Insurance Agent vs Insurance Broker

Countless hours I have spent explaining the differences between Insurance Agents and Insurance Brokers.

The definition of an insurance agent and an insurance broker are developed by individual states and their corresponding department of insurance.​   So the definitions are not always the exact same.

In California, ​"An insurance agent is a person who transacts insurance" but you will notice that the definition creates some confusion - by continuing: "The term 'insurance agent' as used in this chapter does not include a life agent as defined in this article."  But a broker is more clearly defined by their statute: "insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an admitted insurer."

Generally in the world of Insurance, an Agent is someone that is appointed by the Insurance Company to work on their behalf. A Broker is typically not appointed by the Insurance Company.  An Agent generally works for the Insurance Company while a Broker works for the client.

Now in the world of Property and Casualty - Agents and Brokers are more clearly different. However in the world of life insurance - not so much.

What does matter?

Insurance Agent vs Insurance Broker really decreasingly matters in the world of insurance.   What matters much more is the difference between an Captive Insurance Agent vs an Independent Insurance Agent.

Having been a Captive Insurance Agent and now Serving Under my own Brand as an Independent Insurance Agent, I can promise you - that generally most of the people that can become independent producers do. But that does not mean that there are some very good captive insurance agents available.

When Does it Matter Most to Work with an Independent Life Insurance Agent?

The thing to keep in mind is that independent agents are much more able to both save you money and get your successfully placed with a life insurance company.   This could result in saving you hundreds of dollars per year.

What Companies are generally represented by Captive Insurance Agents?

What is the Difference between Insurance Broker vs the Insurance Company?

In the property causality world, an insurance broker may represent you to help you find and purchase insurance.   Sometimes insurance brokers charge you brokerage fees, sometimes not.   For life insurance insurance brokers generally would not charge you a fee.  Generally insurance agents are paid commission from the life insurance company.    Insurance Brokers by definition usually are not appointed with the insurance company and do not speak for the insurance company.

What is the Difference Between an Independent Agent and a Broker?

For Life Insurance an Independent Agent is essentially a free agent that is allowed to work with whatever life insurance company will work with them.  In life insurance, a broker is very similar.

This is not the case for P&C insurance in most states.

How Do Independent Life Insurance Agents Get Paid?​

Typically they get paid from commission from the life insurance company.  Percentages and dollars depend on the size of the life insurance policy.  Ask your agent for more information.

Why Does Everyone Focus on Insurance Agent Vs Insurance Broker when the Difference for Life Insurance when Captive Agent vs Independent Agent is so much more important?

Although the world of insurance is slow to change, it has changed significantly.  Insurance Agent Insurance Broker - not a big deal.  But Captive v Independent is.  We are continually surprised how few people know let along ask their insurance agent:  "Are you a Captive or Independent Agent?"    This is the very first question on our post 19 Questions to Ask your Life Insurance Agent.

Another good question: "How many life insurance companies can you work with?"

How Do I Find an Independent Insurance Agent?

There are lots of ways to find independent insurance agents. For one, we are independent insurance agents. Secondly you can google independent insurance agent.   A third method is to ask around via friends, yelp, etc.

A Note on this Article:

Each State and Regulator may have their own definition of what defines an Insurance Broker and an Insurance Agent.   The best source for that definition will certainly be from your state insurance regulator and it may be specific to the line of insurance that you are considering purchase such as life or home.

As with all forms of insurance please seek licensed consul each and every time you are considering purchasing any form of insurance.  Insurance is regulated by the state in which you live in.