An insurance agent is a professional intermediary who helps clients obtain the best insurance coverage for their needs. They can work full-time for an agency or as independent contractors. An insurance agent represents one or more insurance companies and sells their policies for a fee. They are responsible for understanding the client's needs and finding the best coverage to meet those needs. An insurance agent is a trustee of the funds they receive or collect.
As such, they are prohibited from combining funds received or raised in trust with their own funds or with other funds they hold in any other capacity, unless the principals have expressly consented to such a combination. To sell insurance under a corporate name, the corporation must be licensed as an insurance broker or agent in accordance with Article 21 of the Insurance Act. This ensures that the insurance agent is compliant with all relevant regulations. Typically, a life insurance agent receives between 30% and 90% of the amount paid for a policy (also known as a premium) by the customer for the first year. In later years, the agent can receive between 3% and 10% of each year's premium, also known as renewals or final commissions. Insurance brokers specialize in insurance and risk management. Unlike insurance agents, brokers work for you instead of companies.
An insurance broker uses their knowledge and experience to help you assess your unique insurance needs, find the best coverage and value, and can help you file a claim. Brokers provide comprehensive information about commission rates and the effects these rates may have on your insurance premium. Because brokers don't work for insurance companies, their recommendations are impartial and favor the insurance buyer. Your job as an insurance agent is to represent the insurance company in the transaction while helping customers find the right coverage. While the life insurance industry promises big rewards for those who are willing to work hard and endure a fair amount of rejection, there are two pitfalls you need to be aware of. Insurance brokers, on the other hand, represent several insurance companies to ensure you're connected to the insurance that's right for you. They may choose to specialize in a certain area, such as property and accident insurance (P&C), which protects businesses against property lawsuits and losses.
An insurance broker could better serve a company that faces unique risks and challenges in finding coverage. When looking for an insurance agent, it's important to do your research. First, you should check with your state's department of insurance to make sure that they are licensed to sell insurance in your state. Second, you should visit your state's insurance commissioner's website and check the history of complaints against the companies you're considering working for.
