Pros and Cons of Using an Insurance Broker/Agent

The Best Ways to Buy Insurance

Kirby Thomas
Online Life Insurance CompPRO+ in San Diego, CA

Insurance Insurance Brokers

Pros and Cons of Using an Insurance Broker/Agent
February 11, 2016

When shopping for insurance policies, you have two choices: you can either work with an insurance broker (someone who represents a variety of insurance companies), or you can choose to buy directly from a captive insurance agent (someone who represents a single insurance company).

As a consumer, you are most concerned with the cost of your premiums. Remember that your insurance premium may also depend on your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Before choosing an insurance professional, consider these pros and cons.

Brokers - Because a broker is solely focused on your unique needs, he or she can help with comparison-shopping, honing in on the best prices for the coverage you need. They can even advise you on how to best bundle or customize your policies in ways that agents might not be able to do (either because they are restricted in their policy offerings, or simply because they lack the insight into your specific needs).

Because brokers work with a variety of insurance companies, they tend to have a broader understanding of companies’ offerings and key benefits. They are commission-based, which is a double-edged sword: they may be more motivated to earn your business year after year by getting you the best deal possible; or they may try to sell you a policy with unnecessary bells and whistles since that would pay them a higher commission. Regarding the double-edged sword: the best way to nail down the best deal possible is the annual review and re-shopping of coverage. The best way to avoid unnecessary “bells and whistles” is to remember that your needs guide what you purchase. If you don’t need “bells and whistles”, don’t purchase them. Approaching insurance this way is always the best way forward. Consider this: having options placed in front of you and explained in detail allows you the opportunity to hear about the newest “bells and whistles,” some of which may be just what you need or were looking for, but simply never asked about. Policies change, and new options are added by carriers all the time.

Independent Agents - Independent insurance agents function identically to insurance brokers in that they represent multiple insurance carriers. The primary difference between brokers and independent agents is that insurance brokerage companies are often larger than independent insurance agencies. However, independent agents and brokers approach the business in the same way, which is that they represent the customer.

Captive Agents - Captive insurance agents represent just one insurance carrier. In essence, they are employees of the carrier. The upside of working with a captive agent is that he or she has exceptionally thorough product knowledge. The downside is that he/she cannot provide access to products or pricing from outside their respective company. For this reason, you must have a high tolerance for carrier-specific terms, since each carrier and its in-house representatives may use language that is tough to compare across several companies that you encounter. Nevertheless, tap into that exceptional product knowledge and get smarter along the way as you search. The surge in online insurance websites offers consumers yet another option to use as part of their selection strategy. It is easy to find an insurance agent online, particularly one from a national insurance provider. Moreover, with 24-7 online access and quick comparison of policies, these web services are convenient, quick and a great way to ballpark quotes and to give you exposure to a wide variety of insurance providers. When you find one that is appealing to you, give them a call or fill out an agent request online.

Of course, there is nothing stopping consumers from utilizing all of these resources — other than the time it takes to conduct research and compare policies. Regardless of which route you take, it is always worthwhile to check with organizations such as AAA or the Better Business Bureau, as well as your personal network for referrals, recommendations and reviews, to find the insurance professional that is right for you.

