What is the Difference Between a Life insurance Agent and a Life Insurance Broker?
Thursday, 7 November 2019
“What is the difference between a life insurance agent and a life insurance broker?”
This is a question that gets asked on a regular basis.
While this can be expanded to investments as well as life insurance, let’s discuss the differences on the life insurance side.
Life Insurance Agent vs Life Insurance Broker: Price Comparisons
Typically, the life insurance agent is a representative of one main insurance company and offers products from that company. While having insurance is better than not having any insurance, if this agent represents the wrong company you might find yourself settling on the products available and also paying more than you need to. It’s always great idea to do a quick google search to see the general experiences people have had, or how that company is perceived in the industry.
The life insurance broker represents the client and has the ability to shop your insurance needs to a number of companies and all the products on their shelf. The broker can always find a product that fits your specific need and in most cases they are able to find a better product for a great price.
Often the difference in product options could have a dramatic effect in the long run. Price can save you hundreds or even thousands of dollars over the span of 10-20-30 years, let’s have two examples show those differences.
Example 1: 30yr old female healthy non-smoker looking to cover the chance of getting a critical illness. To put it simply you have a 3 in 1 chance of getting some form of cancer, stroke or heart attack in your lifetime, this is something everyone should consider insuring against.
Depending on the company your options could be limited to just 4 illness and only specific terms as an choice and they might not be able to offer a Return of Premium option. (get all your money back if the policy isn’t used)
Dealing with a life insurance broker that has multiple carriers with multiple products to choose from, you would now have the option of 4 or 24 illness covered, term 10,15,20, to age 65, to age 75, or till age 100. More illness coverage with more time frame coverage choices. The ROP (return of premium) option is most definitely available if that is something you want to incorporate into your financial security plan. If you get a critical illness, the policy will pay out, but if you make it till age 65/75 you have the option to get back all of the premiums you paid into the policy.
Example 2: 35yr old male non-smoker who is healthy looking for a Term30 for $500,000 to cover his mortgage. Looking quickly at life quoting software there is a $15/mth difference in cost between the top 12 companies shown. ($180 /year) That’s $5,400 over the course of that 30 year Term product. Most carriers are on the low side of the difference, but this is just an example that some people have obviously over paid for their insurance.
You can see how having more options available gives you the opportunity to create a plan specific to your need and budget instead of being told ‘this is all that’s available”
Life Insurance Agent vs Life Insurance Broker: Product Availability
Another issue is the selling style of a life insurance agent vs a life insurance broker. The agent, only having specific products available, may steer you towards those products and limit the diversification within your insurance and investment portfolios. The life insurance broker, will often be more open about financial risk and wealth management concepts and will have the ability to tailor your specific financial security risk needs with the vast amount of products available.
Having insurance in place for you and your family is important and to have something is better than having nothing, BUT when talking with your insurance and investment advisor, ask them what companies they are able to represent. And as stated above don’t hesitate to look them up on google.
Billyard Insurance Group Inc. has over 50 life and living benefits brokers representing over 10 insurance and investment carriers. Contact an office near you for more information and to see if we can save you money on all your insurance needs.
In the end its’s all about having great life insurance coverage to protect your family but let Billyard Insurance Group shop for you to see if we can save you some money while doing it.