When you are shopping for insurance policies, figuring out the insurance lingo can be a tricky thing! It can be even trickier trying to figure out who to use when buying insurance or what insurance you would even need.
Both agents and brokers are trained and licensed professionals in their field that help people buy insurance plans. You can find both insurance agents and insurance brokers in your area to help you select the best insurance plans for your situation.
But which one should you use? What even is the difference between a broker and an agent? Does it matter? Well, yes. Depending on your situation and your preferences, making the choice to hire one or the other can save you some money in the long run and even get you a plan that is best suited to your needs.
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Insurance agents
These individuals are licensed professionals, helping businesses or people obtain insurance. They are like the go-between to a person seeking insurance and the insurance company itself.
Who are they?
Insurance agents are skilled in completing transactions with a customer from beginning to end and act on behalf of whatever insurance company they are representing.
Sometimes, an agent represents more than one insurance company; these agents are known as independent insurance agents. These agents have the ability to offer a variety of policies from multiple companies since they aren’t restricted to only one.
Agents who represent only one insurance company are called captive agents. Since these types of insurance agents sell policies from one company, they can provide expert knowledge on that company’s types of policies.
What is it like working with an agent?
Like brokers, insurance agents do work to connect you with an insurance plan that suits your needs. But since they work to provide plans from one specific company (or multiple), they probably won’t be finding multiple different plans from different companies for the best possible price.
Agents work to build relationships with their clients, so your agent will want to get to know you and your insurance needs while helping you throughout the choosing process (and after).
Agents will get to know you and help you shop for the policies and plans that their company provides. Once you settle on a plan that suits you, they will help you apply and will continue to aid you for as long as you are an insurance holder.
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Insurance brokers
Unlike insurance agents, brokers do not actively work with or represent insurance companies. They work on behalf of the customer and work to get whatever insurance policy they need.
Who are they?
Insurancebrokers work directly with clients seeking insurance and work to find the best policies that fit their client’s needs. They typically earn a commission for the insurance policies they sell.
Brokers have a wide range of knowledge about the insurance industry, allowing them to sit down with customers, analyze their needs, and put their industry expertise to work in finding the perfect policy for the customer.
What is it like working with a broker?
When you connect with a licensed insurance broker, they will most likely ask you questions to get to know you and your situation better. Some questions may revolve around your household, your medical needs, your experience with buying insurance, what you are generally looking for, and what your budget currently is.
Once a broker collects all the necessary information from you, they will go on the hunt for the best insurance policies for your situation. At this point, it is crucial that you ask plenty of questions regarding the different types of plans, costs, benefits, etc. The broker should be able to explain all of this to you in a way that makes sense.
The next step is usually purchasing the plan that would best fit your situation. The broker should go overall benefits and details about the policy and provide you with a contact from the insurance agency that will be able to handle any questions, claims, or concerns regarding your plan.
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Should I buy from an agent or a broker?
Choosing to purchase insurance through an agent or a broker really depends on your preferences and insurance needs. Since brokers work entirely for the customer to connect them with an insurance company and agents work on behalf of the insurance carriers, the processes can be different.
Below is a list of the pros and cons of working with agents and brokers to help you decide which might be a better fit for you.
Buying from an agent
If you have very simple insurance needs, then using a broker may not be necessary, as they are very knowledgeable about finding many different policies in the insurance market. Instead, find a good insurance agent to buy basic plans may be the best fit for you if you’re not looking for any complex policies.
The benefits of working with agents:
- Agents can assist you at any time with questions, claims, or concerns throughout the duration of your policy
- Agents are very knowledgeable about the companies they work with and can provide you with policies that best fit your needs
- Agents handle the process of completing and closing out insurance policies (unlike brokers)
The cons of working with agents:
- Most large insurance companies don’t work with independent agents (Geico, State Farm, etc.), so if you’re looking to work with one, consider a broker or captive agent
- Agents can only offer policies with the companies they represent, so your options may be limited to whoever they are representing
- Agents earn a commission when they sell you a policy, so they may have alternative reasons for selling you a certain plan
Buying from a broker
It would be helpful to find a broker if you are a person who owns a business or has very complex insurance needs since brokers work hard to find the best insurance policies at the best price while maintaining the customer’s interest and needs.
The benefits of working with brokers:
- Can help you find cheaper policies for complex insurance needs
- Work closely with you for your benefit, not insurance companies
- Can apply their broad expertise of many insurances policies, rather than just one company
The cons of working with brokers:
- Increased risk of getting scammed by a fake-licensed broker
- May have to pay additional broker fees for their services in addition to the insurance premium fee
- Brokers can’t close the deal on your policy
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Your next steps
With all your newfound knowledge of what agents and brokers do, you may be ready to start looking for one or the other. There are many places to find help in your area or on government websites. And now that you know the difference between them, you can decide for yourself which one to use.
Ultimately, both agents and brokers can help you find insurance; it is the cost and processes that may be a little different, as well as the plans offered.
To find the help you need, you can visit Healthcare.gov to search for a local insurance agent or broker that can help you find the insurance plan best suited for your situation.
Whoever you decide to work with, make sure your agent or broker understands your needs and knows the industry inside and out.