Are All Life Insurance Companies the Same?

How to Choose a Life Insurance Policy?

There is a wide spectrum of insurance companies that provide policy needs of different types of clients. There are companies that provide services to individuals and some to provide plans that are perfect for corporate settings. Some companies cover individuals, group and corporations. There are also some companies that specialize in a particular type of insurance such as insurance policies specially designed for expats (citizens who are settled abroad on a temporary or permanent basis).

There are full-fledged companies that provide their services directly to their clients. There are also insurance agencies and brokers that act as the middleman between the companies and the consumers. They do all the research and contacting according to the needs and personal circumstances of the customer and present to them the best plan that matches their needs and financial situations.

Insurance agents: These are professionals that act as middlemen between the insured and the insurance provider. Agents are only responsible for the accurate and timely processing of premiums, forms and paperwork. They have no obligation to conduct full examination of the business or to make sure the customer has proper coverage. It is rather the duty of the client to make sure they are properly covered.

Insurance agents can be independent or captive:

A captive is one that works for only one provider. The agent will endorse policies only from one provider.

Independent: Here the agent works for various policy providers. They can produce policies from a number of insurers and provide comparisons of various insurance companies.

Brokers: Brokers can be best described as a super-independent agent. They provide a plethora of insurance products for the customer to consider. They are often required to have a broker’s license. This implies that a broker has more experience and education than an agent.

Brokers also have a bigger duty, in most areas, to their customers. They have to examine a business and secure adequate and correct coverage for the business. This is a higher obligation than the administrative work of agents. This expertise comes at a price. Brokers typically charge premium payments or an administrative fee higher when purchased through them.

Most locations require brokers and agents to have an authorized license in order to sell insurance. There can be different types of licenses. For instance, a state may provide a health and accident license. A provider that wants to provide only life insurance may only avail a life license. There are various other types of licenses for business and travel as well.