Is it better to buy insurance through an agent, through a website, or directly from the company? Since the last time we ran this article, we heard from several readers who offered their thoughts.
- From reader Jim Stevenson: "I'd like to clear up one misconception. The days of the captive agent are quickly disappearing at most of your bigger insurance companies. What does this mean for the consumer? In my situation as a financial consultant at one of the top five firms globally, I have access to an in-house insurance brokerage that allows me to place business with over 100 other insurance companies.
"As an example, I can enter a customer's data and type of term policy and generate a list of the five to 10 least expensive policies for that client. So depending on who your insurance agent is and what company he represents, [some] advantages of buying insurance on the Web ... can become a moot point. And if your representative has access to and utilizes that in-house network, you're probably avoiding the type of agent described in your third advantage. This leaves the consumer with the best of both worlds."
- From Ian Sumner, insurance agent, about a note we previously ran regarding commissions: "Unfortunately, your comments about saving the insurance agent's commission are incorrect. The rates you see quoted on the Web are the same rates that a commissioned agent quotes. The consumer saves nothing but loses the expertise of the agent. Most consumers do not understand the features of the various policies and why the price differs between the carriers.
"A simple case of comparing term policies using price as the only criteria is very misleading. For example, two 20-year level term policies may seem to offer the same benefit -- level premiums for the next 20 years -- but what about items such as conversion options, rate guarantees, or re-entry? One insurer may only offer a 10-year window and the other a 20-year window for conversion. Is that important? For some people it is, and the price differential may only be nominal.
There is also the issue of underwriting. Each carrier has its own set of guidelines, and it is important to understand these before picking the carrier. Pick the wrong carrier for your health history, and you could end up paying more rather than saving money. These are only some of the issues that come into play when picking a 'simple term policy.' What happens when you try to look at more complicated products such as disability or long-term care insurance?"
With those thoughts in mind, let's take a closer look at your options. Sometimes, you will find the best prices by skipping the middleman, a.k.a. the agent. But some agents do offer competitive prices, and the best of them will also give you sound advice and guide you through the learning process.
Insurance agents have sometimes been portrayed in a negative light. That's because the shiftier ones prey on the less informed among us by selling unnecessary insurance, insisting that policies are "investments," and not being clear that they're compensated via commissions.
If you find a good agent who's providing a valuable service to you, you might want to consider buying through that agent. If you haven't met such an agent, though, don't be afraid to explore the world of insurance online. Or ask friends for agents they recommend.
We offer more information in our Insurance Center, and you can get your questions answered on our Insurance discussion board -- or just drop in to see what others are saying there. You'll also find the websites of many major insurance companies to be helpful. Depending on the kind of insurance you're after, click over to the websites of companies such as American International Group, Allianz, AXA, Aetna, MetLife, Progressive, and Berkshire Hathaway. You may not have thought about some kinds of insurance, such as disability or long-term care insurance, but they're vital for many people. Take a little time to learn more. You may be very happy you did, if some calamity occurs down the road.