It is a common desire for your loved ones to be well cared for after you die. Life insurance can help your family plan for the future. However, it can be difficult to navigate the life insurance process. Working with a professional can help you avoid confusion and ensure you have the right coverage.
What does a life insurance broker do?
A life insurance broker is not a person who works for one company, but for you. They will find the right price for you and help you get what you want. This is done by helping you to assess your life insurance requirements and then comparing multiple coverage quotes to help find the best deal.
Either a traditional or online life insurance broker can be used. A traditional broker is the best option if you want personalized advice and a way to ask questions. An online broker might be better if you already know the type of policy you want and are looking to compare rates.
Life insurance broker vs. live insurance agent
Agents and brokers both require a state-life insurance license. However, their services are different. Agents and brokers are often independent. They are not tied to one insurer. A broker allows you to shop with several insurance companies.
Captive agents, on the contrary, sell policies through the insurance agency they work for. Because you are limited to one company’s rates and policies, this means you have fewer options.
Why would an insurance broker work with me?
A broker can help you choose the right life insurance policy. Consider the benefits of a broker instead of trying to do it all yourself.
- Get advice on which policy is best for you. There are many options when it comes to life insurance policies. You can choose between whole or term life, and even what amount you want. To help you select the right plan, an insurance broker will assess your financial and personal situation.
- Compare offers quickly. An insurance broker helps you compare offers and instead of you having to check with several insurance companies.
- A simplified application process. Your application information is also kept by a broker to help you compare quotes from different insurance companies. Your broker can provide updates during your application process, saving you time and allowing you to contact the insurance company directly.
How can an insurance broker make a living?
A commission is paid to an insurance broker for the policy that you choose. It’s usually a percentage of the premium amount. It’s possible to wonder if they are looking out for your best interests since they will earn more if the premium is higher. They typically still receive a commission every year that the policy is active. If they try to sell you a costly policy, and you terminate the contract, they will lose this future income stream.
Ask your broker how they make their money if you are concerned about commissions being conflict of interest. Each state has its own regulations about what information they have to disclose to clients. You will likely find them telling you that they are paid a commission. Some states require them to disclose how much. Do not be afraid to interview several life insurance brokers to see how they answer the compensation questions.
The pros and cons of being an insurance broker
There are pros and cons to working as an insurance broker, just like with all things.
| Pros | Cons |
|---|---|
| Service personal | Commission-based sales |
| Comparison shopping made easy | The level of knowledge may be different |
| Negotiation of pre-existing conditions |
Pros
Service personal
Life insurance brokers will take the time to get know you and match you with the right policy. They will ask you about your family, finances, and health. These questions will help you determine the best coverage for you.
Comparison shopping made easy
One conversation with a broker can give you access to many policy options. You would have to apply for each insurance company separately.
Negotiation of pre-existing conditions
An insurance company might deny or offer a premium if you have pre-existing medical conditions. An insurance broker can help you find an insurer who is open to working with all types of applications.
Cons
Commission-based sales
A life insurance broker is ultimately a salesperson. It is your responsibility to analyze their advice and decide if they are right for you.
The level of knowledge may be different
Life insurance can come with a lot of complexities. An inexperienced broker might not be able to fully grasp the details. Ask detailed questions to gauge their quality.
Questions frequently asked
Are you required to use an insurance broker in order to purchase life insurance?
There are many other ways to buy life insurance than through a broker. For example, an insurance agent works for a company and sells only their products. This is a great option if you have brand loyalty and want multiple types of insurance with one carrier to get a discount.
Which is the best life-insurance company?
Because everyone has different needs, there is no one right answer to the best life insurance company . You can begin by looking for companies with strong financial ratings. This indicates that the company is well-run and has the capital to pay claims. You can also assess customer service by comparing prices to get the coverage you need.
What amount of life insurance do you need?
It depends. Consider the financial needs of those you love and how your death would affect them. A life insurance policy may be sufficient to pay for debts such as a mortgage or car payment. You could also use it to cover your final expenses or provide some financial protection to make up the income you lost.