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Kyla Beamon
Insurance Agent in Lake Oswego, OR | 07.23.15 @ 20:55
Here are a few more important items to keep in mind when dealing with Agents and Health Insurance: * There is no cost to using a Broker or Independent agent. If an agent helps a client purchase a plan with a specific company, the insurance company will pay the agent a small stipend each month in which the health insurance plan is kept in place. * With Affordable Care Act - ACA in effect insurance companies are dropping the multiple network option for more specific smaller networks, or only one network. Agents, whom do their job correctly, will help to make sure that your doctor is in network with the insurance company that you choose. * If you work with a Captive Agent make sure to check other options with non-captive agents so that you have all the information you need to make an informed decision. * Using an Agent as your personal representative should go beyond just purchasing a plan. When you have an issue with if a doctor is on a plan or if your medications are covered you should be able to refer back to your agent for help in getting these issues answered or resolved. A good agent will go above and beyond just "selling" a plan to you. * Agents are aware of the Open Enrollment times in which you can change plans. A good agent will send an email out reminding their clients each year that now is the time to move plans or insurance companies since there is only a small period of time (Open Enrollment in the Fall) in which you may move to a different insurance company each year for a Jan 1st effective date. * Each year when rates increase Brokers and Independent Agents will be able to see all the companies rates and plans for the new year and help you decide if you should move to a new insurance company or plan for the new year *Agents are aware of what a Qualifying Event is and if you can change plans each year, how to do that and what is required. With all the knowledge agents possess...why not take advantage of free!
Britt | 09.26.15 @ 04:05
For me, I have always found it to be best to do things on my own without a middle man unless I absolutely have to.
Elaine | 09.26.15 @ 04:26
Nowadays it is difficult to trust people fully, so I'm not sure how I would feel about a broker. In saying that I don't really trust the insurance companies either. So maybe a broker would help me to feel more comfortable.
Kathryn | 09.26.15 @ 04:29
I would rather do things myself, that way I know it's getting done the way I intend.
Nancy | 09.26.15 @ 04:36
I have used all 3 at different times and have positives and negatives for all. Bottom line for me is who am I most comfortable dealing with. And, at this point in my life it is usually the captive agent.
Meredith L | 09.26.15 @ 04:47
This is helpful in understanding the differences and what they can or cannot do. I'm with the majority of comments - with the scams that are running rampant, I would go with a trusted friend or referral only.
Alec | 09.26.15 @ 04:53
I was unaware of the differences between them before reading this. Thank you for the clarification! I've never used any of these but I would probably do my own research and then go with a captive agent for the insurance carrier I decided on so as to get the most thorough information possible.
Kamie | 09.26.15 @ 05:17
This is interesting information, I did not realize that different "titles" really aimed for different things.
Beverly | 09.26.15 @ 05:18
There are positives and negatives to each one. It's best to try each out and see what works for you. Different situations may call for a different type.
irene | 09.26.15 @ 09:40
We got our insurance through a broker and it's been kind of an annoyance. When they were taken over by another company after having the policy for decades we got a non renewal notice which was fine because we were not interested in doing business through them anyway until we found out that non renewal meant no other insurance wanted us and we were forced to buy a new policy through the broker.
Steffanie | 09.26.15 @ 09:49
I prefer doing things on my own. No broker here.
Daniel | 09.26.15 @ 11:38
Some great info here. It is important to know your own limits on what you do or do not need help with
Angie | 09.26.15 @ 11:58
Thank you, Kyla, for adding your comment. You've provided more useful information that is of great help in understanding this.
Erin | 09.26.15 @ 12:14
We have found it's easier to do all of this ourselves. It may take a little longer with research, but then we are in direct contact with the companies instead of having to go through a third party and there is no miscommunication.
Selena | 09.26.15 @ 12:19
I'm not really a middle man type person myself. More hands on, and do it on my own.
Wanda Langley | 09.26.15 @ 12:50
Great information to know.
Carla | 09.26.15 @ 13:01
I might use a broker if it is someone I know locally. I would be more comfortable with that.
Christina | 09.26.15 @ 13:01
Good information. We always went without a middleman
STOKES | 09.26.15 @ 13:10
Great information. I've always wondered the difference.
trish | 09.26.15 @ 13:40
I think I would like to do this on my own, so I know what is going on.
Zanna | 09.26.15 @ 13:48
Useful information, but "Captive" agents, really? Corporate reps, or some other neutral term might sound a little less biased.
Bobbie | 09.26.15 @ 13:50
