Replacing Employer-Based Life Insurance Plan: Term Life Insurance Broker Vs. Captive Agent

By James Tobin, CFP®

  • "Captive" agents are limited to the policy options of the company that employs them.
  • Independent Broker's have access to 50+ "A" rated carriers
  • High risks benefit from carriers competing for business. 

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Why You Can Have Confidence In This Review Of Term Life Insurance Brokers

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Reviewed by

Jim Tobin, CFP®

At Workers Bequest, we value our editorial independence. We keep our reviews strictly factual so you can use them to make informed decisions. Life insurance carriers referred to on this site do not approve reviews.

If you have ever wondered what the difference between a life insurance broker and a life insurance agent is, the answer is simple: Independence

Agents can either work independently and offer multiple carriers or they can work for an insurance company. The Workers Bequest is an independent agency that has access to more than 50 different life insurance carriers.  

If you're looking to upgrade from an Employer-Based life insurance plan, this article will help you discover the differences between providers, Feel free to use the quick navigation links to jump around.

What is a captive agent?

The term “captive agent” refers to an insurance agent that works directly for a carrier. For example a company like Guardian Life has a career agent path and those agents are considered “captive” because they are incented to sell Guardian’s products.  

Captive agent’s can sometimes offer “outside” carriers, but the compensation structure encourages them to “stay home”. The end result is that captive agents will often try to shoehorn your application into their employer whether it’s a good fit or not.   

This situation is particularly concerning if you have an existing health condition that would be looked at more favorably by a different insurance company. 

What is a term life insurance broker

A life insurance broker is an independent agent who is contracted to sell policies from several different  top carriers. The primary advantage that a term life insurance broker has over a captive agent is that with a multitude of carriers to choose from, the life insurance broker can place your application with the carrier who is most likely to see your health concerns in the best light.

The reason this is so powerful an advantage is that different life insurance carriers have different risk appetites for specific health concerns.

For example,  Banner generally does better with type 2 diabetics than other carriers, but Principal is the go to for sleep apnea. The end result being that the underwriting department will give a better health rating to clients who meet the carrier’s risk appetite.  The better classification can lead to significant savings over the life of a policy.

 After all a $21/month savings on a 20 year policy is more than $5000.

What about cutting out the agent and going straight to the Carrier?

This is a terrible idea. The reason is that you have the limitations of a captive agent without even the possibility of going “out of network”. Moreover, it doesn't  save any money. 

That's right. The rates are the same whether you’re sold the policy directly from a carrier or from an independent agent.  The rates are set by the department of Insurance at the state level and carriers cannot offer the same product for less if you buy it directly. 

All you “get” by going to a carrier directly is the loss of competition for your business and the loss of an experienced agent to help you navigate the process in the most beneficial way.

Okay, but what about the big national brokers that advertise on radio & television?

If you listen to the radio or watch television you know about companies like Policy Genius and Select Quote.

While these companies are better choices than using a captive agent or going direct to a carrier, they also have limitations. They are “independent agencies” but in an effort to concentrate business amongst a few carriers (to enhance leverage in commission negotiations), these agencies limit the available options. This is problematic if you need a niche carrier.

Another concern you face with national brokers is they will not service your policy. If you call to make a beneficiary change or want to modify the EFT information, you will be transferred to the carrier with 1-800 muzak to follow.    

Lastly, there is the issue of turnover. It is very difficult to speak with an experienced agent  in any of the above scenarios. The carriers and call centers turnover employees at a prodigious rate.  The result being that it is unlikely the person you will speak to has any significant experience.

Is The Workers Bequest an independent life insurance broker?

Yes. WBLI is an independent broker. We have access to over 50 A.M. Best “A” rated carriers to shop your policy and meet every niche health issue. 

However, what makes the Workers Bequest different is that it's led by a Certified Financial Planner and is committed to transparency. In fact we’ll share our screen with you while pricing your policy if you’d like. 

Additionally, the Help Desk is here for the long haul. This is a career  and not simply a first job out of college. We will be here to help with policy service and no 1980’s Muzak either.

How to apply for life insurance with an independent  broker?

The easiest way to get started is to simply fill out a quote request by using the quoter tool on the site. If you are unsure about your health classification you can either fill out the custom quote form or simply start by using “Standard’ health or you can check out the underwriting assistant tool. Upon receipt, we will be in touch by phone and email. If you have any questions please give us a call or use the contact us page.

Thank you for using the Workers Bequest to research term life brokers v. captive agents

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