Few people enjoy the certainty of death. The possibility of an accidental death occurring at any time is also a factor. It is a problem that can be very distressing for those who depend on your earnings and you.
Although it is not something you enjoy, purchasing life insurance can make sense. Even those who don’t have dependents must still consider funeral expenses in the event of a tragic accident.
Now the question is: Do I require a broker or agent to sell life insurance?
First, you must understand that there are differences. Life insurance agents can only represent one company. Let’s say company A. An agent can only and will work with one company. He is a “captive agent”.
A broker is an insurance agent that represents a variety of insurance companies. A broker represents any number insurance companies. He does not have to represent any particular company. He can use any company that allows him to.
Many clients interested in purchasing insurance policies will only work with one agent. If they don’t know that an agent is a captive agent, they may not have the options they want.
Because an agent’s income is primarily based on commission sales, they will want to appear as though he/she can provide all the clients’ insurance needs. But does this mean that you get the best deal?
Benefits of a “Captive Life Insurance Agent
The question is now that you know the difference. Is there any benefit to being a captive insurance agent? In some cases, yes.
Companies that only accept captive agents are the ones who employ captive agents. Captive agents are not available to most insurance brokers. Companies like New York Life and Mass Mutual will often deal with captive agents. These agents represent only their company.
Although it may not be true 100% of the time, this is often true.
Are These Companies Good?
These captive agencies are usually specialty companies. These three agencies offer large amounts of whole-life insurance and premium types of insurances. These types of insurance serve many purposes and require a professional to properly structure.
Captive companies can offer great benefits to consumers in these circumstances.
Why is an insurance broker a good idea?
Other types of insurance such as term insurance are less common than other types. A life insurance broker is the best choice.
Independent agents are generally the best choice because they have many options and can choose from various insurance companies to get you the best deal.
A broker will prevail over a captive agent in this scenario. The advantage of having multiple companies to use captive agents is not available to them, as they deal only with one company. They will only be able to use their company’s product, which can often lead to higher prices for commodity products.
A broker will usually make the best decision in these situations.
Do Not Be Afraid to Shop Around
It is sometimes a good idea to shop around.
You should choose brains over brute if you’re buying a niche product, such as properly structured whole-life insurance for investment, key man insurance policies or asset management products.
An agent who is knowledgeable about the industry will save you money over time. It can be very costly to save a few dollars only to find out later that there was a mistake. It is possible to lose years of premium payments or leave your heirs with a large tax bill.
If you are in a specialty situation, it is worth hiring someone who is knowledgeable about the subject.
It is not a good idea to shop around in such situations.
With other commodity insurances, such as term insurance, don’t be afraid of speaking to multiple agents. You could save money and avoid dealing with pushy agents.
Choose the right agent for you. If you feel that they are pushingy or don’t know how to help, be prepared to say no and move on.
You will have a better chance of understanding what you’re buying and not just what you think you know.