Life Insurance Broker vs. Agent

Susan Kelly

Dec 31, 2022

When you first start purchasing insurance, one of the first decisions you'll probably have to make is whether you want to deal with an insurance agent or a broker. However, since you want the greatest value, coverage, and customer care with your insurance, you may be hesitant to pick one over the other. In general, insurance agents are salespeople who operate on behalf of certain insurance firms. On the other hand, insurance brokers provide clients with broader insurance services that work in connection with agents, insurers, and underwriters.

What Is An Insurance Agent?

An insurance agent works on behalf of one or more insurance firms to promote and sell the policies offered by such businesses in exchange for a commission. They can work for an insurance agency full-time in the sales department or go into business for themselves as independent contractors.

They serve as representatives of the insurance business during the transaction, guiding consumers toward the policies that best meet their needs. An agency agreement, also known as a contract, is in place between the insurer and the agent. This agreement details the numerous kinds of insurance the agent can offer and the commission rates for each policy. There are two primary categories of insurance brokers and agents:

In most cases, captive agents are only authorized to sell policies for single insurance.

Most of the time, independent insurance agents work with many insurance companies.

What Is An Insurance Broker?

An insurance broker represents customers in their quest for coverage and can sell insurance policies from various businesses in exchange for a commission. In contrast to captive and independent agents, whose major responsibility is representing one or more insurance firms, the customer is the broker's primary concern.

A retail broker will assess the requirements of a client and then explore the offerings of several service providers to locate for the customer the appropriate coverage at the most reasonable cost. They earn money off broker fees, a percentage commission on the policies sold, and how they generate revenue.

When obtaining insurance, a broker cannot bind coverage on behalf of an insurer since brokers do not work for insurance firms and do not represent them. They must give the account to an insurance agent representative to finalize the transaction.

Things to Consider When Choosing an Agent or Broker

Which businesses that specialize in life insurance does the agent represent? Check whether the agent or broker offers policies from the insurance companies you want to do business with. Check out our list of the finest life insurance companies to assist you in reducing the number of available choices.

What kind of professional certifications does the real estate agent or broker have? CLU and ChFC are two common titles that demonstrate a dedication to specialized study in life insurance. is a resource that may verify the qualifications of a subject matter expert.

Does the real estate agent or broker have previous experience dealing with customers similar to you? If you require life insurance to finance a buy-sell deal for a company, you should inquire whether the agent has previously worked with other business owners.

Does the real estate agent or broker show concern for your requirements? An agent needs to comprehend your current monetary circumstance and adapt their advice accordingly. Stay away from anybody who attempts to coerce you into making judgments or purchasing items you do not need. Check out our perspective on the many tactics life insurance brokers use to sell you more coverage.

Which Is the Best Option for You?

If you currently have a policy directly with an insurer and want to combine your coverage with other forms of insurance, working through an insurance agent will be more suitable for you. If you want to compare rates on your own and interact with an agent to have questions answered or to finalize your policy purchase, you may find that an agent is more convenient than a broker. When you are hoping to be matched with coverage offered by a certain insurer or group of insurers, an agent may be more useful than trying to do it on your own.

Working with an insurance broker is a good option if you want to evaluate coverages and pricing across the insurance market and seek unbiased suggestions on the best insurance policy based on your requirements and preferences. If you are having problems locating a certain sort of insurance, such as house insurance for high-risk properties, you may find it helpful to work with a broker with a better capacity to search through various available possibilities. Remember that even while the agents you work with won't charge you any additional fees, you can end up paying a fee to the broker for the additional services you get.

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