When it comes to buying insurance, these days many of us turn to the Internet first. Nearly three-quarters of consumers in the market for auto insurance, for example, start their research by getting quotes online, and 25 percent buy their policy through digital channels. But if you’re buying life insurance, shopping for the cheapest quote or the biggest benefit may not always make the most sense.
Many people prefer to work with a real person before committing to a 20- or 30-year policy or signing up for whole life insurance. And a trained insurance advisor can assess you and your family, and help analyze risks to find a policy that fits your future plans.
If you’ve been previously satisfied with an insurance company’s products, that’s a good starting point for other types of coverage. If not, seek referrals from family and friends, as well as other professionals such as attorneys and financial advisors who are already familiar with your situation. The industry site LifeHappens.org also has an agent locator tool that lets you search by name or location.
One decision is whether you want to work with an insurance agent or an insurance broker. Often used interchangeably, these terms do have distinctions.
- Agents are directly employed by one or more insurance companies. “Captive agents” represent a single firm and generally won’t make recommendations or suggest products outside their own company’s portfolio. Non-captive agents might draw a paycheck from one carrier (and have deep knowledge of those products) but can sell across insurance companies.
- Brokers also offer coverage from a variety of carriers, but instead of being employed by insurance companies, they work directly for their customers. You won’t pay more for a policy that you buy through a broker—instead, the insurer pays the broker a commission for selling the policy.
Finally, there are fee-based advisors (though these are far more rare than agents and brokers). Fee-based insurance advisors don’t work on commission or salary from insurance companies. Instead, they take a one-time or hourly fee to provide advice about policies and overall insurance concerns. While this seems like a reasonable model, some industry experts have argued that they may lack some insight that comes with being directly affiliated with one or more insurance firms.
Reviewing résumés
You’ll trust your eventual agent to understand and analyze risks relating to your health and your family’s financial situation, so you want someone who is more of an advisor and less of a salesperson. Before scheduling phone calls or face-to-face meetings, do a little self-directed homework.
Check their licenses
Visit the National Association of Insurance Commissioners (NAIC) website to make sure any potential agent on your list maintains an up-to-state license in your home state. You can also narrow your search and focus on members of the National Association of Insurance and Financial Advisors (NAIFA). This organization enforces a strict code of ethics among its members and has a strong focus on inclusion and diversity.
Survey their education
Continuing education opportunities are readily available for insurance professionals, and those with advanced certifications may ultimately be more experienced and dedicated. Look for certifications such as Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), and Financial Services Specialist (FSS).
Interview more than one insurance pro
When you’ve whittled your list to two or three names, you’ll want to meet in person or talk over the phone, to get a deeper sense of both their expertise and their insurance approach.
The expertise that matters most to you will depend on your financial and personal situation. Do you have Type 1 diabetes? Love to skydive in your spare time? Have a child with special needs who will require ample financial security after your death? Any agent or broker you work with should have experience working with others in a similar situation, so you can have confidence you’re getting the best policy—and the best premiums.
During the conversation, also take note of the insurance pro’s demeanor. An effective agent should ask the right questions to quickly analyze your risk tolerance, asset level, and familial situation (like number of dependents). If an agent jumps into a sales pitch before doing his or her due diligence to learn your needs, keep shopping around.
You can—and should—get specific policy quotes from more than one agent or broker. Price will (of course!) play a part in your decision, sure, but you’ll also want to compare the policies themselves and how well they seem to fit your needs.
By Kate Rockwood
