick a few colleges that you think you might want to attend. Even if you don't know where you want to go yet, you'll want to start researching colleges, their specific degree programs and other policies which I'll get into below.

Picking colleges you might want to attend is important because it's going to help you figure out the kinds of things you'll want to look for and where to find them as you get closer to going to college.

At the time I am writing this, my son doesn't know where he wants to go to college but he knows he wants to go. What I did for him was just pick a few colleges I might want him to go to. I started with six colleges I was familiar with just to begin my research.

At this point, it isn't about choosing a final college destination although what you learn below should certainly carry considerable weight in making a final decision. Just make sure it's a regionally accredited college.

2. Obtain the course catalog for each college

For each college, obtain the current year's course catalog. This is usually available on the school's website. The course catalog will tell you specific courses the college offers. The catalog will also tell you other information such as degree requirements and other school policies.

The course catalog is important to have on hand to refer to. Keep in mind that course catalog's as well as university policies can always change by the time you enroll.

3. Find and review each college's residency requirements, transfer credit, credit by exam policies and matriculation agreements the college has in place

The next step is to identify some of the most important information that you'll need to know. Every university is a little different. So let's walk through these items.

  • Residency requirements Nearly every school has what's called a "residency requirement". A residency requirement is a total number of course hours you need to complete at the university in order to meet their degree requirements. Most of the time we think of residency requirements as whether you are an in state or out of state student. But here, what I am referring to is the number of hours you need to complete at that university to qualify for a degree.  For example, a school may require that you complete the last 30 credit hours of course work at their school to earn your degree. This means you might be able to get the other 90 credits of a 120 hour degree program by other means and at lesser expense. Most universities will have at least a 30 hour credit residency requirement. There are a handful that will let you do less which we will talk about below. 
  • Transfer credit limits Transfer credit is university credit earned at another university that satisfies a course you need to take at your final university. You'll want to know what the maximum number of credits you can transfer into the university is. Some colleges are stricter than others. One college near me allowed up to 90 credit hours be transferred in. The higher the number the better. This allows you to shop for lower cost per credit hour courses and transfer those credits in which in turn saves you money.
  • Credit by exam limits Credit by exam is a way to earn credit just by passing an exam. Popular credit by exam programs are CLEP, DSST and ECE. This is one of the most important things you want to find out. The school I mentioned above that had a 90 transfer credit limit only allows 30 credit hours to be earned through credit by exam. But still - that's 30 hours you can test out of and see significant savings. 
  • Matriculation agreements One other good thing to learn is what matriculation agreements the college you want to go to has with any other college. A matriculation agreement is a partnership between schools. Most commonly these are community colleges. These colleges have already identified which courses are equivalent to the courses the final university making it easier to identify the right course work to take.

Now when you start digging for this information, you might not find it in the course catalog. I've noticed that some colleges don't make it very easy to figure out what these policies are by clearing identifying them on their websites. It might be that you have to contact the university to find out what their policies are. 

Remember, the colleges would prefer that you take all of the courses at their school and that's OK. That's what most people do. But, what you want to do here is do everything you can to get credit hours in the cheapest way possible. The information you find out in this step is key to determining that.

If you find a school isn't very accommodating in these areas, makes it extremely difficult to identify there policies, it'll be a lot tougher to save money going to that college. Because of that, you might want to strike them off of your list as a potential college.

4. Pick a starting major

Armed with the above information, it's time to pick a major. Just like you might not know what school you want to go to yet, you might not know what you want to major in yet either.

Schools have lots of majors so they can appeal to many different kinds of students. Most of the lower level classes you'll need to take might be the same no matter what degree you eventually earn. It's the upper level courses that differentiate a degree.

Since the lower level classes will most likely be the same from degree to degree, that's where your main focus is and also where you can find the most savings.

For my son, he doesn't know what he wants to major in yet so I just picked finance as his major to start with. I did this since I earned a finance degree and also just a starting point in figuring out the best plan to get his lower level undergraduate work done in the cheapest way possible.

5. Obtain a map of the courses required for your specific major

Once you pick a major, then what you want to do is obtain a map of the courses required to complete the major you picked.

