Where can I buy life insurance?

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Where can I buy life insurance?

You’re looking for life insurance – that much is clear because why else would you read this article? For a lot of consumers, the biggest question on their mind is where or from whom should I buy life insurance. Does it make sense to use Doug, my car insurance agent who also sells life insurance? Or should I use a website instead? Can I just call up MetLife and buy over the phone?

In this article, we’re going to break down the six ways that you can buy life insurance. Most people buy their life insurance through agents – licensed professionals who work with insurance companies to help people apply for life insurance – but there’s more than one type of agent, which can get pretty confusing. Additionally, you may be able to buy life insurance directly from an insurer, or through an affinity group such as a professional organization.

Note that we’re not going to tackle group life insurance through an employer in this article – that’s a very different process that you can read more about here.

Before we start: A quick note about life insurance prices

If someone says they can get you a discount on a life insurance policy, be wary. There are definitely variations in how much a life insurance policy costs -- two 30-year-olds will have different premium rates if their lifestyles and health are very different, and Lincoln and Prudential may not have the same rates for their $500,000/30-year term policies -- but the rate you’re given for a given policy from a specific company will be the same regardless of who you buy through.

Life insurance companies are required to submit their rates in a rate table -- basically a giant spreadsheet -- to state governments. Rate tables outline how the insurer will charge customers. These prices are regulated: you can shop around for more affordable policies, but the same policy through the same insurer will be the same price everywhere. Don’t be fooled by anyone who says otherwise.

1. Local independent insurance agents

Local independent life insurance agents can sell you life insurance from a variety of different life insurance companies. They typically have an office that you can visit, or they may make an appointment to go over your options in the comfort of your home. Most agents do not charge you for their advice – instead, they’re compensated by the life insurance company with a commission if they sell you a policy. This commission is built into the price of your policy.

Pros of local independent insurance agents

  • Meeting in person allows you to build a relationship with your agent

  • Sells policies from multiple companies, allowing you to shop around and get the best price

  • No cost for advice on top of the price of your policy

Cons of local independent insurance agents

  • May not offer plans from every life insurance company in your state, leaving you with some gaps in your shopping experience

  • You need to schedule an in-person appointment to get advice

  • Application process may be more inconvenient, e.g., paper applications

2. Local captive agents

Captive agents differ from independent agents in one major way: they only offer policies from one company. Like independent agents, they may have an office or visit your home, and are paid by the life insurance company. Captive agents may also sell multiple products from the same company, such as home insurance or car insurance. Some well known insurance companies that only sell through their captive agents include State Farm and New York Life.

Pros of local captive agents:

  • Deep knowledge of their company’s products, which may help you find the best policy from a specific insurer

  • May sell multiple insurance products from that company, allowing you to get all of your insurance shopping done in one place

  • Usually the only way to buy their company’s policies

Cons of local captive agents:

3. Directly from the life insurer

Some life insurers, such as Haven Life, offer their own products for sale directly from the company. Typically, you buy online, never talking to another human being about your policy. Some claim to get you a policy faster than competing life insurance companies because they sell it themselves.

Pros of buying directly from the life insurer

  • All online, like shopping on Amazon

  • May be faster than going through an in-person or online agent

Cons of buying directly from the life insurer

  • No dedicated agent for your application, just a general purpose customer service line

  • Won’t be able to provide independent insurance advice or help you comparison shop other life insurance companies

4. Affinity or membership life insurance offerings

If you’re the member of a professional organization or another group, such as having a Costco membership, you may have the option to buy life insurance through your affinity group. Typically, affinity groups offer life insurance from one company, and may advertise some sort of savings by purchasing through your affinity group.

Pros of affinity offerings

  • The policies offered through the group carrier may be cheaper than those from other carriers

  • Probably offers an expedited application process

Cons of affinity offerings

  • Life insurance offered may have restricted features (e.g., low limits on the amount of coverage you can buy or length of the policy)

  • Won’t be able to provide independent insurance advice or help you comparison shop other life insurance companies

5. National / online independent insurance agents

Online independent insurance agents are a lot like local independent insurance agents. They can offer policies from multiple companies, help you comparison shop, and give you free advice. The big difference, as you probably already figured out, is that online independent agents have no physical offices near you. Instead, you shop and apply online, using your computer and/or phone.

Pros of national / online independent agents

  • Sells policies from multiple companies, allowing you to shop around and get the best price

  • Shop for and apply for life insurance on your own schedule in the comfort of your home

  • Live licensed agents usually available over the phone or email for additional questions or complex cases

  • May offer some advantages due to scale, e.g., better technology or faster turnaround times than a local independent agent

No additional cost for advice

Cons of online independent agents

  • Some online agents aren’t really agents, but generic forms that ask for your contact information that is then sold to local independent (or captive) insurance agents (more on this below)

  • Not the best option for those who prefer to make most or all financial decisions in person with an advisor

6. Fee-only insurance consultants

In most cases, using a life insurance agent is free for you, the consumer. They’ll get paid a commission for the policy but won’t charge customers for their services. However, you might run across fee-only consultants in your shopping journey. As the name suggests, these types of agents charge a fee for their services. Proponents argue that you’ll get better advice (since you won’t be pushed a certain policy just for the high commission), but these types of agents are rare and unnecessary for most people. If you’re comparing policies across multiple companies, you’ll be able to see that you’re getting the best deal without relying on a fee-only consultant.

Pros of fee-only insurance consultants

  • Can help consumers navigate large and complex permanent life insurance policy strategies

Cons of fee-only insurance consultants

  • The fee can be an unnecessary extra expense (up to $250 to $300 an hour)

  • Usually only used in cases of permanent life insurance policies with cash-value components -- which we don’t recommend for most customers

What’s the best way to buy life insurance?

That really depends on your needs and preferences. For example, if you’re a brand loyalist and want to stay with State Farm for all your insurance, then you’ll have to work with a State Farm agent. But if you want to comparison shop for a straightforward term life insurance policy, and like the convenience of technology, then an online independent insurance agent is the best option. Online independent agents give you a lot of choice (and the best ones let you see quotes anonymously and with no commitment). Comparison shopping is the best way to save money on life insurance, because it’s all about finding the life insurance company that is best suited for your particular profile. Not only that, but online agents also allow you to shop for and apply for life insurance on your own time.

When looking for a good online independent agent, make sure that their website actually asks you specific health and lifestyle questions in order to provide quotes. The only way that any agent can give you an accurate quote is to ask questions about your health and lifestyle. A good online independent agent will also give you quotes online without first requiring your email or phone number. A simple website with a contact form is a pretty good indicator that the site isn’t operated by an independent insurance agency, but is collecting and reselling "leads" to local insurance agents (which means you’ll get phone calls and emails from multiple agents).

You obviously have your choices when it comes to where to buy life insurance. For tips on how to save time and money shopping for the perfect policy, be sure to check out our life insurance shopping guide, and use our quoting engine to compare policies from the top-rated life insurance carriers in minutes.