I have always checked out each insurance company on my own. The internet has give me so many more resources to research them all.
George | 09.26.15 @ 13:57
I just do research and trust friends and family word of mouth.
Tina | 09.26.15 @ 14:24
Interesting points. I generally prefer to research online and decide on my own.
steven | 09.26.15 @ 14:48
Hmmmm I would say I rather do things myself.... However, I would be lying. This is great info.
Sara | 09.26.15 @ 14:53
Did not know this info. Good to know though.
Kelley | 09.26.15 @ 15:07
This seems kind of like a no-brainer to me. I've always used the compare quotes websites for things like car if I were looking for any other kind of insurance I'd want to do the same thing.
Rychana | 09.26.15 @ 15:09
This is a great article. I always wondered what the difference was between and agent and a broker.
Jackie | 09.26.15 @ 15:11
Thanks for explaining the difference in the types of agents. I prefer to do my own research and make the decision myself.
Ron | 09.26.15 @ 16:08
I like to shop for myself, but having a broker's insight can be valuable. They know the system and its practicalities. Never dismiss that insight out of hand.
Amanda | 09.26.15 @ 17:01
I always do the leg work myself, compare, price, look for any questions and answers. Cut out the middle man and do the work myself.
Amanda | 09.26.15 @ 17:02
I always do the leg work myself, compare, price, look for any questions and answers. Cut out the middle man and do the work myself.
Andrea | 09.26.15 @ 17:18
I would rather do this on my own, make my own choices/decisions.
Leslie | 09.26.15 @ 17:26
My husband and I have been using the same Independent Insurance Agent for over 15 years and I can't imagine getting insurance from anyone else! I like the personalized service we get. As bad as customer service is everywhere else, it's nice to know that I can go to my local office and get the help I need. I'm rarely put on hold when I call and I'm always helped by a knowledgeable staff member, not someone reading from a script. I've compared our insurance rates with many other companies, and our agent makes sure we get the best insurance for the best price. We've dealt with brokers and captive agents too, but our best experiences have been with Mr. Johnson.
Kirby Thomas PRO+
Online Life Insurance Comp in San Diego, CA | 03.08.16 @ 20:38
I read the comments about the topic of my article and I see that some responses touch on the "middleman" in ways that suggest some things about those who reside "in the middle." One plus for us "middle" people is that we get to hear things from carriers that those on the retail buying end may not ever hear. Sometimes, when dealing with us "middle" people, you get a behind the scenes look at things that may have a bearing on your coverage. With life insurance through a broker vs an agent, you get to know that impaired risk underwriting (for unhealthy applicants) has a particular kind of nuance. For instance, carriers may decline your application because they take on a set number of impaired risk clients, and then they decline those coming after that. You might think, after being declined, that what they are telling you is "you are done, no life insurance for you." But, what I know from experience is that another carrier or two have not hit the limit yet on declines - and that might be the avenue of approach to get you approved. As a broker, I know things that apply across a broad spectrum of carriers, not just the playbook of one carrier. As a result, the market intelligence of this "middleman" can improve the experience of buyers by finding a way forward for them that is outside the boundary of what a retail buyer might ever know. One thing that I did not mention in the article is that I have been both a captive and a broker, and the experience allows me to see the pluses and minuses in both. Thank you for your responses, and if you have a question about insurance of any type (my specialties are life, Health, Disability, and Annuities) you may post it at and let the professional community respond to it. It's free, harmless, informative, relatively instant, and a bunch of other good things, too.
Joseph | 04.07.17 @ 16:50
Nice write up. I personally have been able to save with an independent agent. A big concern of mine was finding an agent that worked with more reputable insurance carriers. There seems to be alot of agents who will use non-standard insurance carriers to provide cheaper coverage. I've heard some horror stories about customer service, sub-par adjustments, and claims services. I'd definitely do alot of research into the insurance companies the independent agent is appointed with.
Gregory | 04.15.17 @ 14:13
To all of those saying "I'd rather do it on my own," you're definitely taking a huge chance, and more than likely are throwing a ton of money away. There are certain fields where you can do things on your own. However, insurance isn't one of those fields that would be advisable to take that course of action. The laws/rules are sky high, and many of these laws and rules change every single year. Trust me, even if you don't think you're throwing money away, you more than likely are. Whether you choose a broker or captive agent captive agent, I would recommend using a professional who has in depth knowledge. I mean, it's free, anyway. Insurance is similar to the legal/lawyer field. If I had a case, I certainly wouldn't want to represent myself.
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