Is an independent agent, vs. a company captive, right for you?

Is an independent agent, vs. a company captive, right for you?

Old School insurance calendar (date 2010) by Chris Hartman for Flickr Creative Commons - some rights reserved
Old School insurance calendar (date 2010) by Chris Hartman for Flickr Creative Commons - some rights reserved

WASHINGTON, June 14, 2014—Shopping for life insurance has been compared to thrilling activities like root canals, having the flu, or rush hour traffic. These comparisons come about due to the confusing terminology and ignorance that surrounds the life insurance industry. That is why it is important to find an insurance agent that you can trust and who can help you navigate the waters of uncertainty while finding you a policy that is custom fitted to your wants and needs.

The two choices you’ll have when looking for an agent is one who works directly with a provider and is known in the industry as a captive agent, or one who has struck out for themselves and is known as an independent agent.

The main difference (and it’s an important one) between the two is the difference in flexibility between the two agents. A captive agent is held… well… captive by whichever provider they work for and is limited in what they can offer based on the company’s policy. An independent agent, on the other hand, can shop around between many insurance providers while negotiating and fielding multiple quotes.

While many people may be fine with a captive agent, those who have unique situations may find that an independent agent will be better able to find them a competitive rate. Here are some real examples where an independent agent can help.

A Less Than Stellar Past

It’s a given that people make mistakes, but these mistakes can affect you in more ways than you could imagine down the line. For example, many insurance companies will not approve a policy if you’ve had a DUI in the last 12 months, or if you’ve had two in the last 10 years. If you’ve had this kind of legal trouble or issues like it you could be stuck cold calling captive agent after captive agent only to be told, “Sorry, there’s nothing I can do for you.”

But an independent agent can have access to over 30 companies, all of which have unique underwriting policies. This greatly increases the odds of finding a provider and policy that will work for you.

Major Medical Conditions

The sad truth is that many people don’t think about life insurance until the possibility of death is impossible to ignore, and if that’s the case you’ll be hard pressed to find a provider who is willing to take the risk of insuring you. Take, for example, a 50+ year old male who has been diagnosed with stage 3 prostate cancer. He’s got more than his fair share to worry about and trying to shop around for life insurance is another stress he doesn’t need, especially if all he’s hearing is “no.”

In that particular case, an independent agent was able to email 15 companies with the details of the case and one came back saying they would approve him for life insurance coverage.

Getting Better Rates

Maybe you’ve never broken the law and don’t have a high risk medical history such as cancer. Maybe you just have high cholesterol, high blood pressure, or another common malady that affects millions of Americans. This may drop you down to a standard rate rather than a preferred which means higher premiums for you. As mentioned above, life insurance providers have unique underwriting policies and an independent agent can help find you one that will give you a preferred rate (and end up saving you money).

In the end, you may be very happy dealing with a captive agent if the provider can offer a plan that fits with your wants and needs.

But if you have anything that might set you apart from the masses, an independent agent is your best bet for finding the right policy for you.

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