Insurance is complicated. Let’s start with what insurance agents do. Insurance agents help people pick the right type of insurance for their individual needs by helping them choose between options that are offered by different companies, based on the client’s specific situation, risk tolerance and goals. When clients sign up buy a policy through an agent, it in CLUs both the agent’s commission and the insurer’s fee. The agent’s commission varies by insurance type, state and insurer. Commissions are negotiated between the broker or agency and the company. Insurance agents are well-trained in understanding the complexities of different types of insurance products, but they are not financial planners.
Chartered Life Underwriter (CLU) is a professional designation for individuals who wish to specialize in life insurance and estate planning.
Holders of the Certified Financial Planners (CFP) designation will often add CLU to their credentials to demonstrate additional subject-matter expertise. Individuals must pass a series of courses and examinations to receive the designation.
Chartered Life Underwriters must complete extensive educational requirements in order to receive their designation. They are required to have a bachelor’s degree, pass 10 courses covering subjects such as life insurance, estate planning, taxation and investments, and pass at least three examinations in these topics. While not all CLUs are lawyers or cpas , many choose to complete those designations as well.
The Chartered Life Underwriter designation is the highest level of achievement for those who work in the life insurance and financial planning industry. Those who hold this designation often charge higher fees than other advisors, as they have a greater level of expertise. These professionals typically offer advice on complex topics such as estate planning, trusts, retirement planning, tax strategies and investments. Many also offer services to small businesses.
Ideally, the Chartered Life Underwriter should be experienced in all of these areas. However, one major drawback to this designation is its costliness. The courses required are not only extremely lengthy – often ten days or longer – but also very expensive. Some students must travel for many hours just to attend classes. Not only that, but the exams are challenging and can also be very expensive. The designated person must receive a grade of 70% in order to pass.
In addition, the courses do not provide a guarantee of employment or any lead to actual careers.
Many who have earned this designation have been disappointed when they have found employers unwilling to hire them because of their lack of experience, rather than because of their educational background. Another drawback is that there can be a great deal of duplication in the material covered in these courses.
People who are considering earning this designation may wish to visit some seminars and lectures offered by universities before committing to the expense of attending classes. If they do attend, they should also ask about scholarships and loans to help pay for their studies. They should be aware that the courses are rigorous and demanding, requiring many hours of studying before exams can be taken.
An insurance agent is someone who sells insurance policies to the public. The letters “CLU” stand for Chartered Life Underwriter, which means they have a designation from the American College of Financial Services. They must meet certain requirements, such as working for at least three years under a licensed broker and having thirty-six hours of business and twelve hours of investment courses, before they can earn their designation. Those who have this certification are qualified to sell all types of insurance policies.
Qualifications for CLUs
The American College of Financial Services, founded in 1927, is a non-profit educational institution with the highest level of academic accreditation—regional accreditation—given by the Middle States Commission on Higher Education. The college has a full-time faculty of industry professionals and is one of the leading educators of financial professionals in the United States.
The CLU is a certification awarded to individuals who have completed five core courses and three elective courses and passed eight 100-questions, two-hour examinations. The following mandatory courses are Fundamentals of Insurance Planning, Individual Life Insurance, Life Insurance Law, Fundamentals of Estate Planning and Planning for Business Owners and Professionals.