Life Insurance Agent vs. Life Insurance Broker (Terms Explained)
The comparison of an insurance agent vs. broker comes down to a few main differences, including who they work for and the companies they work with. Insurance agents represent only the companies they are contracted to work for. Insurance brokers, on the other hand, represent ordinary consumers and don't have a particular company they work for. Both insurance agents and insurance brokers work on commission.
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Chris Abrams
Licensed Life Insurance Agent
Chris is the founder of Abrams Insurance Solutions and Marcan Insurance, which provide personal financial analysis and planning services for families and small businesses across the U.S. His companies represent nearly 100 of the top-rated insurance companies. Chris has been a licensed life and health insurance agent since 2009 and has active insurance licenses in all 50 U.S. states and D.C. Chr...
Licensed Life Insurance Agent
UPDATED: Feb 28, 2024
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Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Feb 28, 2024
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- An insurance agent represents insurers while brokers represent buyers
- Brokers can provide quotes from many different insurance companies
- Both insurance agents and brokers are required to have business insurance
When it comes to buying term life insurance, car insurance, or any other type of insurance, you’ll hear the terms “agent” and “broker” thrown around a lot. You might not know exactly what they do or how they differ from each other. Though, the insurance agent vs. broker topic isn’t all too difficult to understand.
The difference between an agent and a broker is pretty simple: an agent sells one type of insurance product for one company, while a broker can sell many different types of products for many different companies.
Agents work on commission, while brokers are paid by their clients instead of the insurance company.
How do I find an insurance broker near me? Is an agent or a broker the right choice for me? We have answers. This article will give you all the information about the insurance agent vs. broker subject and settle the matter once and for all.
Before you read more about the difference between an insurance agent and a broker, make sure to enter your ZIP code below to fast, free quotes from top companies.
What is an insurance agent?
An insurance agent is someone who represents a particular insurance company and sells that company’s products. They usually work on commission, meaning they get paid based on the policies they sell.
Agents are licensed to sell only the products of the companies they represent. So, if you go to an agent asking for car insurance, they can only sell you car insurance from their company and probably at a higher price than you would find elsewhere.
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What is an insurance broker?
An insurance broker is someone who represents multiple insurance companies and can sell you products from any of them. They don’t work on commission, so they aren’t motivated to push one product over another.
Brokers are paid by their clients instead of the insurance company and are free to shop around for whatever policy would be most advantageous for their clients.
What are the benefits of working with an insurance agent?
The benefits of working with an insurance agent are pretty clear:
- Agents are knowledgeable about the products they sell and can help you choose the right amount of coverage.
- They’re licensed to represent a particular company, so they likely have experience with claims and know how that company handles them.
If you’re leaning on picking a particular insurance company, siding with an agent may be your best best.
What are the benefits of working with an insurance broker?
The benefits of working with an insurance broker are also pretty clear:
- Brokers have access to many different products from multiple companies, so they can find the best policy for you.
- They’re not motivated by commission, so they’ll look for the permanent life insurance policy, car insurance, or home insurance that’s best for you rather than the one that pays them the most.
- Brokers are paid by their clients, so you don’t have to worry about them steering you towards a more expensive policy.
If you’re open to shopping for multiple insurance policies, hiring an insurance broker is your best option.
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What are the drawbacks of hiring an insurance agent?
The drawbacks of hiring an insurance agent are pretty clear as well:
- Agents work on commission, so they’ll be more interested in selling you a policy and making their money than what’s best for you.
- They may even recommend products based purely on how much commission it will earn them instead of its value to your family.
Insurance agents are opportunistic in nature. It’s important to know this going in.
What are the drawbacks of hiring an insurance broker?
The drawbacks of hiring an insurance broker can also be pretty obvious:
- Brokers shop around for multiple companies and don’t have access to all their resources like agents do. This can lead to a longer process of finding the right policy as well as the potential for mistakes.
- Since they’re not commissioned, brokers may not be as motivated to find you the best deal possible. They might settle for a policy that’s okay instead of one that’s great.
Insurance brokers may not have the same resources as insurance agents. Some of them may not perform their due-diligence in working for your best interest either.
How qualified are insurance agents?
Insurance agents are required to have a license in order to sell insurance products.
In most states, this means passing an exam that tests your knowledge of insurance law and product types.
This can be a good thing if you’re looking for someone who knows the law and insurance products well.
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How qualified are insurance brokers?
Because brokers represent many different insurers rather than just one at a time, they must have additional education before becoming licensed to work with clients.
Usually, this takes the form of coursework called continuing education classes that keep them up-to-date on changes within each insurer’s policy offerings and product prices. In some states,
Insurance brokers don’t need to have a license in order to sell insurance policies.
However, they must complete mandatory training courses on the different types of products offered by each company they work with. This ensures that they know enough about each type of policy to make an informed recommendation.
How does customer support differ between agents and brokers?
Customer support is where the real difference between insurance agents and brokers really shows.
When you work with an agent, you’re typically working with one person who’s responsible for your account. If something goes wrong or you have a question, they’re your only source of help.
If you have a problem with your policy, your agent may need to get in touch with the underwriter, the person who actually writes and approves policies, which can take time.
Brokers, on the other hand, have access to multiple customer service representatives from different companies. This means that if there’s a problem with your policy, someone will be able to help resolve it quickly without having to go through extensive channels.
