A Guide to Life Insurance Agents: What They are and How to Choose OneThis article will tell you everything you need to know about life insurance agents.
Our content follows strict guidelines for editorial accuracy and integrity. Learn about our and how we make money.
People often use a life insurance agent or broker when buying insurance. Agents help because they have knowledge of multiple plans and can streamline the process of choosing the best one.
With so many different life insurance options available these days, having a life insurance agent to help you find the right one can save you time and money, and reduce overall stress.
This article will tell you everything you need to know about life insurance agents. We’ll cover what they are, the pros and cons of using them, and what to consider when choosing an agent.
What is a Life Insurance Agent?
A life insurance agent sells policies on behalf of life insurance providers to people who want to buy a plan. They can help you find an insurance plan that meets your needs which is particularly important if you have specific requirements.
Agents are well placed to help you choose a plan because they have good knowledge of the types of policies that are available. They can answer any questions you have during your search for insurance.
The life insurance agent you choose will also help you navigate the process of signing up for the plan. They’ll help you understand each step of the process, and they’ll be there to answer any questions you have along the way.
A life insurance agent earns a commission whenever they successfully sell a plan. Agents and brokers that sell life insurance must be licensed in their state by taking a course and passing an exam.
There are several different types of agents and brokers you may come across. It’s essential to understand the difference between each one when choosing an agent.
What is a Life Insurance Agent?
Insurance agents are licensed professionals who help you buy insurance.
They act as an intermediary between the insurance company and the buyer.
They earn a commission whenever they make a sale.
You don’t need to use an agent when buying life insurance, but it can be helpful.
What is a Captive Life Insurance Agent?
A captive life insurance agent sells insurance plans from just one insurance company. They may receive a salary from the company on top of their commission.
A non-captive or independent life insurance agent or broker can sell policies from various companies. These agents can offer you more choices than a captive agent.
Some companies only sell insurance policies through captive agents. If you’re interested in buying a policy from one of these firms, you’ll need to use one of their agents. But, there is a big reason to go with a captive agent in some circumstances.
What is the Difference Between a Life Insurance Broker and Agent?
If you’ve ever bought insurance before, you’ve probably heard the term broker and agent being used.
Insurance agents and insurance brokers both:
Sell insurance plans to clients.
Act as an intermediary between the company and the client.
Earn a commission when they make a sale.
Have to be licensed to sell insurance.
However, there is a significant difference between the two:
Insurance agents represent specific insurance providers and sell policies to consumers.
Insurance brokers represent insurance buyers and look for policies on behalf of their clients.
Do You Need an Agent to Buy Life Insurance?
Many companies sell life insurance policies over the internet, which means you can get by without an agent or broker.
If you’re web-savvy, you can put in the time and compare quotes from multiple providers to ensure you get the best deal.
It’s easy to fill out an online form detailing your needs and receive a quote. If you like the price and conditions, you can sign up there and then.
However, using an agent means you’ll get their experience and life insurance industry knowledge. This can be particularly useful if you don’t have a lot of time to do research or you need advice on premiums, costs, living benefits, and insurance riders.
An agent or broker can tell you what you need to know and save you significant time by doing the leg work for you. They can also help find solutions and offer alternative options that most people don’t know about.
Pros and Cons of Using a Life Insurance Agent
|✔️ Agents are familiar with the process of buying insurance. They can help you navigate every step, from comparing plans to submitting applications.||❌ Experience and knowledge will vary between agents. This means you’ll need to find the right partner to get the full benefits of using an agent.|
|✔️ A successful life insurance agent is knowledgeable about multiple plans and types of plans. They help you choose one that meets your specific needs. Agents may even save you money by helping you avoid plans with unnecessary extras.||❌ Some agents are limited in the life insurance companies they can sell plans from. This reduces the amount of choice you get. If this is an issue, you can always speak to multiple agents.|
|✔️ Agents help you understand the plan and your needs better. If there is something you are unfamiliar with, they will explain it, so you understand.|
|✔️ Agents communicate with the insurance company to ensure your application goes through. If there are any issues, they are there to help resolve them.|
How do Life Insurance Agents Make Money?
Life insurance agents earn a commission whenever they make a sale. However, this doesn’t result in any extra costs for you.
Commissions are paid by the insurance company, not by the buyer, which means it won't cost you anything to use an agent or broker.
Some life insurance agents who work for a single company may also receive a salary or benefits from their company.
The issue with pay structures that use commission is that the agents’ commission amount rises when they sell higher-cost plans. This could incentivize agents to push you towards a more expensive policy.
Of course, a good agent will always help you choose the best plan for your needs. Consider speaking to multiple agents to get various opinions on the best plan for you.
There are some protections to ensure you don’t pay more than you need. All states regulate prices, so agents can’t charge more for a plan than you would pay with another agent.
And some commission structures spread the agent’s payment over the first few years of a contract — they don’t earn if you’re unhappy with your plan and choose to leave. This gives them an extra incentive to help you select a plan that works for you.
If you’re looking for a trustworthy insurance partner to help find life insurance plans in your state, speak to PolicyScout. We work with top insurance companies throughout the U.S. and pride ourselves on making the process of finding quality insurance easy for anyone.
What to Expect When Working With a Life Insurance Agent
To ensure you get a suitable life insurance plan, the agent you work with must discover more information about your current situation and health. This can lead them to ask some personal questions.
While perfectly normal, it can help to be prepared for this when you speak to an agent. Remember that providing incorrect information at this stage can void your policy further down the line.
You’ll typically be asked about:
Your personal details: The agent may ask about your job, age, marital status, and dependents.
Your health: Insurance companies use information about your health when deciding your premiums. Agents will typically ask for your height and weight, whether you smoke, and whether you have pre-existing conditions.
Your finances: Your insurance agent may also ask about your finances to help you find a plan you can afford. They may ask about income, your mortgage, savings, and loans.
Once the life insurance agent has this information, they will begin to recommend plans to suit your needs. Take a look at the plans yourself to ensure they meet your expectations. Your agent is available at this point to answer any questions you may have about the policies on offer.
After you decide on a plan, the agent will help you sign up. They will pass on any forms you need to fill out and will be there to answer any questions you have.
Once you're ready to apply, they will then file the forms for you with the insurance company and keep you up-to-date about your application. Your insurance agent will help if there are any problems, and they will alert you once your plan is live.
How to Choose the Right Life Insurance Agent: Checklist
✔️ Agents and brokers must have a relevant license. Be sure to check the agent you are considering is licensed in your state.
✔️ Check which insurance providers the agent represents. This is essential if you want a plan from a particular company.
✔️ Look for reviews or testimonials from other customers and online. If you want to look at the latest reviews of leading life insurance companies, visit our Life Insurance Hub to learn more.
Where Can I Find an Insurance Agent to Help Me Get Life Cover?
The next step to taking out a life insurance policy is to find out more about the available types of plans.
At PolicyScout, we have a life insurance hub that has all the information you need to get started. Our advice is to read up on the different life cover types, life insurance policies, and look at some of the providers that offer life insurance.