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.
|