What is the difference between a life insurance agent and a life insurance broker?
[social_share]A life insurance agent and a life insurance broker can seem to do very similar things; they advise a person who is looking for life insurance as to what is the best policy. They also both tend to be self employed or work for a small firm, although this is not necessarily always the case. But there are big and important differences between the two types of people.
A life insurance agent is a salesman who is retained by the life insurance providers, although often this will be through a commission basis and the life insurance agent is often self employed. The life insurance agent will usually only offer one provider’s products, although in most cases they will be working for a large life insurance company so they will tend to have a wide variety of policies that they can offer to a consumer.
It is usually seen as a good idea for a person who is looking for a life insurance policy to look at the life insurance products that are offered by a number of different providers before calling in an agent. This will mean that they have a good idea of how the market looks and what is a reasonable price for a level of cover before the agent tries to sell them a product.
A life insurance broker will be a person who looks over the whole range of the life insurance products and so should be in the position that they can advise on the best product for a person regardless of the provider. These people tend to be paid either through an up front fee for the time that they take that is charged to the person who is looking for life insurance, or by commission from the life insurance provider.
Paying a broker through commission can be seen as quite a dangerous thing to do. This is because although a broker tends to bear a customer’s best interest at heart, they will still be biased towards products that pay a reasonable level of commission towards the broker. If the life insurance broker was going to be paid by a fee then they would tend to be able to see across the whole market without worrying about what commission a product would pay. The problem is that a commission can see a life insurance broker acting more like a life insurance agent.
