Navigating the life insurance buying process can be complex and stressful. If you’re feeling overwhelmed, you may benefit from working with a life insurance broker. A life insurance broker may help point you toward the right policy for you and your family’s needs. While they can offer informed advice and help streamline the application process, there are potential pros and cons to explore before working with a broker.

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What is a life insurance broker?

A life insurance broker sells life insurance policies to clients. Rather than being employed by one specific company and selling that company’s policies, a life insurance broker works for you to help you navigate policy offerings from many different companies and choose the best one for you. They do this by helping you assess your insurance needs, then comparing life insurance quotes to help you find the best deal, whether based on price, coverage type, customer satisfaction or any other metrics that matter most to you.

You can opt to work with either a traditional life insurance broker or an online broker. If you’re looking for personalized advice and an easy way to ask questions, then a traditional broker may be a better choice. However, if you know what type of life insurance policy you’re looking for and just want an easy way to compare rates, then an online broker may be more convenient.

Life insurance broker vs. life insurance agent

Both brokers and agents require a state life insurance license, but their services differ. Brokers are usually independent, meaning they aren’t tied to any single insurer. Using a broker gives you the opportunity to shop around with multiple insurance carriers.

A captive agent, on the other hand, typically sells policies from the insurance agency they work for. This means that you have fewer choices because you’re limited to the policies and rates offered by one company. If you do not choose to work with a broker, you can still contact multiple insurance agents to compare policy offerings from different companies.

How does an insurance broker make money?

An insurance broker earns commission on the policy you ultimately choose. Usually, it’s a percentage of your premium amount. Because they’ll typically earn more if you purchase a more expensive life insurance plan, you may wonder if they have your best interests in mind. They most often continue to receive a commission each year the policy stays active. If they push an expensive policy and you end up terminating the contract, they’ll lose that future stream of income.

If you’re concerned about commissions being a conflict of interest with your life insurance broker, you can always ask them how they make their money. Each state has its own rules about what life insurance brokers must disclose to clients. They likely have to tell you that they receive a commission, and some states even make them disclose how much. You may choose to meet with multiple brokers in order to find the one that best meets your needs.

Should I work with an insurance broker?

There are a number of potential benefits to using an insurance broker to choose and purchase a life insurance policy. Life insurance brokers understand the finer points of different life insurance policies and may help put complex financial terms into everyday language. Plus, the personal relationship you develop with your life insurance broker may help you modify your policy to meet your family’s changing financial needs. However, life insurance brokers may not be the best choice for everyone, and there are some potential downsides to consider.

Pros and cons of an insurance broker

Pros Cons
May make buying life insurance easier and more efficient.
Easy way to compare coverage offerings and rates from multiple companies.
A broker may be able to negotiate on your behalf to secure coverage if you have a pre-existing condition.
Some brokers may charge a fee in addition to their commission.
As with all industries, knowledge and experience among brokers will vary greatly.
Finding a broker you trust may be time consuming.

Frequently asked questions

    • No, there are a number of ways to purchase life insurance other than through a broker. An insurance agent, for example, works with a specific company and only sells their products. This may be a good option if you already know which company you want to work with. Although some carriers offer online quoting for life insurance, this feature is not as common as it is for auto and home insurance, so comparing quotes on your own may require contacting multiple agents.
    • There’s no simple answer to the best life insurance company since every individual has their own needs. However, making a list of companies that offer the policy type you’re looking for and meet your financial strength and customer service requirements may be a good place to start. From there, you can compare personalized quotes to see which carrier may be able to best meet your budget. It may be important to note that life insurance quotes do not vary as much between carriers as auto or home quotes, so finding a company that offers the riders, digital tools and customer service resources you want may be more important than searching for a low price tag.
    • Yes; in order for someone to work as a life insurance broker, they must be licensed by their state’s department of insurance. On top of an insurance license, a life insurance broker may also have professional financial services designations from a recognized institution.
    • A life insurance broker works for you. Unlike a captive insurance agent who works for only one specific insurer, a life insurance broker is not bound to just one carrier. This means that a life insurance broker can offer you quotes from a selection of different life insurance providers. However, it is important to note that life insurance brokers usually work on a commission basis and may charge a broker fee. Before committing to one broker, you may want to ask them about how they may profit from your policy.