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You can buy life insurance in a few different ways. Learn about each and why going through a broker is usually the best option.
Updated October 28, 2020
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When you buy life insurance, one of the first things you’ll decide is where to buy your policy. You can buy life insurance from an affiliated agent, an online broker, directly from the insurance company, through your financial adviser, or even from an organization like your employer or a credit union.
Life insurance premiums are registered with your individual state and are highly regulated: Regardless of where you buy a policy, the price is the same. Your quotes could differ depending on where you choose to buy. But, once your application goes through underwriting, your premium will be the same no matter where you submitted your initial application.
But the experience of purchasing life insurance is different depending on where you purchase it. Some avenues, like brokers, offer more impartial advice than others, while some might involve more opportunities for personal connection or expediency. Read on to find out which is right for you.
Where you buy life insurance comes down to what you prioritize in your shopping experience
Brokers best serve the buyer by selling insurance from several companies, while agents work for a specific company or companies
Buying directly from an insurer can limit your options and ability to compare quotes
Be wary of professionals who may recommend costlier policies than you need
Independent brokers aren’t beholden to any single insurer, and they are in a unique position to know which companies offer the best pricing to people with your health history and specific needs. Working with an independent broker allows you to compare quotes from multiple insurers and choose the best policy for you based on your needs.
Every life insurance company has its own guidelines for every medical condition, financial situation, and family health history. The best life insurance brokers can identify the right insurer for your personal profile. But, working with a broker can add a little time to the application process.
|A good broker will know how each insurer is likely to view your specific profile and be able to recommend the best life insurer for you.||Some insurance brokers are more knowledgeable than others. You may need to choose a different broker if you don't think you're getting the support you need.|
|Some brokers can shop your application around if it comes back from underwriting with a higher premium than you were quoted, or even if it was declined.||If you present several risk factors for a life insurer to consider, it might take longer for a broker to compare quotes and find the best company for you.|
|A broker can follow your application through the entire underwriting process and keep you up to date on its progress or delays.|
Affiliated agents, also called captive agents, are who most people imagine when they think of a life insurance salesperson. Affiliated agents generally work alone or in small offices and they sell policies from select insurance companies.
Insurance agents focus on just a few insurers and therefore know their policies very well. They’ll be able to make recommendations specific to your insurer, but because they work on commission, they benefit if you buy more expensive policies.
|You may know your insurance agent and feel more comfortable sharing personal application information with them.||They can only sell policies from the life insurance company they work for, so you might miss out on a better deal from another provider.|
|Agents know their company's offerings and processing times extremely well.||Most life insurance agents are paid on commission, meaning they could sell you more expensive policies or more coverage than you need.|
Most people purchase life insurance from an insurance agent or broker. According to LIMRA, an association of insurance and financial services companies, 89% of the life insurance market is sold by agents or brokers.
Sometimes “agent” and “broker” are used interchangeably, but it’s important to distinguish them. Independent brokers like Policygenius are not affiliated with any insurance company and sell policies from multiple companies. They work on behalf of the customer to prepare applications. Affiliated agents, on the other hand, are appointed by one or more insurers to sell their products. They work on behalf of the insurance companies.
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While many insurance companies only sell their policies through agents or brokers, some allow you to apply to their plans directly. It may seem like a smart idea to go straight to the source, but applying through the provider can leave you with limited options.
The life insurance company can give you the most accurate information about their processes and policies, and you may prefer to work with a well-known provider. However, you may not get the best recommendations from a company representative, who benefits if you buy a bigger policy.
|You'll be able to get accurate answers about the product quickly.||The company you choose may not be the most affordable provider for your health and lifestyle profile.|
|You may be familiar with the company already and feel confident in their products and reliability.||A company representative could prioritize their employer and lead you toward costlier coverage options that you don't need.|
|If your application is declined or your premiums are higher than initially quoted, you have to start the entire application process over with a new company.|
Some financial advisers are also licensed to sell insurance products, but they are rarely insurance experts. Financial advisers usually partner with select life insurance companies to sell their products and can integrate them into your overall financial plans.
A financial adviser can make sure that your life insurance fits into your budget and is large enough to cover all of your assets, but they probably don’t have the expertise to identify the most affordable policy for your profile.
|They know your financial situation and goals, so they can suggest options tailored to your financial plans.||They may not know life insurance as well as a broker, so it's unlikely they'll be able to suggest the best providers for health or lifestyle concerns.|
|They probably sell insurance on commission and could make recommendations that are better for their financial interests than for yours.|
There are other ways to purchase life insurance, which may only be available to you if you’re affiliated with a specific organization. Unless your organization offers multiple provider options — a rarity — the same advantages and disadvantages of buying directly from the insurance company apply.
Many employers offer group life insurance to employees. If your employer subsidizes some or all of your premiums for a group policy, it doesn’t hurt to opt in. But if you know you need life insurance, it’s better to purchase your own policy since group policies usually come with lower coverage amounts than private policies and you likely can’t take group life insurance coverage with you if you leave your job.
Some organizations have affiliations with certain insurance companies. Costco, for example, sells policies from Protective and AARP sells policies from New York Life. The risk is that the one insurer your organization has partnered with may not be the most affordable insurer for you.
If you’re a credit union member you may receive life insurance offers from your credit union. You’ll only see premiums from one company in these situations as well, again putting you at risk of paying more for your policy than you would if you had an opportunity to do comparison shopping.
To ensure you get the best pricing available and work with someone knowledgeable about multiple insurers and their policies, an independent broker will likely offer you the most thorough shopping process and most affordable final premiums.
However, when deciding where to buy your life insurance policy, think about what parts of the experience you want to prioritize. If it’s most important to you to buy from someone who knows the ins and outs of your financial situation, you may choose to buy through your financial adviser. If expediency is your top priority, you may choose to work directly with the insurer or an affiliated agent.
You can buy a life insurance policy from any licensed life insurance salesperson, though we recommend buying from an independent broker. You may also be able to buy direct from the insurer, through an affiliated agent, or a financial adviser.
Buying through an independent life insurance broker is the most consumer-friendly way to buy a life insurance policy because independent brokers do not work on commission and can make recommendations based on your needs.
You may be able to buy life insurance through your bank or a credit union, but they often offer limited policy options. You may save more money if you buy from an organization that sells multiple policies from different life insurance companies.
Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.
Amanda has a B.A. in literature and communication from New York University.