When it comes to shopping for individual disability insurance, what is the difference between working with an agent or a broker?
An agent is employed by an insurance company and has a financial incentive to show only that company. Depending on your situation, it may or may not be the best fit. But if you are working with an agent, chances are they are not shopping around for you and making an objective recommendation.
A broker is someone who works on behalf of the client and is licensed with multiple companies. Brokers tend to be more objective since they do not have an incentive to place business with any one particular company.
Another major difference is that agents are sometimes not well versed in policies that they do not have available. I oftentimes have calls from clients stating misinformation they received about the various policies that I show them from an agent. Some of the information is either outdated or wrong. The agents in these particular cases only knew about their own policies but not the other ones available in the marketplace.
Working with a broker is important when it comes to shopping for life insurance as well. Term insurance rates can vary greatly and it typically does not make sense to pay a significant more for term insurance than necessary. I’ve seen clients paying up to triple the cost for term insurance than other available policies.
When shopping for disability insurance, make sure you are working with someone who has your best interest at heart and can objectively shop around for you and recommend the most suitable and cost effective option for you.