Will the Real Insurance Agent Please Stand Up?
The financial services industry is composed of the various institutions dealing with your money, such as insurance companies, savings and loans, banks, and mutual funds. When you remembered back during the 1970s and 1980s, the financial services industry began to transfer in directions that have and will go forward to have a major impact on you.
The different lines between the various institutions have indistinguishable and in some cases disappeared. As a result, you’re no longer to look to an insurance agent for insurance only, or to a stockbroker just for stocks. It is become a trend that almost everyone in the financial services industry is in someone else’s business. Sure you have to wait whether you’ll be better served by these changes. Yet, you need to be aware of these changes and their affect on your security.
Below we will look some of parties that have role in insurance’s sale.
Insurance Companies
The organization that acquires the risk you choose to be transferred to is the insurance companies, also known as the carrier/ insurer. Insurance companies assets’ size can vary from a few million dollars to over several hundred billion dollars. Size shouldn’t be the choosing factor in which carrier to select, but size is a strategic circumstance in selecting a tested and safe company. A company requires sufficient assets to diversify its investments and fund its future growth. You should also look for insurance company’s regulation regarding payment and processing clients claims.
Insurance Agents
Insurance agent is individuals who solicit your business on behalf of the insurance company. Insurance agent can be employees of one company or work as independent agents. In both cases, an agent technically acts for the insurer, not you. This means they have responsibility to sell their company’s products, although it is common for some insurance agents may also sell other companies products.
Insurance Brokers
You will be represented by insurance company whom will act on behalf you rather than company. Generally, insurance will research and gather quotes from several insurance companies to find the best insurance product for you. This doesn’t mean that a broker will necessarily answer your needs better than an agent. A well-trained, experienced agent is so much better for you than an inexperienced broker.
Insurance Consultants
Unlike agents and brokers, who are paid a commission by the insurance company. Most of the time, you will pay fee to insurance consultant. This can mean less pricy insurance coverage, if commissions are not charged as part of the premium. However, this doesn’t mean you always avoid the expense of a commission. There might still be a commission paid to someone other than the consultant for example, if an agent or broker is involved in the purchase of the insurance. Before hiring someone in the capacity of a consultant, make sure you understand whether a commission will also be paid.
Financial Planners
A financial planner role is more or less to evaluate your financial conditions. As part of this evaluation, the planner may endorse insurance products. Planners work for fees or commissions, but usually not both. State laws may dictate the ability of planners to get both compensation. Many insurance brokers and insurance agents help you and evaluate your overall financial needs.
Stockbrokers
This is the traditional marketer of bonds and stocks from a firm registered with the NASD (National Association of Securities Dealers) and the SEC (Securities and Exchange Commission). But now it is more common to see stockbrokerage firms also sell insurance as well as pure investments products. In recent years, a number of experienced life insurance people have emigrated to securities firms, making it feasible to have good advice from these firms.
Bank Teller
Although a teller may have a different title, bank personnel are marketing insurance products all over the country. Some aggressive companies are selling all types, while others are selling only annuities. Annuities are contracts between insurance companies and the insured that allow the insured to collect monies or receive income payments for some periods of time, oftentimes for life, normally on a tax-advantaged basis.
Direct Sellers
Several organizations, including credit unions and associations such as the AARP (American Association of Retired Persons), provide insurance products to their membership directly, through mailings or advertising. This minimizes the broker or agent, which is not always a good thing for you. There are times when you need the counseling as much as the product, because the products can be complicated and your needs can be complicated.