When you want to take out a life insurance policy, you may require the services of a life insurance representative. The representative can be an agent or a broker. This is absolutely necessary because they will explain the fine points of different types of insurance policies. An insurance agent represents only one insurance company while a broker is an independent agent. The broker can represent as many companies as he/she wants.
How to choose
A life insurance broker can offer you premium rates for different products of several insurance companies. The broker can provide you with a comparative study on the offers of different companies. You can select the one best suited for you. On the other hand, the insurance agent can offer you the products of only one company. He/she is not interested in selling the products of other insurance companies. If you have already decided on the insurance company with which you are going to insure, there is no harm in going to the agent of that particular insurance company. The agent is specialized in the products of that company.
Whoever you select, an agent or a broker, you have to make sure that they have some basic attributes. One is that they must have a license to do the business. Secondly, they must have some reasonable experience in life insurance business. You can ask this question directly to the agent or broker. They must also be able to provide you with some references about themselves. The agent or broker must furnish all insurance proposals in writing with supporting documents. This is required under law. Make sure that the agent or broker is registered with the Financial Industry Regulatory Authority. A good agent or broker explains to you until you understand it and are satisfied with it. He/she never pressurize you into taking a particular or any policy.
Commissions
Commissions are paid by the company to both agent and broker. An additional retention fee is also paid to the agent for working with a particular company alone. The premium you pay includes the commission the company pays to the agent or broker. Even if you go directly to the company to take out the policy, no discount is offered for the commission they save. If you go to the agent or broker the added advantage is that you get expert advice. Some brokers charge an extra fee on the insured.
Types of agents and brokers
Life insurance agents and brokers do not do business in life insurance alone. They also sell annuities that provides for retirement benefits. Another field they work with is mutual funds. Both the agents and brokers are experts in their field.
You are getting the services of the life insurance agents and brokers for free. They are paid by the life insurance companies. It would not be wise not using this free service and taking out the best policy which suits you. They listen to you patiently and give their advice because that is their profession. Even if you go directly to the insurance company you do not save anything.