Life Insurance Broker vs. Agent: How to Choose

Choosing between a life insurance broker and agent depends a lot on the type of policy and services you want.
Written by Georgia Rose
Reviewed by Tony Steuer
Aug 15, 2022

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If you’re shopping for coverage, you’ll likely deal with a life insurance agent or broker at some point during the process. Both entities sell life insurance policies, but there are important differences between the two and the ways in which they help you navigate your options. Here’s what to consider before you shop.

Life insurance broker vs. agent

Life insurance agents. In general, there are two types of agents: captive and independent.

  • Captive agents work typically with one insurer and sell products offered by that company. For example, a State Farm life insurance agent primarily sells only State Farm policies. A captive agent may be able to offer a policy from another insurance company only if the primary insurance company does not sell that type of coverage.

  • Independent agents can sell policies from multiple companies, but only those with which they have an agreement to sell.

Life insurance brokers. Similar to independent agents, brokers can sell policies from a variety of insurance companies. But insurance brokers typically represent the buyers, not the insurance companies. Some brokerage firms let you compare quotes from various companies and buy coverage online. Brokers can also be individuals working more personally with clients to find the best coverage options.

Which option is best for you?

A broker or independent agent is a good choice if you want to see quotes and offerings from a variety of companies. For the widest range of options, choose a broker who looks at a large number of companies, not a select few. A good broker will know the rate-setting guidelines at different insurers and steer you to the one most likely to offer the best-priced coverage.

If you know the exact policy or insurer you want, you may prefer dealing with just one company. If so, you can shop directly on the insurer’s website or through a captive agent who sells that company's products.

Online life insurance agent or broker

Shopping online through a broker or agent is a good idea if you require minimal help because you know how much life insurance you need and the type of policy you want.

If all you need is term life insurance, an online agent or broker might fit the bill. Term life lasts a set period of time, such as 10 or 20 years, and is typically the most affordable life insurance. These policies are sufficient for the majority of people, and most insurers offer them.

Some companies sell same-day term life policies online. This type of instant life insurance coverage offers a quick application process that doesn't require a medical exam for many applicants. While it’s convenient, coverage can be more expensive as the insurer doesn’t have a complete picture of your health and lifestyle.

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Traditional life insurance broker or agent

A traditional agent or broker offers a more personalized experience, typically doing business face-to-face or over the phone. Choose this type of service if you need more support than an online platform can provide, or if you need permanent coverage, such as whole life insurance. A permanent policy covers you for your entire life and includes cash value that grows tax-deferred.

Permanent life insurance is more expensive and complex than term life, so you may prefer to talk through your options with an agent or broker before making a decision.

🤓Nerdy Tip

If you’re not ready to meet with an agent or broker, consider talking to a fee-only insurance consultant. These advisors don’t make commissions on product sales, so they can advise you on what to buy without being biased toward the amount or type of coverage.

Things to consider when choosing an agent or broker

Which life insurance companies does the agent represent? Make sure the agent or broker sells policies from insurers you want to do business with. Check out our best life insurance companies list to help narrow down your options.

What professional designations does the agent or broker have? Common designations that show a commitment to specialized education in life insurance are CLU, chartered life underwriter, and ChFC, chartered financial consultant. You can confirm an expert’s credentials at DesignationCheck.com.

Does the agent or broker have experience working with clients like you? For example, if you need life insurance to fund a buy-sell agreement for a business, ask if the agent has worked with other business owners.

Does the agent or broker 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.

Is the life insurance agent or broker licensed in your state? You can check through your state’s insurance department to see if the agent or broker is registered. Click on your state to go to your local insurance department’s website.

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