Traditionally, life insurance has been sold through insurance agents hired by a company to sell products. In exchange, a life insurance company provided its agents with training, support and benefits. This agency system thrived throughout much of the 20th century and gave rise to the multibillion-dollar life insurance market that exists today.
The Internet has changed the life insurance industry significantly in the last two decades, and the traditional agency system has given way to an increasingly popular independent structure for life agents.
With information and pricing readily available, many consumers now expect life insurance agents to market policies from multiple companies. Rather than contracting with one specific company, many agents have become brokers so they can offer clients the best deals available.
When many life insurance companies abandoned the captive agent system, they also gave up much of their valuable agent support, most of which is now in the hands of the brokerage agency where an agent is contracted. This makes it more important than ever for the independent agent to select a brokerage agency that provides not only excellent compensation but also the support necessary for career and business advancement.
What Your Peers Are Reading
Many independent life agents these days fall into one of three categories: those who work for non-life insurance agencies, investment advisors, and trustees and estate planning attorneys. It’s important, then, that they select the appropriate brokerage agency to meet their needs — one that provides the best access to information so they can offer clients the most attractive options available.
1. Non-life insurance agencies
Insurance agencies that have not typically sold life insurance — particularly P&C and health insurance agencies — have been a major source of increased business for some life insurance brokerage agencies. The margins for these lines of business have been squeezed in the past few years due to increased competition and government regulations. As a result, many of these agencies have looked to make up for lost revenue by adding additional lines of business, including life insurance.
Typically, one of the most important considerations for these agencies when dealing with a brokerage agency is service. Obviously, their core business is of primary importance; they don’t want to jeopardize client relationships when adding life insurance to their offerings.
A primary consideration is having confidence that the brokerage agency will take care of their clients the way they would if they were selling one of their core products. This is why a brokerage agency must provide agents with the tools that help assure quality service: online case access so agents can check on the progress of their cases in underwriting, accessibility to the life insurance companies for in-force policy information, and timely updates if issues arise during the underwriting process.
Another added value brokerage agencies can provide to P&C agencies and other non-life shops is access to carriers offering tailored programs to help them grow their business.
Particularly for P&C agencies, many life insurance companies have designed marketing platforms that aid the agency in letting its client base know it also provides life insurance. It’s incumbent on the brokerage agency to be familiar with the various programs and to introduce agencies to the best solutions available to them.
Agencies with little or no experience selling life insurance are also concerned with their lack of familiarity with life insurance products and how best to position them with clients. This is why it’s important to find a brokerage agency with an experienced staff that can guide inexperienced agents through the process and make sure the agency is asking clients the right questions to uncover their life insurance needs.
2. Investment advisors
A second and growing non-traditional outlet for life insurance sales is investment advisors. With the movement toward holistic financial planning, more investment advisors are adding life insurance to their client services.
It is important for these professionals to find a brokerage agency that understands where life insurance fits into a client’s overall financial plan. Today, brokerage agencies are asked to go beyond filling orders. They should also be able to make recommendations as to which products best fit client needs and the appropriate amount of coverage.
It’s worth noting that an investment advisor may be using software for creating client investment plans that does not include life insurance in the analysis. Therefore, it’s important to find a brokerage agency with robust capabilities for analyzing life insurance needs, not only for family protection but also for estate and charitable planning.