Should You Use Life Insurance Agents? uptrends

It turns out, not everyone needs a life insurance agent to purchase a policy. If your insurance requirements aren’t overly complicated, or you feel comfortable selecting a policy without one-on-one assistance, you can get coverage without interacting with an agent.

However, you do need to understand what life insurance agents do and the benefits and drawbacks of working with them before deciding to go it alone. Here’s what to know.

What is a life insurance agent?

Life insurance agents specialize in selling (drumroll, please)… life insurance. They typically work on behalf of multiple life insurance companies, helping individuals find the policies that best suit their needs.

Of course, life insurance agents must fully understand what they’re selling, so they undergo training and coursework to help them understand the ins and outs of life insurance coverage. Before they can start selling policies, they must obtain a license from their state or another regulatory agency. Most agents undergo continuous training, helping them keep up-to-date with industry changes.

If you collaborate with a life insurance agent to find a policy, expect them to ask lots of questions about your current circumstances. This includes any medical conditions you have and whether you have children, a partner, or a spouse. Your agent will also want to know about your current debts and whether you own property or financial assets. A comprehensive understanding of your finances and family situation will help them determine how much coverage you need and what policies are appropriate.

Because insurance agents work with different insurance companies, they’re familiar with the advantages and disadvantages of varying policies. If you have certain medical conditions, are older, or smoke, they can help you find a policy that won’t automatically disqualify you from coverage while still delivering an optimal rate.

Some life insurance agents sell other types of insurance, like medical, dental, and homeowner’s policies. If you need coverage in other areas, you can work with them for all your needs rather than using multiple agents for each policy.

What are the pros of working with a life insurance agent?

One reason to partner with a life insurance agent, rather than attempting to go it alone, is their guidance. If you’ve never purchased life insurance before and have no idea what type of coverage to buy, a life insurance agent can guide you through the process. They can explain the differences between term and permanent life insurance policies, determine how much coverage you need, and point you toward insurance companies that sell what you require.

Because life insurance agents collaborate with clients from all walks of life, they’re familiar with the roadblocks that consumers commonly face. For instance, if you have a pre-existing medical condition that might cause one company to deny you, they can help you find another company that won’t. Similarly, if you’re older, they can help you find a policy that accepts senior applicants.

Another benefit of working with a life insurance agent is the human touch. There’s so much automation in today’s world that sometimes it can be nice to collaborate with an actual person. If you prefer one-on-one conversations about your insurance needs, you need a live person to talk to. Agents take the time to learn about you, your family, and your financial circumstances before recommending suitable policies.

Life insurance agents can keep you up-to-date on the status of your application. They’ll handle the submission process and speak with the insurance company on your behalf.

If the provider requires additional information to approve your application, like medical records or a doctor’s visit, they’ll make the necessary arrangements. You won’t need to worry about calling your insurance company and sitting on hold. The agent takes care of everything for you.

What are the cons?

While you might think a life insurance agent has your best interests at heart—and many do—they are salespeople. Most life insurance agents earn much of their money from commissions, not salaries. They don’t make that commission if they can’t sell you a life insurance policy.

Life insurance agents’ commissions on new policies vary from 30% to 90% of your first year’s premiums. Some agents will continue to earn additional commissions in the years after selling you a policy, particularly if you buy whole-life or permanent coverage. However, once the glory days of the sale are over, they’ll need to attract new clients to maintain their income. Some agents try to sell their existing clients on new policies if they’re open to them.

Another drawback of working with life insurance agents is their focus on the most expensive coverage. They know they’ll earn the most money if they can sell you a permanent policy, especially if your coverage is exceptionally high and you add additional riders. While some people can benefit from permanent life insurance, it isn’t suitable for everyone. You’ll usually pay higher premiums than you would with term life insurance, and you might not need it.

Finally, life insurance agents might try to upsell you on buying more coverage than you need. For instance, they might say you need $500K worth of life insurance when, in reality, a $250K policy is enough. If they sell additional insurance products, like auto insurance or long-term care insurance, they might suggest you purchase those policies, too, even if you already have coverage or don’t need them.

Be wary of agents who come up with all kinds of worst-case scenarios that require you to buy policies or extensive coverage. Do some independent research to fully understand what each policy covers and whether you need the amount they suggest or if a smaller policy is adequate.

And then, finally, there’s the convenience factor.

In the 21st Century, you don’t need a life insurance agent to get an affordable, high-quality life insurance policy. You can see how much coverage you need online. You can get a free life insurance quote online.

You can complete most of your application online. You can schedule your medical exam online. You can manage your policy online.

And if you have questions or concerns, you can interact with a customer service rep… online.

In this day and age, the ease of procuring and managing life insurance online might outweigh the pros of working with an agent, particularly if you’re relatively young and healthy.

Who should consider a life insurance agent?

People with complex life insurance needs are the most likely to benefit from a life insurance agent’s help. For example, if you picture using your life insurance policy as part of your retirement plan, you might be better off working with an agent who can explain the various types of permanent policies with cash value components.

Individuals with medical conditions that might result in a coverage denial, like cancer, heart disease, or diabetes, might need help from an agent. Similarly, lifestyle factors like smoking can make it harder to obtain life insurance, so an agent might be beneficial.

A life insurance agent is probably your best bet if you prefer to work one-on-one with a professional rather than handling the purchase and research process yourself.

However, if you want a simple life insurance policy without many bells and whistles, you can find coverage on your own. You might find it cheaper, too, since you won’t be paying an agent’s commissions and extra fees.

Get a no-frills term life insurance policy with Haven Life

Shopping for life insurance doesn’t have to require working with an agent. In fact, you can find a suitable policy on your own without the need for office appointments or phone calls. At Haven Life, we offer affordable term life insurance with up to $3 million in coverage. Some policies don’t even require a medical exam.

Start an application today, and we’ll help you select a policy that fits your needs.