If you’ve never initiated a call to buy life insurance, it can be a little intimidating. Even though you may know the value of owning life insurance, many people avoid speaking with a life insurance agent because much of the conversation is centered around death. Fortunately, the right agent can ease your mind and lower your stress level.
Jump ahead to these sections:
- Do You Need an Agent to Buy Life Insurance?
- Qualifications to Look For In a Life Insurance Agent
- Steps for Choosing the Best Life Insurance Agent
- Frequently Asked Questions About Life Insurance Agents
So how do you go about finding the best life insurance agent to meet your needs? This article will take you through the process of doing just that and answer some other questions about agents you may be wondering about. Let’s start at the beginning.
Do You Need an Agent to Buy Life Insurance?
You don’t need an agent to buy life insurance. Many people shop for life insurance online and fill out an application without ever meeting or talking with an agent. If their application is approved, a policy will be sent to keep with other important documents.
But perhaps another question related to that one worth considering is, “Should I work with an agent to buy life insurance?”
Insurance companies and agents will tell you (although they’re biased) that shopping and buying life insurance without working with an agent is not a good idea.
They feel this way for a couple of reasons:
- Each person’s situation is unique. The type and amount of life insurance you need are based on so many variables: age, gender, health history, income, the anticipated cost of final expenses, amount and type of other assets you have, and many more factors that need to be considered.
- There are many types of life insurance policies. Selecting the right kind can be confusing and complicated. Whole life, term life, mortgage life, universal life, variable life, and final expense life insurance are just some of the types you’ll need to select from. If you aren’t schooled in these different kinds of policies, a professional life insurance agent can make sure you and your family are adequately protected by the type of policy you select.
Agents who help you with life insurance can often help you with other coverages, like health and disability insurance, and they’ll answer important questions for you, like how long it takes to get approved.
Qualifications to Look For In a Life Insurance Agent
There are qualities in an agent that everyone looks for: honesty and professionalism are a couple of them. But along with qualities you want them to possess, there are also specific professional qualifications to look for in a life insurance agent.
No matter who we deal with, when we’re spending money, we want to talk with someone who has experience and knows what they’re talking about, particularly when it comes to life insurance.
Being advised to buy the wrong type of life insurance can be costly to you not only while you’re alive, but it can drastically affect the financial future of your loved ones, whom you’re buying it for in the first place.
For example, if you just took out a 30-year mortgage, many inexperienced agents will automatically recommend that you buy a 30-year level term life insurance policy to pay off the mortgage if you die while there’s a balance due.
But what happens to your children’s college education if that’s the only policy you own? And how will your spouse/partner make up your missing half of the two-income family? An experienced life insurance agent is going to take the time to get to know you and offer a solution that meets the total needs of your family; they’re not just going to sell you a policy.
Unfortunately, many new and inexperienced agents, though they usually have good intentions, are often driven to sell you anything they can so they can survive the lean, early years of their career and stay in business.
One way you can tell if an agent is experienced is by the initials next to their name on their business card or email signature. Professional agents that have been in the life insurance business for a while typically have initials after their name, like:
- CLU (Chartered Life Underwriter)
- ChFC (Chartered Financial Counselor)
- LUTCF (Life Underwriter Training Council Fellow)
- CFP (Certified Financial Planner)
Why is this important? Aren’t some agents that don’t have initials after their name still good agents? Absolutely. But you’re not looking for a good agent; you’re looking for the best!
Another requirement a life insurance agent must fulfill is having a valid, state-issued life insurance license. Unfortunately, some people misrepresent themselves as licensed agents when they:
- Never had a license, or
- Had a license, but it was revoked.
You can make sure the agent you’re considering working with has a license and is in good standing with regulatory agencies by checking with your state’s insurance department. They’ll be able to verify that the agent has an active license, but they can also fill you in on the number and types of complaints filed against the agent (if there are any). Much of this information can be found online.
Steps for Choosing the Best Life Insurance Agent
Now that you know what you’re looking for, how do you go about choosing the best agent? Follow these simple four steps, and you’ll find who you’re looking for.
Step 1: Get a referral
If you do an online search for a local life insurance agent because you don’t already know one, you’re just spinning the roulette wheel if you choose one randomly. You’ll meet an agent by chance, not by choice.
A better way to find the best agent is to get a referral from someone you know. Talk with friends, family, and colleagues to find out who they bought their life insurance from. You don’t need any personal details, like the type and amount of insurance they purchased; you just need the name and number of an agent they recommend as knowledgeable, trustworthy, and professional.
Step 2: Find a specialist
If you’ve recently gotten married, work with an agent that has experience working with young families that are getting established.
Similarly, if you’re about to retire, you want to work with an agent who’s experienced working with people nearing retirement so they can decide what to do with the policies they’ve accumulated during their lives. Are you a business owner? Find an agent who has worked with business owners in the past.
Step 3: Talk with multiple agents
If you’re new in town, don’t know an attorney, and you need legal advice, wouldn’t you want to call at least two on the phone and find out about their experience and fees? Likewise, protecting your hard-earned assets and your family’s financial future merits talking with at least two different agents.
Step 4: Don’t succumb to high-pressure tactics
If you have a meeting with an agent and they are pressuring you to buy on the spot, you’re working with the wrong agent. It’s important not to procrastinate when you’re buying life insurance, but you don’t want to be rushed into making this critical decision without some time to talk with someone you trust and reflect on your meeting.
Frequently Asked Questions About Life Insurance Agents
Hopefully, we’ve taken some of the guesswork out of finding the best agent. But let’s look at a few questions that are often asked about life insurance agents.
How do life insurance agents make money or commission?
Life insurance agents (not financial planners) earn money or commission based on the amount of your monthly or annual premium.
For example, if you are spending $100 per month on a life insurance policy, the agent may get a commission of 50% of the monthly premium for the first twelve months and then earn renewal commissions of 4% per month for as long as you keep the policy.
How do you know if you should choose an independent agent?
There are essentially two types of life insurance agents: independent agents and captive agents. Here’s the difference:
- Independent agents represent more than one company. When you speak with an independent agent, they will probably show you quotes from two or three different life insurance companies. The advantage to that: you can comparison-shop policy features and prices. The disadvantage: an independent agent might recommend that you select the company that pays them the highest commission rate (without telling you).
- Captive agents, also known as career agents, represent one life insurance company. They are generally loyal to that particular company because they like the products and the commission structure. Their advantage: they’ve been well trained on their product and know it inside and out. The disadvantage: they only show you what their company offers.
Which one is better? They’re both great choices if you select the right agent. Interview one of each and make your selection based on that meeting.
How do you find your current life insurance agent if you already purchased a policy?
There’s quite a bit of turnover among life insurance agents, so there’s a chance the agent you bought from is either out of the business or has moved on to another company. If you can’t find them, call the name of the insurance company on the policy. Their policyholder support department should be able to help you with just about anything you need.
The Right Agent Is Out There
Congratulations on deciding to investigate, evaluate, and select the best life insurance agent. There are many excellent agents out there; take your time to find the one that best meets your needs.