Insurance is typically purchased directly through an insurer or through independent commercial agents and brokers who provide access to the products of several insurers. Direct issuers dominate auto and homeowner insurance sales, while commercial insurance is more commonly purchased through independent agents or brokers. Individual policies are generally sold through insurance agents or brokers. If you buy a policy through an agent or broker, you'll pay a commission, also called a “charge,” which is included in the premium rate.
The commission compensates the agent or broker for the time spent advising you on how much and what type of life insurance to buy, for facilitating the application process, and for any additional services needed in the coming years to keep the policy up to date (such as changing beneficiary designations, arranging loans, or coordinating your financial plans with your lawyer and accountant). Selling insurance is about selling people the different types of insurance they need. This can include life insurance, as well as car insurance, health insurance, disability insurance and home insurance. People who sell insurance policies are known as insurance agents or insurance brokers.
Insurance agents may focus on different areas of selling insurance, such as selling to businesses or individuals. They're not going to suddenly buy life insurance from you when they want third-party car insurance. Second, commission rates are very high compared to other insurance sales, such as health insurance. Other segments, such as the sale of auto insurance and the sale of insurance for homeowners, will experience (and in many cases already are) a massive evolution: cars are getting smaller, people are having fewer car accidents, and computers are discovering how to automate insurance products.
Most people who work in the insurance industry know that deceptive insurance agents don't tend to create successful businesses; they don't get or retain customers and almost never get great referrals. And while you won't be entitled to any discounts if you take out your life insurance and other insurance with the same representative, working with a single advisor for all your insurance needs can make your financial life easier. If a customer is looking for a life insurance policy, it's also a good idea to be able to offer services such as accident insurance, funeral insurance, and income protection insurance. In addition, unlike a new car or mobile phone, life insurance doesn't offer any of the instant perks that lead people to make impulse purchases.
Most employer group plans are temporary insurance, but if you leave that employer, your state may require that you be allowed to convert the policy into a form of full life insurance with the same insurance company that offers group life insurance. By far, life insurance sales offer the highest fees in the insurance industry, but it depends on the type of insurance being sold. If I were limited to selling just one type of insurance product, it would be commercial insurance.
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