Life insurance agents and brokers are representatives of life insurance companies who help consumers in navigating the process of buying life insurance.
Shopping for a life insurance policy can be daunting for most consumers. And since it is a key part of sound financial planning, and protecting the future of your family and heirs, it might not be wise to make a DIY decision, especially since you’re going to keep that policy for at least a decade. The first part of buying life insurance is shopping for the amount you need, the term length, and certain policy options, riders, and customization. For many consumers, the process begins by finding instant life insurance quotes online, provided by the many insurance brokers on the Internet, such as LifeQuote.
So, let us help you understand the pros and cons of using a life insurance professional for this big life decision. You can work with an independent life insurance broker who represents many insurance companies. They are unbiased and provide a variety of quotes from different carriers, giving you a broad choice of policies. Conversely, you can buy directly from a so-called “captive” life insurance agent, who is essentially a representative of a single insurance company. It’s an old-school way to buy insurance, instead of the modern, competitive way where you do comparison-shopping and look at different company premium rates side-by-side. A captive agent works for ONE particular carrier and is paid commissions on sales. Independent brokers are also commission-based, but the broker works for you, NOT the company, and is focused on finding you the best price and customizing the coverage that suits your needs.
Life Insurance brokers have contracts with many insurance companies, that is the reason their licensed agents generally have a broader understanding of companies’ offerings and the related pros and cons of the policies. They are savvy to the different carriers’ underwriting tables and rate classifications and can help an applicant land the best-priced policy for their needs. For instance, an overweight applicant with elevated cholesterol may pay a lower premium with a company that has more lenient guidelines for those chronic health conditions.
The other pro is that you will not be alone in making these critical decisions, such as researching the policy options on your own. It’s not that you are forced to talk to the agent/broker throughout the whole application process. We live in a digital age where you can fly solo online, but it will likely prove beneficial to rely on the expertise of an insurance professional, at least during a portion of the process.
In a nutshell, a life insurance agent sells insurance on the behalf of an insurance company. They sell customers the companies’ specific products. On the other hand, brokers such as LifeQuote, have a client-based business model. In other words, customers come to us to price their policy choices, and we provide them with the application and submit it to insurers to get you the coverage. Brokers aren’t beholden to any single insurer and work with a wide variety of insurers.
Experience matters when it comes to telling you the differences between a basic term life insurance policy vs. a permanent policy, such as Whole Life, Indexed Universal Life (IUL), or Variable Universal Life. The latter are cash value policies that might be more appropriate for a prospective policyholder with significant assets or complex business financial needs. They can explain how a Second-to-Die insurance policy is a cost-effective way for spouses to do estate planning, providing benefits to their heirs only after the last surviving person on the policy dies.
+So, you’re probably realizing that buying the right policy for the right reasons is the value of using an educated life insurance broker to help guide you.
There are thousands of life insurance companies in America, and all are not rated equally. Brokers such as LifeQuote represent only the best carriers rated “A” or better on rating services such as AMBest. These companies are highly ranked for their financial strength and ability to pay claims. As aforementioned, these companies all have different rate classification guidelines to determine how much policyholders will pay for premiums. Insurance company underwriters will assess an applicants’ current health, family health history, driving records, credit history, and other risk factors to arrive at that price.
The customer service benefits provided by a broker are completely free of charge to you. Remember that insurance agents and brokers get paid on commissions directly from the insurance companies, not by you. And, regardless of the impression that some people might have, the price you pay for your policy does not differ from a broker or agent. Those rates are set by insurance companies, which are highly regulated. A 20-year, $300,000 policy from Legal and General may be a different price than a similar policy from Genworth, but a broker or agent can’t offer you that same policy at a different rate than you would get directly from Legal and General. Don’t be fooled by unscrupulous claims online. An educated consumer is powerful. The more you know, the better armed you are to choose the right policy for your family’s future. So, if you feel you are ready to start the insurance shopping and application process, let us know how you want to do it. Start solo by requesting a free, no obligation quote and see results in minutes. Then let us know if one of our licensed experts can help you anywhere along the way.
Thank you for reading our article on “What Does a Life Insurance Agent or Broker Do? How Can They Help?” If you have any questions, please leave a comment below.