Buying InsuranceInsurance Broker vs Agent: Background

Insurance Brokers and Insurance agents both sell insurance. The key difference between insurance broker and agent is that an insurance agent (also called captive agent) typically works for one insurance company and thus can sell insurance policies of this company only. That limits consumer’s options to compare different products.
Insurance broker on the contrary does not work for one insurance company but rather have a distributor relationship with multiple insurance companies. That allows insurance broker to compare several polices available on the market. When engaging an insurance broker to find an insurance policy, a consumer should clarify upfront with how many companies insurance broker works.

There are also some differences in compensation of insurance agents and insurance brokers: insurance agent typically receives a fixed salary and might get a sales bonus based on own sales results. Insurance broker gets compensated through commission paid by an insurance company for each policy sold (and sometimes some smaller amounts on policies which stay in place).

Insurance Tip Related to Insurance Brokers and Agents

Insurance broker can often get better insurance rates: Life insurance is not the simplest product as opposed to e.g. auto insurance. A good life insurance broker can navigate you through many question marks, compare for you premiums across dozens of different companies and often get lower rate than you would get on your own (e.g. because brokers may have some air to offer discounts on insurance products due to the large insurance volumes they make).

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