What If A Producer Lets Their Insurance License Lapse?

What If A Producer Lets Their Insurance License Lapse?

"Lapsed" refers to an expired insurance license that state authorities have not administratively terminated. It is challenging to keep track of production credentials and ensure compliance, especially with the industry-wide effects of a constantly shifting labour force. 

An expired insurance license affects more than just the agent who has it. To maintain growth or profitability, carriers rely on the good standing of their agency partners. To this end, competitive carriers place a premium on digital technologies that provide more transparency into license renewal dates and state-specific criteria. Let us check out the tips for Dealing with a Lapsed License. 

Invest In Your Future Via Study

A producer's insurance license might be revoked for several reasons, including inactivity. Lack of CE (continuing education) completion. Failure to complete the necessary continuing education hours in a timely way may prevent the renewal of their license, preventing them from opening a new place of business. 

There is a grace period in certain jurisdictions but not in others. Producers should wait to complete their CE until the last minute and should instead keep track of the time remaining.  

There Are Always Late Fees For Renewing A Membership

The licensee must reapply if the grace period has expired. Residents may be required to retake a license test after a certain amount of time has passed.

Keep Track Of Your Renewal And Advance Payment Deadlines

All licensees should prioritize renewing their licenses on time as much as they prioritize completing their required continuing education. It is shocking how many insurance industry professionals (producers, adjusters, brokers, etc.) will do everything required of them except renew their licenses on time. 

These renewal dates are subject to notification requirements in certain states but not others. Some jurisdictions require continuing education to be completed before a license expiry date, further strengthening the connection between the two. In certain jurisdictions, continuing education requirements must be completed at least 60 days before the license's expiry date to process the renewal. 

Put Your License In Good Standing By Willingly Returning It

If a producer allows a license to expire, they will have to pay reinstatement fees as punishment for being a bad steward of the license. That is why it's preferable for manufacturers to willingly give up or deactivate a license they aren't using, especially if they plan to leave the sector temporarily but want to come back. States often provide periods during which returning producers may avoid taking tests, albeit they will need to catch up on any required continuing education. 

That period might be as short as 90 days or as long as three years. Those who leave the profession in good standing are seen favourably by states, and carriers benefit from knowing that their assigned or captive agents are honest people. Honest people do not let their licenses expire on purpose.      

Conclusion

A "lapsed" insurance license is one that the policyholder does not renew before its expiry date, but state authorities have not administratively revoked that. The licensee must move immediately to re-establish the license unless the licensee no longer wishes to solicit or do business in the state. 

However, if the licensee no longer needs the right, they should turn it in instead of letting it expire. A policy of dealing with a Lapsed License is more than just a tax shelter. Ensure your life insurance or term life insurance payments are paid on time to avoid a lapse in coverage.