How to Find the Best Insurance Agent
While making sure you have life insurance and disability insurance are basics tenants of protecting your assets, finding an agent or company to work with can be daunting. Unlike a lot of other services, it often makes sense to work with an agent to find the right insurance product rather than turning to a modern app.
Do I need an insurance agent?
Yes, you probably want to work with an insurance agent. While you can find life insurance under $1 million through a modern company without ever needing to talk to a human or seeing a doctor, most people are going to benefit by working with an independent insurance agent that can check rates across the major carriers. Insurance agents are also going to know about the various discounts that might be available to you. In some cases, it may even make sense to sign up to a local bar association just to get the discount on a major policy.
Additionally, an independent agent is going to know the market and where there is room to manuever. One insurance company might treat a health problem as a major red flag where another insurance company may view it as a minor problem. The expertise to navigate you through this critical path is magnified when you think about any small difference in your premium is something that you’ll be paying for years and years to come, so it’s worth making sure you are getting the best deal possible.
How to find an insurance agent
You do not need to contact every insurance agent to get the best quotes. You likely only need to reach out to two or three independent insurance agents to be assured that you’re getting the best deal. Anything more than that and you’re likely just wasting your time, as there are only a handful of major insurance companies and you’re really looking for the insurance agent that is the best fit for you. Other than finding a good fit, be sure to ask for (and that the insurance agent has considered) whether you are eligible for any discounts. There are many discounts available and it’s highly likely that you’ll qualify for something.
Once you’ve identified an insurance agent, don’t feel bad if you have a lot of questions. Particularly with disability insurance, it’s a complex financial product that warrants the questions. This is mainly because there are many shades of gray when it comes to whether you are disabled or not (unlike life insurance where you are either dead or you’re not dead). Disability insurance policies tend to be much more expensive as well because you’re much more likely to become disabled than to die. Insurance agents make a healthy commission on the sale of a disability insurance product, so don’t be afraid to make them spend the time to explain it to you several times so you understand what is covered and what is not covered.
Things to avoid when looking for an insurance agent
#1 Captive insurance agents
It’s hard to imagine that a single insurance company could possibly have the best deal for every type of insurance for each specific type of person. Yet, many agents work for a single company and only sell insurance from that specific company. These are called “captive” insurance agents and are the opposite of “independent” insurance agents. You want to find an independent insurance agent that can get you quotes from the major insurance carriers and knows intuitively which carriers are better for your specific situation.
#2 Selling life insurance for children
Children don’t need life insurance. The purpose of life insurance is to set up your dependents with an income source due to your inability to continue working when you’re dead. If your child dies, you do not need the payout of the policy. Sometimes life insurance for children is sold as a $10,000 “burial” policy for a family where $10,000 would be a huge financial burden but that is not for readers of this site. Save up $10,000.
The other argument from agents is usually along the lines of “locking in insurability” while your child is young and healthy. Most companies, however, will not allow you to buy a term life insurance policy on a child until they are 20-years-old, which means the agent is pushing some type of “whole” or “permanent” insurance for your child. If you’re interested in buying a policy for your child for invement purposes, you should instead be funding a Roth IRA, 529 and UGMA instead. Mixing investing and insurance (which they don’t need) is never a good idea.
#3 Selling whole life insurance
Whole life insurance is a product meant to be sold. The commissions for the agent are huge and the financial benefit to you is questionable, complicated and completely avoidable while still achieving your financial goals. Whole life insurance is pitched to nearly every lawyer because it pays huge benefits to the agent. While there are a minority of situations where whole life insurance makes sense, the average lawyer has much better things to do with their time than to understand a complex financial instrument that mixes insurance and investment. Keep those concepts separate. Buy a gigantic cheap term life insurance policy and leave the investing to your investment accounts.
#4 Acting as a financial advisor
Financial advisors have their own issues but are required to get at least a little education (particularly if you hire a financial advisor with a CFP). An insurance agent acting as a financial advisor is not a good sign. Can an insurance agent be knowledgable about both insurance and general financial advice? Of course. But there are big differences between the professions. Insurance agents are selling a product on a comission. Financial advice needs to be free of commissions. Insurance agents are good at eliminating risk. Financial advisors need to understand how to profit from risk. There’s nothing wrong with an insurance agent being an insurance agent.