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When shopping for life insurance a generation ago, you probably would have discussed policies across the desk from a local life insurance agent.
Going old-school is still the best option in some cases, but if your coverage needs are simple, you can buy from an online life insurance agent or broker without going anywhere or talking to anybody.
Which approach is right for you depends on your situation. Here’s what to consider:
Online life insurance agent or broker
Good if you:
Generally understand your coverage needs.
Want only term life insurance (coverage that lasts a set number of years).
Want to buy coverage on your own time with minimal help.
If all you need is term life insurance, an online agent or broker might fit the bill. Term life insurance covers you for a certain period, such as 10, 20 or 30 years. It’s inexpensive and sufficient for most families. (Learn more about the differences between term and whole life insurance.)
Online agents or brokers let you get term life quotes, apply and buy coverage online. Some, such as Quotacy, which partners with NerdWallet's life insurance comparison tool, let you compare quotes from several companies and select a policy.
Others sell term life online from a single company. They include Haven Life, a subsidiary of MassMutual; Ladder, which partners with Fidelity Security Life Insurance; and Ethos, which sells policies from Assurity Life Insurance Co. These companies specialize in a quick application process and can offer nearly instant coverage, without requiring a medical exam, for many applicants.
In addition, some life insurance companies let you get quotes and apply for term life directly from their own websites.
Does the website offer information and tools to help you decide how much coverage to buy?
What kind of customer support is offered?
Can you compare quotes from different companies, or buy only from a single company?
Which life insurance companies provide the policies sold through the website?
» MORE: See our roundup of the best life insurance companies. Click on the insurers’ names to check out our reviews.
Traditional life insurance agent or broker
Good if you:
Need permanent life insurance (coverage that lasts your entire life).
Want personalized advice.
Have complex needs.
Choose a traditional agent or broker if you need more hand-holding than an online broker can provide or want permanent life insurance, such as whole life insurance or universal life. Permanent life insurance covers you for your whole life and includes “cash value,” a savings account that grows tax-deferred over many years. The policies are more complicated than term life.
Confused about life insurance and how it fits into your overall financial picture? Consider hiring a fee-only financial planner, who doesn’t make commissions on product sales. A certified financial planner can advise you on the type and amount of coverage to get and refer you to a reputable insurance agent. You can find planners who charge by the hour through the National Association of Personal Financial Advisors, XY Planning Network and Garrett Planning Network.
‘Captive’ vs. independent life insurance agent
A “captive” life insurance agent sells products from just one company. A State Farm agent, for instance, can sell only policies issued by State Farm.
An independent agent or broker can sell policies from a variety of insurance companies. That means you can compare prices and offerings from different companies -- but only those with which the agent has an agreement to sell. You can’t buy a policy through an independent agent from a company that uses only captive agents, such as State Farm, or only sells policies directly to the consumer, such as TIAA.
An independent agent is your best bet if you might have trouble qualifying for affordable coverage because of a health condition, such as diabetes, or a risky hobby, such as scuba diving. A good independent agent will know the rate-setting guidelines at different insurers and steer you to the one most likely to offer the best-priced coverage.
Ask your accountant, attorney or financial planner for referrals to life insurance agents. You can also find agents in your area by going to life insurance company websites.
Is the agent licensed in your state? You can check through your state’s insurance department. Each has a tool on its website to look up whether an agent is licensed.
Which life insurance companies does the agent represent?
What professional designations does the agent have? Common designations that show a commitment to specialized education in life insurance are CLU, chartered life underwriter, and ChFC, chartered financial consultant.
Does the agent have experience working with clients like you? For example, if you need life insurance to fund a buy-sell agreement for a business, look for an agent who has worked with other business owners.
Does the agent pay attention to your needs? An agent should understand your financial situation and tailor recommendations to fit. Avoid anyone who tries to pressure you into decisions or products you don’t need. See our take on ways agents try to upsell you on life insurance.