When you buy life insurance, using a life insurance agent or broker can help you get the right policy at a competitive price. Agents work with life insurance companies and brokers work on the customer's behalf to help them navigate the process of buying a life insurance policy.
Each state’s department of insurance sets insurance commission rates, so while agents and brokers earn money on the policies they sell, there’s no extra cost to the consumer.
You can shop around for a life insurance policy on your own, but using a professional who knows the ins and outs of life insurance, such as an agent, can save you time and money.
What is a life insurance agent?
A life insurance agent is a licensed professional who sells insurance policies to clients on behalf of one or more insurance companies.
To get a license in their state, an agent must take an accredited course, pass a life insurance agent exam, and complete continuing education requirements every few years for licensing renewal.
An agent can help you understand your options – from what type of life insurance policy is best for you to who you should name as a beneficiary. It’s the agent’s job to try to sell you a policy, but they should also be working in your best interest.
The agent should know what kinds of policies are available and which would be the best fit for you, based on your financial situation and lifestyle. That includes making sure you’re not buying more coverage than you need.
Agents should know a life insurance company’s policies inside and out and should be able to answer any questions you have about buying life insurance coverage, like:
In addition to buying the right type of life insurance, you’ll want to find an insurer that offers you the best rate. Insurers will charge you a higher premium if your medical data, age, or hobbies indicate that you pose a higher risk.
An independent sales agent could help you figure out which insurer penalizes certain health conditions or lifestyle choices more than others. Depending on your health needs, some life insurance companies are a better fit than others.
Check out our definitive breakdown of the best life insurance companies to get a sense of what’s out there before meeting with an agent.
Life insurance brokers vs. agents
Life insurance brokers are similar to life insurance agents. Both brokers and agents serve as intermediaries between the insurance companies and customers. Both brokers and agents must be licensed to sell insurance.
Although they both work with insurance companies to help shoppers find the right policy, agents are often more limited in the number of companies they work with while brokers aren’t beholden to any single insurer.
“Though agents may be able to offer products from companies other than the one they work for, they are usually incentivized to sell policies only from the insurer that employs them,” adds Jake Herskovits, life insurance team lead at Policygenius.
Without the incentive from any single insurance company, an independent broker is often better suited to provide objective advice that puts your best interests first.
An agent who works directly for one insurance company is called a captive agent. Captive agents are more likely to recommend a policy offered by their parent company.
Brokers (also referred to as non-captive agents or independent agents) develop relationships with a large number of insurance companies and can help you compare policies from each. They may also sell additional insurance products, like disability insurance, homeowners insurance, and auto insurance.
If you’re looking for a detailed description of a specific insurance company’s products, one of its agents may be the best person to talk to.
However, if you’re trying to comparison shop across multiple insurers, you’re better off contacting an independent broker like Policygenius who can help you evaluate policies from several different companies.
At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.
How do life insurance agents make money?
In most cases, life insurance agents won’t charge you anything if you work with them to buy life insurance. So how do they get paid?
State-regulated commissions
Most agents earn a percentage of the premiums on life insurance policies they sell — a commission — rather than a set salary. That commission, however, doesn’t come at an extra cost to you because it’s already built into the premium.
Insurance prices are regulated by each state’s department of insurance. Each insurance company develops rate tables and then files those rate tables with the state’s insurance department.
Because these rates are set beforehand, an agent can’t offer you one company’s policy at a different rate than you’d get by simply going to the company itself.
These pre-set commission rates are another reason why comparison shopping is so important when shopping for life insurance to secure the lowest price.
Some agents may charge clients a fee for their labor instead of earning a commission, but these fee-only agents are rare.
Pros and cons of using an agent to buy life insurance
Buying insurance on your own can be confusing and researching your options is often a challenge. Different resources might have conflicting or inaccurate information, especially as federal and state insurance laws change every year.
Not sure how much life insurance you might need? Our life insurance coverage calculator will give you a tailored recommendation. We can also help you compare quotes from multiple insurers.
Come armed with that info when you’re ready to meet an agent, and you won’t need to accept the first offer. Or simplify the process even more and use Policygenius to sort through available life insurance options and apply online.
More about the life insurance application process
Why do life insurance companies need my Social Security number?
Everything you need to know about the life insurance medical exam
Why does a life insurer need an attending physician statement (APS)?
What is a modified life insurance offer or approved other than applied?
Buying life insurance and disability insurance at the same time
Frequently asked questions
What’s the difference between a captive agent and a non-captive agent?
Captive agents work for one specific insurance company, while non-captive agents – also called independent agents – and independent brokers don’t represent any single company.
How does a life insurance agent make money?
Most agents earn a percentage of the premiums on life insurance policies they sell. Each state’s life insurance department regulates rates, so commissions are already included in the price you pay, regardless of which agent or company you use.
Do you have to use an agent or broker to buy life insurance?
No, you can apply for insurance on your own directly through insurance companies. But working with a licensed broker or agent is in your best interest. They can help you compare rates, explore options, and handle the back and forth while your application is underwritten.
How much does it cost to become a licensed life insurance agent?
The total cost varies by state and includes fees for required courses, exams, and licensing. Costs commonly run $40-100 for each course, exam attempt, or license application, but may be higher in your location.