Case Studies: Insurance Agent vs. Insurance Broker
Case Study 1: John and the Insurance Agent
John, a 35-year-old entrepreneur, was in search of a comprehensive health insurance policy for himself and his family. He approached an insurance agent who represented a well-known insurance company.
The agent explained the benefits and coverage options of their company’s health insurance plan. Although the agent was knowledgeable and provided excellent customer service, John felt limited by the offerings of a single company.
Case Study 2: Sarah and the Insurance Broker
Sarah, a 40-year-old freelancer, wanted to secure multiple insurance policies, including life insurance, disability insurance, and liability insurance. She decided to work with an insurance broker who had access to various insurance providers.
The broker carefully assessed Sarah’s needs, shopped around for the best policies from different companies, and presented her with a range of options. Sarah appreciated the unbiased advice and the ability to choose from multiple insurers.
Case Study 3: Mark’s Experience With an Insurance Agent
Mark, a 45-year-old business owner, had been working with an insurance agent for several years. The agent was knowledgeable about the products offered by the company and consistently provided personalized service.
However, Mark noticed that his agent often recommended policies from their own company, even when better options might have been available elsewhere. Mark realized that he may have missed out on potentially better coverage and more affordable premiums.
Case Study 4: Emily’s Journey With an Insurance Broker
Emily, a 30-year-old first-time homebuyer, sought an insurance broker’s expertise to help her navigate the complexities of homeowners insurance. The broker thoroughly analyzed her requirements and explored multiple insurance providers to find a policy that offered the right coverage at a competitive price.
Emily appreciated the broker’s unbiased approach and the ability to compare options before making a decision.
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Insurance Agent vs. Broker: The Final Verdict
Ultimately, choosing between an insurance agent or broker is a personal choice. It will depend on your particular situation and your exposure in the insurance industry.
Insurance agents are more geared toward people who are experienced in the industry and have a good idea of the company they want to buy from. Brokers are ideal for newcomers in the industry that want to assess all of their options.
Before meeting with either an insurance broker or an agent, you can compare insurance rates online easily. Just enter your ZIP code to see free insurance quotes from top companies right now.
Frequently Asked Questions
What is the difference between a life insurance agent and a life insurance broker?
A life insurance agent and a life insurance broker are both professionals who help individuals and businesses obtain life insurance coverage. However, there are distinct differences between the two:
- Life Insurance Agent: A life insurance agent typically works for a specific insurance company as an employee or independent contractor. They are authorized to sell the insurance products of that particular company only. Agents often receive commissions and may also receive bonuses or incentives for meeting sales targets. They provide guidance, information, and personalized recommendations on the insurance products offered by their company.
- Life Insurance Broker: A life insurance broker, on the other hand, works independently and represents multiple insurance companies. They are not tied to any particular insurer and have the freedom to compare and offer policies from various providers. Brokers work on behalf of their clients and act as intermediaries, helping them find the most suitable life insurance coverage for their specific needs. They receive commissions from the insurance companies for policies sold through them.
Which one should I choose, a life insurance agent or a life insurance broker?
The choice between a life insurance agent and a life insurance broker depends on your individual preferences and circumstances. Consider the following factors:
- Product Options: If you prefer to explore a wide range of insurance products from different companies, a broker may be a better choice as they can provide you with multiple options. Agents, on the other hand, can only offer products from the company they represent.
- Expertise and Advice: Both agents and brokers can provide guidance and advice, but brokers may have a broader knowledge base due to their exposure to multiple insurance companies. Agents, on the other hand, may have a more in-depth understanding of the products offered by their specific company.
- Personalization: Both agents and brokers can tailor policies to your specific needs, but brokers may have more flexibility in customizing coverage since they have access to policies from various insurers.
- Relationship and Service: Agents often focus on building long-term relationships with clients, providing ongoing support and assistance. Brokers also offer similar services, but since they represent multiple companies, their focus may be more on finding the best policy at a given time.
How are life insurance agents and brokers compensated?
Life insurance agents and brokers earn their income through commissions from the policies they sell. The commissions are typically a percentage of the premium paid by the policyholder. The exact commission rates can vary depending on factors such as the insurance company, the type of policy, and the premium amount.
How do I choose between a life insurance agent and a life insurance broker?
The choice between a life insurance agent and a broker depends on your personal preferences and needs. If you prefer working directly with a specific insurance company and want in-depth knowledge of their products, an agent may be a good choice. However, if you want access to a wider range of policies from multiple providers and value independent advice, a broker may be more suitable. Consider your priorities, gather recommendations, and interview potential agents or brokers to make an informed decision.
Can I trust the recommendations of a life insurance agent or broker?
Both life insurance agents and brokers are licensed professionals who are required to adhere to ethical standards and regulations. While they may receive compensation for policies sold, they have a duty to act in their clients’ best interests. It is important to ask questions, do your own research, and ensure you understand the policies before making a decision. Working with a reputable agent or broker can help ensure you receive reliable guidance.
Your life insurance quotes are always free.
Secured with SHA-256 Encryption
Chris Abrams
Licensed Life Insurance Agent
Chris is the founder of Abrams Insurance Solutions and Marcan Insurance, which provide personal financial analysis and planning services for families and small businesses across the U.S. His companies represent nearly 100 of the top-rated insurance companies. Chris has been a licensed life and health insurance agent since 2009 and has active insurance licenses in all 50 U.S. states and D.C. Chr...
Licensed Life Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.