Finding the right broker or agent for life insurance can be a challenge. Find out how to make it easier.
How To Choose the Right Life Insurance Broker or Agent (2024)
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Via Secure Partner PolicyGenius
Updated:
Apr 13, 2024
Edited by
Sabrina Lopez
Sabrina Lopez
Life insurance is complex, and choosing the right broker or life insurance agent to connect you with the best life insurance companies can make a world of difference. Finding the right professional to provide you with the coverage you need at an affordable price requires careful consideration of qualifications, experience, reputation, communication and customer service skills.
A broker or agent can help you navigate the different types of life insurance and find the best term life insurance or whole life insurance policy for your needs and budget.
Understanding the Role of a Life Insurance Broker or Insurance Agent
Life insurance brokers and agents can help you find the best policy and coverage for your needs. There are two types of insurance agents: brokers and agents. A broker is a licensed independent agent who’s responsible for representing the buyer and working with many life insurance companies to negotiate the best coverage options available. An agent is a representative of a particular insurance company who works on commission from that company.
The differences between a brokerage and an agency should also be considered when selecting a life insurance broker or agent. Brokerages are companies that represent clients of different insurance companies, while agencies only represent one particular company’s products. This means that brokerages can offer more varied coverage options than agencies, though they’ll typically charge more due to their larger overhead costs.
Brokers and agents are paid, typically, by commissions. Independent brokers are compensated through commissions from life insurance companies based on the policies they sell or place for their clients. Captive agents – agents who sell the products of only one company typically – receive salary plus bonuses based on sales performance from their respective employers.
Should I Work With a Broker or an Agent?
There are advantages and disadvantages associated with using either type of professional to help find life insurance coverage. Brokers have access to many different companies and types of insurance and insurance products, so they can shop around for the best life insurance quotes or insurance plan; however, they may not be familiar with all of the products offered by each insurer.
Agents have greater knowledge about specific insurance companies and their products due to their direct relationship with that one insurer.
Importantly, both brokers and agents provide services beyond just selling policies, such as answering questions about policy features or providing customer service when filing claims or making changes to existing policies. Brokers can often offer more comprehensive services such as financial planning services with, for example, annuity products.
Qualifications To Consider
The first step in selecting a broker or agent should be to seek references from friends, family members, colleagues or even other brokers they may have worked with in the past. You can also read reviews online to find highly rated professionals in your area. When vetting providers, consider their qualifications, including licensing, reputation, customer service and your personal needs.
Licensing and Expertise
When choosing a life insurance broker or agent, make sure the broker or agent is properly licensed and experienced in the type of life insurance in which you are interested. Research if they are affiliated with reliable insurance companies and verify if they belong to any reputable associations.
It’s also beneficial to research if the broker or agent is engaging in ongoing professional development by attending seminars, conferences or other events. Professional associations such as the National Association of Insurance Commissioners (NAIC), the Chartered Life Underwriter (CLU) or Certified Financial Planner (CFP) may offer relevant certifications that demonstrate a commitment to staying current on industry trends and regulations.
Reputation and Experience
Another factor to consider is the number of years they have been in the business. This will help you gain insight into their level of knowledge and understanding of the industry. Additionally, brokers and agents may have specialized knowledge or experience related to certain areas such as estate planning, retirement planning, tax planning or investing.
Online review sites like Trustpilot and Yelp can also provide information on customer experiences with a particular broker or agent. Furthermore, check if there have been complaints filed against them with the Department of Insurance in your state or, conversely, if they have earned any awards for excellence in service.
Communication and Customer Service
Consider the communication style of a potential broker or insurance professional when making your selection. Are they responsive? Do they explain the different types of insurance and answer all your questions? Do they provide helpful advice that caters specifically to your needs? Do they outline the best price, coverage amount or best policy for your financial situation?
A broker or agent who’s willing to take time out of their schedule to provide personalized attention can make all the difference in getting the right coverage at a good price point that fits within your budget.
Understanding Personal Needs and Preferences
Before deciding on a life insurance broker or agent, analyze your personal needs and preferences to make sure you find a professional who is a good fit.
Lifestyle and Financial Goals
Life insurance can be used to provide for the needs of loved ones in the event of a death or disability. Additionally, it can help with retirement planning by providing a tax-free source of income during retirement years. Other uses for life insurance include college or wedding expenses for children, estate planning, business continuation planning or debt repayment.
If you are over 60 or have chronic health issues that make qualifying for a policy difficult, you may also want to consider a no-exam life insurance policy. Knowing your objectives when selecting an insurance provider will help narrow your options so you can find the best fit for you.
Risk Tolerance
Risk tolerance is how comfortable someone is with taking risks with their financial investments. It’s important to understand your own risk tolerance level because this will affect the type of coverage you choose as well as your premium payments over time. A higher risk tolerance may lead to higher premiums but could also result in a greater return on your investment over time.
Family’s Needs
When deciding on life insurance coverage, assess the current and future needs of your family. Family size can play an important role in determining how much coverage is needed, as well as what kind of policy fits best into your budget. Consider any major changes you anticipate in the future, such as marriage or having children, that might increase your need for additional coverage.
Discounts and Incentives
Exploring potential discounts, incentives, features and benefits offered by different companies can help reduce your life insurance rates. Many insurers offer discounts based on various factors such as age or occupation that might make some policies more affordable than others depending on individual circumstances.
Riders
Different providers may offer unique features such as accelerated death benefits that allow access to funds before death under certain conditions. Some common riders include waiver of premium riders, which cover premiums if one becomes disabled, and return of premium riders, which provide refunds at certain points throughout the term period.
Evaluating Insurance Options and Companies
No detail is too small when evaluating an insurance provider. Taking the time to assess a company’s financial strength and compare different policies will ensure you get the best value for your money. Considering these factors together will help you make an informed decision on which provider is best suited to meet both your needs and budget regarding life insurance coverage.
The Bottom Line
When searching for a life insurance provider, take your time and do your due diligence. Ask questions of the broker or agent and make sure you are clear on their answers and verify that they are properly qualified and experienced in handling cases similar to yours.
Compare policies from different companies before making a final selection as this will help ensure you get appropriate coverage at a competitive and affordable price. It may be useful to check if there are any complaints filed against them with the Department of Insurance in your state or if they have earned any awards for excellence in service.
By taking the necessary steps early in the shopping process, you can feel more confident that your chosen life insurance broker or agent is reliable, responsive and will provide quality support according to your individual needs.
Frequently Asked Questions About Choosing a Life Insurance Broker or Agent
Brokers represent many insurance companies, which is great for a customer looking for options and flexibility. However, brokers may not be experts on every company they represent.
The difference between an agent and a broker is simple: an agent sells one type of insurance product for one company, while a broker can sell many different types of products for many different companies.
Referrals from family or friends is a strong source of finding a good agent or broker. Look for agents in your area as well, either through online internet searches or advertisements.
Chris Patrick started in the insurance industry when he was 18 coming from a line of successful insurance industry superstars as his parents started the marketing division of Amerilife back in the 80s. He’s known as one of the legends in the industry. Chris has worked in just about all departments, from managing mail and supply to product development, and he currently runs a 50-state marketing firm Midwestern Marketing. Chris concentrates on all products, including but not limited to Life, Health and Annuities. With over 37 years in the business, his specialty is turning around struggling firms as well as building from scratch new opportunities.
