The Advantages And Disadvantages Of Using Insurance Brokers

Insurance brokers act as intermediaries between large insurers and consumers. Some businesses and individuals will only purchase insurance through a broker. Others have different feelings and do not use brokers. Brokers might not be for everyone especially if personal insurance needs are very simple. Consumers will find that several advantages and potential disadvantages come with using an insurance broker.

Time

A good insurance broker will save a client time. Brokers maintain relationships with a range of different carriers. A broker can compare rates based on the personal information about a client in a very short period of time. An average consumer who is shopping for a life insurance policy will need to visit each insurer separately. The consumer has no knowledge of the different companies and must spend time comparing the different rates and policy details. The broker does all of this in a fraction of the time.

Better Rates

An insurance broker can often provide better rates for individuals with specific needs. This is because the broker understands exactly how to modify a policy in order to get the coverage, premium or long-term return that the client expects. Modifying policies is not normally something that an average consumer can do when shopping for insurance directly with insurers or other institutions. Some brokers even have relationships with certain insurers and can offer special rates or discounts if a client qualifies.

Flexible Insurance

Life insurance comes in a very wide variety of different types. There are simple term policies, annuities and whole life policies.

Not all individuals outside of the insurance industry are fully aware of the different products available. An insurance broker will have a detailed knowledge of all the insurance products that are being offered. This allows the broker to offer clients flexible policies that meet the coverage needs of the family.

Limited Selection

Some insurance brokers do not cultivate relationships with a wide range of insurers. These brokers choose to work with just one or two insurers. This could be because the broker is comfortable with those companies or because there is a perception that just one or two providers are enough to handle all client needs. Hiring a broker who only works with one or two insurers could result in policies that are not a good fit for a family.

Pressure

Insurance brokers are essentially salespeople. They make a living by selling insurance products to consumers. Some individuals do not want to deal with brokers because of the sales pressure and tactics that could be employed. Consumers have started to turn more towards the Internet for research about certain products in order to avoid high-pressure sales environments.

Disclosure

A large reason that some consumers avoid insurance brokers is because of a lack of disclosure. Brokers are paid by insurance companies under any number of different pay structures. The possibility exists that a broker might decide to push a particular product or policy aggressively because it will garner the highest compensation possible. This means that the broker is really working for the insurance company or personal gain and not for the customer. This is not always the case although it is hard to tell the difference between brokers.

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