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What does a life insurance agent do?

Agents and brokers work on behalf of life insurance companies to help potential customers navigate the process of buying life insurance.

When you buy life insurance, you may find it useful to enlist a life insurance agent to help you. Agents work on behalf of life insurance companies to help potential customers navigate the process of buying life insurance. While you can shop around for life insurance on your own, using a professional who knows the ins and outs of life insurance, such as an agent, might save you both time and money.

What is a life insurance agent?

If you’re looking to get started on the process of buying life insurance, a life insurance agent may be able to help answer your questions. The agent is going to try to sell you a policy, but he or she should also have a good grasp of what kinds of policies are available and which would be a good fit for your financial situation and coverage needs.

All agents need to be licensed. To get licensed, an agent needs to take an accredited course and pass a test. Agents should know a company’s policies inside and out and should be able to answer any questions you have about buying life insurance coverage, like:

One thing an agent will excel at is assessing your needs. 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 rate if your medical history indicates that you pose a higher risk, so an agent could help you figure out which insurer penalizes certain health conditions more than others.

Depending on your health needs, some life insurance companies may be better for you to work with than others. Check out Policygenius’ explainer on 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 life insurance agents and life insurance brokers work on behalf of life insurance companies to sell you a policy, but agents are more limited in the number of carriers they work with while brokers aren’t beholden to any single carrier. If you're looking for details about a specific insurer's products, an agent may be the best person to talk to. However, if you're trying to comparison shop across multiple insurers, you may want to contact a broker.

Most of the time, agents are independent contractors, and they can be either captive agents or noncaptive agents (also known as independent agents). The former means that they work directly for a single insurance company, and the latter means they work for multiple insurance companies. Brokers, like Policygenius, are more independent, and work with a large number of insurance companies. They may also sell more insurance products, like disability insurance. Captive agents have fewer options to offer you because they only have their parent company’s policies to choose from.

If you're looking for details about a specific insurer's products, an agent may be the best person to talk to. However, if you're trying to comparison shop across multiple insurers, you may want to contact a broker.

How do life insurance agents make money?

In most cases, agents won’t charge you anything if you use one to buy life insurance. So how do insurance agents get paid?

Most agents earn a percentage of the premiums on life insurance policies they sell, which is called a commission.

But the commissions are already built into the premium. Insurance prices are regulated by the states; each life insurance company’s policies should start at a baseline value that will be essentially the same cost to you across the board (except for the various factors that insurers use to calculate your rate, such as age and health). 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.

Some agents may charge you a fee for their service instead of earning a commission, but these fee-only agents are rare.

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In addition to buying the right type of life insurance, you’ll want to find an insurer that offers you the best rate.

Pros of using an agent to buy life insurance

You can probably buy life insurance without speaking to another human being, but you should probably ask a professional for help. Even just researching the correct information can be a challenge, as different resources can have differing content and lead you astray. This can become especially frustrating as the laws change at both federal and state levels, and it’s an agent’s job to help you navigate all the nuances of buying insurance.

Beyond simply understanding life insurance, an agent can also guide you through the process of buying it. While you can apply for life insurance entirely on your own, sometimes that means a lot of waiting for a response from a carrier before you know where you stand in the application process. But an agent can update you as move through the funnel.

It’s also useful to for someone to have all your information on file should your application get declined, which could happen if you fail to disclose medical conditions or your lifestyle is too risky to be covered. If you make improvements to your health and lifestyle, the agent can automatically submit your application again when you’re ready. Agents who can offer you multiple types of insurance, such as disability insurance, may even be able to reuse your information across applications if you need more coverage.

Cons of using an agent to buy life insurance

When you’re ready to buy life insurance, you might need someone to help guide you through the process. An agent will know which policies best suit your individual situation. But that also means you’re at a disadvantage if the agent misleads you about the coverage you need.

A life insurance agent is essentially a salesperson. If you don’t buy a policy, he or she doesn’t get paid. Because of the commission structure, the more expensive a policy you buy, the more the agent gets paid. You could be roped into a life insurance policy that offers way more coverage than you need, with premiums much higher than you’d pay for more accurate coverage.

Not sure how much life insurance you might need? Our life insurance calculator will give you a tailored recommendation, and we can also help you compare and buy life insurance.

Come armed with that info when you’re ready to meet an agent, and you won’t need to accept the first offer. Or skip the agent entirely and use Policygenius to sort through the available life insurance options and apply online.

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Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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