Should You Buy Insurance From A Broker Or Direct Agent?

By on March 2, 2017

When you think of buying insurance, you should consider going with it via a broker rather than the main insurer themselves.

A broker is a person who has up-to-date knowledge of each and every company dealing in the sector. He aggregates information concerning different plans and policies.

Thus, he can easily tell anyone about the pros and cons of insurance policies of different companies available in the market at a point in time.

You could get to know about all the trends in the market of insurance industry. You could also know about the reputation of all the companies dealing in this field.

On the other hand if you go directly to only one company, you would get in the trap of only the polished side of its outlook.

You will hardly get an unbiased opinion.

And you can hardly fault an insurer to have some form of favoritism towards their own products. It will be surprising if they are!

A direct insurer would never tell you the loopholes attached with their products. So it comes as no surprise that brokers are the preferred choice for the type of individuals who would like to know what is available in the market before committing to buying something.

In addition to that, this is a product that can either give your peace of mind or heap more misery while you are laying in bed at a ward in the hospital. And it is a financial commitment that can last for years to even a lifetime.

The basis of a capable broker is in keeping tabs on all the kinds of policies which are found in different companies including timely updates on changes on existing products whether that are policies for homeowners, fire, medical, motor, life, or just one with general coverage.

So it is not too much of an expectation to expect your broker to be able to list down, compare, and advice accordingly on the pros and cons of different insurance plans available from different insurers.

He might even be able to provide information on the operating culture of different companies like how much they value their clients to how impossible it is to make a claim with one.

This is undoubtedly an important selection criteria that is often overlooked by buyers. It would be meaningless when you are supposedly covered for a huge amount but will never be able to claim it due to fine prints.

You know the drill with sales pitches. Direct agents usually promise the world and make it sound like every little claim is so effortless.

Some might even make a big fuss about how you will be rich if you make your hospital stay to be a lengthy one.

These days, it is getting tougher and tougher to make a good decision when the people selling these products are causing great distraction and confusion instead of just facts on why a particular plan is best.

But maybe that’s how difficult to sell them these days to prospects with budgets in mind.

So much so that it becomes necessary to send prospects into a frenzied state that they do not have a clear idea of what they are signing up for.

You can expect a broker to also list down the drawbacks of a particular insurance policy. Established players might have an integrated system with insurers that enable real time updating of information so that product information are never skewed.

And using these data, filters can be set to narrow down choices in the order of specific preferences.

It is very important to know about each and every side of a policy before you finally go for it as it might give you trouble in the long run.

You wouldn’t expect this from an agent direct from an insurer itself.

Flexibility and variety are other benefits

The other cardinal aspect of taking insurance policies from a broker is that you enjoy a great amount of flexibility and variety.

A broker is available all around the year for catering your needs because every client matters to him.

Generally, brokers work on a commission basis. So they are highly active in responding to give you all the information and facilities which you would need.

In this regard, you enjoy a better customer service. And because they usually sell products from almost all available insurers in the market, it is not unfair to say that everyone is a potential customer, even those who have a specific brand preference.

As a landlord, when going direct to an agent, you could be stumped at how limited their product line is and how inflexible they can be in customizing a plan tailored to your needs.

In cases like these, it is not uncommon to find agents giving prospects an ultimatum or a “take it or leave it” policy.

On the other hand, there are a variety of policies available with a broker. It’s as close to limitless as it can get as they are usually partners with all insurers worth partnering with.

So if you find a policy unsuitable, you could just go for the one which is most suitable according to your profile. In this way, you could enjoy the benefit of knowing about the various schemes offered by different insurance companies in order to get the maximum benefit of such a deal.

A Drawback

There is however a disturbing drawback of working with brokers. It is this issue that has probably held them back from becoming what they are fundamentally meant to be.

Because brokers are compensated by insurers by selling their products on a commission basis, they could be vulnerable to practice favoritism for products that pay them the most commissions.

This is even though their basis of existence is to actually be an information aggregator for clients to help them make better decisions based on good timely data rather than anything else.

If at times, you do find yourself being constantly recommended of specific products when it does not have a clear selling edge, it is probably one that has a good payout.

Always remember that you are responsible to make your own choices for insurance products as you and your family are the ultimate ones who will benefit while paying from them.



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