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What is a life insurance agent?

Most people’s first dealings with insurance companies are through an insurance sales agent. Like all financial advisors and agents, life insurance agents help individuals, families and businesses to choose select appropriate insurance policies to provide protection for their lives, health and/or property. Not only do life insurance agents offer insurance policies, but increasingly they sell more financial products, such as mutual funds, retirement funds and securities. Life insurance agents working exclusively for one insurance company are referred to as captive agents, whilst independent agents, also called brokers, represent several companies and claim to place insurance policies for their clients with the company that offers the best rate and coverage. Of course, you should know that agents are paid a fee for bringing new business to a company, so they may not be quite as independent as they claim! However, many now show you precisely what they receive from the insurance companies, and in some cases even offer to share their fee with you in order to reduce your premium if their fee is significantly more than the average. So the role of a life insurance agent is to find new clients, prepare reports, maintain records, and in the event of a loss or need to claim, help policyholders to settle their claims. Increasingly, agents also offer their clients financial analysis or advice on ways to minimize risk. 

Of course, life insurance agents specialize in dealing in policies that pay the beneficiary or beneficiaries when a policyholder dies. Depending on the policy, life insurance agents help you set the level of cover you need and the premiums you will have to pay so that your policy will pay out the amount required to provide retirement income, funds for education etc. 

Many independent agents are paid by commission only, whereas sales workers who are employees of an agency or an insurance carrier may be paid by one of three ways: salary, salary plus commission or salary plus bonus. Generally commissions are the most common form of compensation, particularly for more experienced agents. The amount of commission depends on both the type and amount of insurance sold and also whether the transaction is a new policy or a renewal. Some agents involved with financial planning receive a fee for their services, rather than a commission. 

Many people find the financial advisor they use for choosing or changing mortgages also deals in life insurance, or if not can recommend a colleague who does. In these days of increasing trepidation when selecting financial products, you may find using someone you trust, or one of his or her colleagues, will give you one less thing to worry about. 

Disclaimer: The information contained on this page is not intended, nor should it be construed as providing any form of financial advice or guidance as to which insurance product/policy is right for you. If you are unsure as to which product meets your requirements/needs you should always seek advice from an Insurance Professional.

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