Life Insurance Agent vs Life Insurance Broker
Ever wonder the difference between a life insurance agent and a life insurance broker?
Knowing the difference between the two is a key to helping you get an overall perspective on the insurance industry and also will help when it comes time for you to buy insurance.
What is a Life Insurance Agent?
‘Life Insurance Agent’ is often used as an umbrella term to describe a person who sells insurance. Although used loosely and for simplicity when describing those who sell insurance, ‘insurance agent’ has a specific and important implication.
Technically, a life insurance agent refers to a person who sells insurance for only one insurance company. For instance, a life insurance agent with MetLife only sells MetLife insurance products… a life insurance agent with Prudential only sells Prudential insurance products…etc. This is why true insurance agents are often described as ‘captive agents’. They are captive in the sense that they only sell insurance products from their respective insurance companies.
What is an Insurance Broker?
Alternatively, a life insurance broker, also known as an independent agent, is not captive to selling insurance from just one company. A life insurance broker can sell insurance products from any insurance company and can provide a potential client with price comparisons.
The Myth of Buying Insurance Directly
It is important to note that when you purchase insurance it is mandated by law that a licensed insurance agent or a broker be involved in the transaction. There is no such thing as buying insurance directly from an insurance company so as to avoid paying a commission to an agent or a broker. Commissions are already built-in to the costs of all insurance policies. So choosing to purchase insurance through a life insurance agent or through a life insurance broker will not change the cost you pay for any policy. Keep in mind that if you are being charged a fee to get quotes then there is something wrong.
Why do some insurance salespersons become agents and others become brokers?
People entering the insurance sales profession often become agents first. Agents often receive sales training, an office space, sales incentive, and employee benefits from working with just one company. Those salespersons who become brokers typically have been in the insurance business for an extended period of time. Brokers rely solely on commissions to sustain themselves. They forego the benefits of being contracted with one company, but get the added benefit of being able to sell from multiple insurance companies.
Life Insurance Rate Comparison
It is important to get the most quality information you can when shopping and purchasing insurance. Comparing prices and getting a sense of the overall marketplace before you contact an agent or a broker is easy and beneficial.
At Secure Term Insurance we offer free quotes and personalized service with step by step guidance throughout the application process, underwriting process, and any assistance you may need thereafter.