In most cases, you can pick these up off the college's website but again if you can't find it, contact the school to see if you can track one down.

This is important for your next step.

6. Map out your degree

Once you know what the college specific course requirements are for a degree, it's time to map out your own path to the degree you want using their map as a guide.

You will have to dig into the requirements they give you to identify courses you want to take. On their map, they may say you have to take 120 hours to get your degree and 60 hours of lower level classes. You might need12 hours in Arts and Humanities. Or, 6 hours of electives. Or, a certain number of hours in your major have to be upper level classes. Along with that will be required courses you'll have to take for that major.

Whatever those requirements are, sit down and make a preliminary plan by plugging in specific classes from the course catalog that fit those requirements.

The first reason you want to do this is so you don't take more credit hours than you need to by taking unnecessary classes. I know when I went to school, I only needed 120 hours but somehow I took 126. This means that I might have spent $3,000 or $4,000 dollars more than I needed to which was a waste of money.

More importantly though, you can also begin to identify courses that you can test out of or transfer in to get a lower per credit hour cost.

7. If still in high school, obtain a list of Advanced Placement (AP) classes and other ways to earn college credits at your high school

Many high schools have AP classes that are available to students these days. They also have other options such as dual credit or dual enrollment.

You'll want to get a complete list of what's available from the high school if that's still an option for you.

8. Obtain a list of AP, CLEP, DSST & ECE course equivalents from the college

Most colleges will have a list of what course an AP class you take in high school matches up to at the college. They also will likely have a list of CLEP tests and their college course equivalents. For the DSST and ECE test, it might be a little less likely to obtain.

At each school, these will all probably be different. So what may count at one school won't at another which is crazy but that's just the way it works.

Same goes for scores required. The list you get should have a required score you must receive for it to count. That can vary by school as well.

9. Identify courses in your degree plan that have AP, CLEP, DSST and ECE test equivalents

Once you get the course equivalents, you'll want to look at them carefully to figure out which courses you can test out of either by AP if still in high school, CLEP or one of the other tests. When you review your initial degree map, see if you can plug in the classes that you can test out of instead.

In fact, the AP classes at my son's high school are what got me looking at this carefully. Once I obtained a list of AP equivalents, I noticed that while he could take AP Biology, AP Chemistry and AP Environmental Science in high school, he would only need one of them for a degree at the school I was looking at. It didn't make any sense for him to take all three AP science classes for a science requirement if only one was going to count.

You want to do the same for the other credit by exam programs an in particular CLEP. Match up courses you can test out of that will work in your degree map.

In my son's case, we discovered that while he needed a history requirement he could satisfy by an AP course, he could satisfy it by CLEP as well. In those cases, he's going to take the CLEP tests instead and still graduate with honors in high school.

10. Study, take and pass for as many classes as you can test out of

Once you've identified which classes you can potentially pass to get credit by exam, it's time to start preparing for those tests. Credit by exam is the cheapest way to obtain credit.

When I write this, CLEP exams are $85 and the college charges a $25 sitting fee. This is a fraction of the cost of one of the schools my son might go to. A credit hour at that school costs nearly $300. That's just tuition. It doesn't factor in text books, lab fees, parking fees and other fees the college charges. It also doesn't factor in the time to go, room and board if you are on campus or gas if you are commuting.

If you do the math, a CLEP exam that earns 3 credits might cost $110 (or $150 after you add study materials). Actually taking the same course in college might cost at least nearly a $1000 (plus all the other college costs). Further, if you multiply that out by even 30 hours of credit by exam and it's a small fortune.

I've already mapped out what courses my son can take by CLEP and even though he's only just turned 16, he's already earned 9 credit hours via CLEP.

What he's been doing is using a study service called SpeedyPrep.com, taking practice tests through REA CLEP study guides and then taking the tests.

I also have used the same materials including some materials from Free CLEP Prep and easily passed CLEP's myself for my own degree. I can tell you that with a little study and a little preparation, you can EASILY save a lot of money not to mention time.

