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Captive life insurance agents and you

How does the agent's relationship affect your options

It sounds like something ripped from the headlines...captive life insurance agents.  Aside from the implied drama of the term, it's really a just an industry term that describes the insurance agent's relationship with the life insurance companies.  Let's find out how this affects you and your options when comparing life policies on the market.

First, we'll offer just a quick explanation of what a captive insurance agent is.  Essentially, it's a life insurance agent that works exclusively for one life insurance carrier.  Hence, the "Captive" part.  This typically means that the agent can only market products available from his/her insurance company.  This isn't necessarily bad but in today's dynamic market, it really puts you at a disadvantage as we'll discuss in a bit.  What's the alternative to the captive agent model?  It's us...independent life brokers and agents.   Independent broker and agents can market, sell, and work with multiple life insurance companies.  Independent broker and agents receive commissions from the carrier but the rate is identical whether you take advantage of our services or go direct to the large carrier.  Captive agents also receive commission (and perhaps salary) from their company with the rate being the same.  Since the captive agent works for the company closer to the status of an employee, the company will usually put a prospective buyer in contact with their agents.  Okay, so we have the lay of the land in terms of agent's relationships with carriers....what's the net effect?

By definition, a captive agent can only show you a limited number of insurance plans and rates.  With a very large and well-established life company, this can still offer may options but it is limited to that company.  Independent agents do not have this restriction.  They can search the market to find the exact (or as close as insurance comes to exact) fit for your needs.  This may be a difference in options but usually it comes down to a question of cost when comparing life insurance plans.  Like with most other products, life insurance companies tend to have strengths...types of plans or price bands that they excel at.  This may be by design "We want to dominate the sub-250K term life market" or happenstance, "Claims have been very low for our California market so our rates are very competitive there".   Both of these can affect what is called price bands.  Premium bands are essentially price points of term life dollar amounts for which you get discounts as you go up.  The common ones are $100K, $250K, $500K, etc.  There can be distinctions among these bands and our online term life quoting tool will automatically scour the available plans to quote the best priced plans (and best premium bands) for your given needs (benefit amount and term length). 

Most life insurance agents (captive or independent) work hard to find the best options available for their customers.  There might be a conflict of interest issue with some less scrupulous agents if their employer IS the life insurance company.  Again, we give all agents the benefit of the doubt but an independent status feels intuitively to be aligned with the customer's needs since the agent is not under any type of sales requirements by an employer. 

In today's world, where an online life insurance agent provides you the tool to quickly run a quote across multiple strong carriers, plans, and rates, it doesn't seem self-serving for the life insurance shopper to narrow his/her options to a captive agent and just one carrier.  Ultimately, whether captive or independent, the key is that they are knowledgeable, impartial, and competent.  We aim to excel on all three accounts as your independent life broker.

 

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DISCLAIMER   -   Information provided on this page is intended as a general overview.  Your situation regarding life insurance may be different and we strongly          
 recommend speaking with a license life insurance agent.  This information is solely the opinion of etermlifeinsurancequote.com and may not be suitable for you.