When buying an insurance product, it is smart to get as many quotes as possible. With many Canadian insurers not offering online quotes, a life insurance broker can do all the necessary research for you. Furthermore, they will talk you through all the available options — which can be a great help since insurance products tend to be complex — so that you can buy coverage that best matches your needs and budget.
An insurance broker acts as an intermediary between you and the insurer. It is important to note that a life insurance broker represents their clients during the buying process and are legally and ethically bound to act in their best interest.
Who are insurance brokers meant for?
The following types of buyers stand to gain the most from using a life insurance broker to buy life insurance:
- Applicants who are purchasing their first life insurance policy
- Applicants with special insurance needs
- Applicants who want an insurance product that gives them best value for money
- Applicants who want to simplify the buying insurance
Benefits of having an insurance broker
Here are five compelling reasons to use a life insurance broker for buying an insurance product.
1. Objective Risk Assessment
Life insurance products can sometimes be complex. Moreover, with many coverage options available, finding a life insurance policy that perfectly suits your needs is not easy. This is where an insurance broker can come in. Using their education, training, and years of experience, they can first assess your risk, liabilities, and financial situation. Next, they will walk you through various coverage options that suit your needs and are affordable, so that you can pick the one that gives you the most value for money.
Because insurance brokers are not tied to any particular life insurance company, they are in a great position to peruse the product lines of various insurers to find you life insurance policies that best meets your needs. Furthermore, they can also suggest the right add-ons — called riders in insurance parlance — that can ensure all your insurance needs are covered under one life insurance policy.
Long story short, life insurance brokers have their clients’ best interest in mind. The same, however, cannot be said about insurance companies. They have only aim: to sell their product. Whether their product perfectly matches your needs or not, is of secondary importance to them.
2. Impartial Advice
You can count on an insurance broker to give you impartial recommendations. Because:
Insurance brokers are not on a payroll of a specific company
A life insurance broker sells life insurance but does not make their money from their clients. They are neither on the payroll of specific insurance providers nor linked to a few carriers. In other words, they are not under any obligation to push certain financial products ahead of others. Their unique position allows them to offer you the best unbiased advice — whether that is the life insurance product that perfectly meets your unique financial needs or the most affordable plan.
When you buy an insurance product through a life insurance broker, the latter receives a commission from the life insurance company. Most commissions are between 2%and 8% of annual premiums. Whether you buy a term life insurance policy from a provider X orY, the life insurance broker is likely to receive more or less the same commission. Because they do not have a financial incentive to sell the products of specific providers, brokers can offer you the best unbiased opinion.
Life insurance brokers earn a commission not only when you buy a new product but also every time you renew it. While the renewal commission is significantly less than the initial premium, it can add up to a sizeable amount over the years. Since insurance brokers rely on repeat clients, it is in their best interest to find them the optimal coverage.
Insurance brokers have a fiduciary duty to act in your best interest
A fiduciary is a person or an organization that acts on the behalf of a client, putting the latter’s interests ahead of their own. This basically means they are legally and ethically bound to act in the best financial interest of their clients.
In simple words, life insurance brokers represent you in the insurance-buying process and will not favor anyone else’s interest — including their own — over yours.
Insurance brokers have extensive knowledge of insurance products
Certain life insurance products are more complex than others, but by partnering with an experienced broker, you can easily pick the right solution. For instance, while term life insurance is easy to understand, cash value life insurance, whole life and universal life insurance can be a different thing altogether. A broker can explain how these products work, as well as how you can take maximum advantage of them.
3. Cost Savings
A life insurance agent can help you save money on premiums in two ways.One, by comparing quotes from different providers, they can help you pick the most affordable plan. Two, they can ensure you get all discounts for which you qualify.
4. Time Savings
When it comes to insurance products, cost is the biggest factor for most buyers. The only way you can ensure that you do not pay more for coverage than you should is by comparing quotes from different insurance carriers. However, with many Canadian insurers not offering online quotes, comparison shopping is anything but easy. A broker can save you time by doing all the legwork for you. After doing research and pulling up quotes, they will present you with all best available options, allowing you to pick the cheapest option in minutes.
5. Claim Assistance
If the worst happens, you may need all the assistance you can get. Your insurance broker can fill in the life insurance claim form and submit it to the provider on your behalf. They can also monitor the progress of your claim and, if the insurer denies the claim, can best advise you on the next course of action.
How does one qualify as a broker?
Insurance brokers must complete a course of study and pass the licensing exam in the province they plan to practice. For example, if someone wants to practice in British Colombia, they must pass the licensing exam in British Colombia. Provincial bodies establish the Licensing and educational requirements. As such, they may vary from one province to another.
Insurance brokers are trained experts who represent their clients during the insurance-buying process. A broker will objectively assess your needs, compare different insurers’ plans and rates and offer you impartial recommendations.