When we went to my son's high school information session about AP classes, they made it clear that AP classes are hard work and the students have a lot more responsibility. I explained to my son that translated that means you basically teach yourself. I shared with him some of my experiences in college. One of which was an upper level macroeconomics where I paid good money to have the professor teach me high level macroeconomics but the only thing he did was read the book to us in class. Since I read the book as well, this basically meant I taught myself that class.

Now I'm not saying instructor's don't add value. In most cases they do. But in the lower level classes, if you are already an excellent student, passing these exams instead of taking these classes is a lot easier than you think and something you should definitely do.

Honestly, it's my opinion that these four year colleges have been slowly pushing this lower level course work into high school and to community college anyway because they want to focus on the stuff in your major anyway.

11. Identify which lower level classes you can transfer in from less expensive community colleges or other colleges with lower tuition rates

If you have taken as much as you can transfer in through credit by exam, you'll then want to identify courses you can take at other colleges for transfer purposes.

Community colleges might be the third of the cost of a state school and the instructor probably just as good.

This might be difficult to figure out how to map courses and it's probably going to be more important to speak with an advisor at the college you want to attend to help you sort out which classes satisfy which requirements.

12. If you are working, take advantage of any tuition reimbursement plans available to you

One huge benefit if you can score it is tuition reimbursement from your employer. If you can find an employer who will reimburse you for exams and tuition, you'll want to do that. If you aren't locked in where you are working, seek out employers who will have tuition reimbursement plans as part of the benefits and find out how they work.

There are companies today that still provide tuition assistance if your degree is related to your work. Seek out those companies and start working there if you can.

This will help lower the costs of the upper level classes you'll need to take to satisfy the "residency requirement" of the school you want to earn your degree from. That's that 30 credit hour degree requirement I talked about above.

13. Petition the school if you need an exception to policy

When I was in college, I was able to substitute some courses and transfer some courses in on an exception basis. I was able to do this by petitioning the school to allow me to do certain things I needed to graduate.

If you are a good student, and your request is reasonable, your school will most likely work with you.

To petition the school, you look up the procedures on the college website. They will usually have a form. Basically, you are writing up a letter and laying out your requests and the reason it should be approved.

I petitioned the school twice to earn my degree requirements. In both cases my petitions were approved.

This will be important if you have taken classes you thought would map up but for some reason didn't.

Also keep in mind that only the school determines what meets their degree requirements so you do need to work with them to. It is possible that you might complete a requirement you didn't need to. It happens to all of us.

14. Decide the best time to enroll in the school of your choice

There's no right answer here, but it might make sense to test out of as much as you can before you enroll in the college of your choice.

If you been working with an advisor before you enroll who has worked with you on potential transfer credit, it also might sense to enroll after you completed what you can at a less expensive school.

You'll just have to evaluate your situation and what you think is the best approach.

15. Consider shopping your accumulated credits to several schools before you select your final school

Some schools may be a little more willing to work with you than others. You might consider college shopping to see if there are any advantages to you in how they apply your transfer credit to the degree you are interested in.

And what school wouldn't want a motivated student who took a proactive approach to their degree attending their school.

16. Consider one of the few regional accredited colleges that don't have a residency requirement

Most schools have a residency requirement but a small handful don't. This means they have a more liberal transfer policy. Some schools like the regionally accredited Excelsior College allow you to transfer in 114 of the 120 credits you need to earn a degree there.

Other regionally accredited schools with liberal transfer policies are Thomas Edison State College and Charter Oak State College.

Don't be afraid of choosing one of these colleges to complete your degree. As long as they are regionally accredited, they are good to go.

17. Start now

I've already started my son on his degree plan even though he hasn't even started his sophomore year in high school yet. This summer he passed three CLEP tests which are potentially 9 hours of college credit. He's already preparing for the next one.

At the very least, he can be done with 30 to 60 hours of undergraduate work or if he is really ambitious could actually finish near the time he graduates from high school. Only time will tell.


You need a college degree today, Unless you are going to an Ivy League school, what matters most is that you get your degree not how much you paid for it.

It's a new world out there today and it's expensive. If you follow this roadmap, you can cut your college costs substantially.

Let me know in the comments if you have any questions and the process you took to earn your degree.

And, if you followed any of the steps in my 17 step roadmap to cut your own college costs, I definitely want to hear about it.