Life Insurance Broker: Do You Need One?

Information verified correct on September 30th, 2016

Benefit of Life Insurance Brokers

Key Facts

  • Insurance brokers are industry professionals that can assist you in finding the right insurance solution. Besides having the ability to obtain multiple quotes from various providers on the market, they take out the difficulty in understanding different policies which can often confuse many.
  • Insurance brokers have the obligation to make sure you have the right policy to your situation and budget.

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When you are aware of the uncertainties of life, you do your best to get protection against them. It takes a lot of foresight to prepare well for the future and its uncertainties. However, it is much better to make the preparations with somebody who knows the way than by just doing it alone. After all as the old saying goes, two heads are better than one. Aside from this, you also save a lot of time and money.

Time, because you know where you are going; and money, because it will not be a case of trial and error. Thus, when it comes to drawing out a life insurance policy for you, it is best to seek the help of an expert, in which case, an insurance broker.

What is the role of a Life Insurance Broker?

An insurance broker is often confused with an insurance agent; however, they are very different. An insurance agent is someone who works for a certain insurance company, or for a number of insurance companies. Thus, an insurance agent is a representative of an insurance company with a purpose of selling policies to those who are in need for it.

An insurance broker does is gather different quotes from various companies and presents them to you. Then he will help you gather the necessary information you need for the application process and submit them to different insurance providers. When the provider agrees he will then give a binder which will then be presented to you by your insurance broker. The binder includes all the terms and conditions of the insurance contract you will enter into.

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Find Life Insurance Policy by Yourself or through a Broker?

Finding the right life cover is possible by researching and familiarising yourself with the different plans that are available on the market. This may perhaps sound daunting and time-consuming when done on your own, but this is when a life insurance broker's services can be proven valuable. With the wealth of knowledge in different products on the market, a broker can cut out a lot of the work for you. Of course, there are some things that you may need to consider when making deciding whether or not you require a life insurance broker:

  • Cost: Finding a policy on your own, without the help of a broker will be the most cost-effective as you do not require to pay a professional fee for a service. You can save money by going online and using the services of a comparison site such as Life Insurance Finder, where you get to compare multiple policies from Australian providers, obtain quotes and decide which policy is the right one for you!
  • Time: Looking around for different policies on the market can be a significant investment of your time, if you're not sure what you are looking for. This may be particularly true for first-time buyers who may not have a wealth of knowledge of life insurance at hand. With the help of an insurance broker, you can get access to information and recommendations to life insurance policies that are tailored to your situation, without costing too much of your time. You can arrive to a decision and get insurance protection quickly with minimal fuss.
  • Effort: Finding a policy on your own gives you the advantage of making a decision on your own pace with confidence, without all the pressure of immediacy. On the other hand, getting some assistance from an expert can save you from being overwhelmed by a wealth of information from multiple sources, some of which might be unfamiliar. An insurance broker gathers all the information you need, sort them out, tailors his recommendations based on your needs and requirements, and suggests which policy is most appropriate for you to help you arrive at a decision.

Expert help can be very valuable in terms of time and quality. A good insurance broker will never insist on a specific policy with a certain provider based on how much commission he can make. Instead, he finds various solutions that will put you at an advantage. It is essential to find an insurance broker who has a wide range of portfolio so that he can give you more options and solutions.

Life Insurance Brokers Duties and Responsibilities

Since a reputable and licensed insurance broker should be acting in your best interests, these professionals have a number of duties and responsibilities to follow. Insurance brokers have a duty of care to you as the customer and their actions should therefore be focused on helping you to get suitable coverage at the right price.

Some of the key duties and responsibilities of an insurance broker include:

  • Attempting to source the most suitable policy for your needs based on the information that you provide
  • Trying to find competitively priced cover on your behalf
  • Acting in your best interests throughout the process
  • Ensuring that they advise you in the event that they are acting as an agent for an insurer rather than for you
  • Act with integrity and honesty at all times when it comes to dealing with clients and insurers
  • Avoid conflicts of interest or disclose conflicts if and when they do arise
  • Ensure that any fees, commissions or other benefits being received are disclosed to the customer
  • Adhere to client confidentiality regulations and data protection
  • Ensure that all records required by law are maintained
  • Comply with the Insurance (Agents & Brokers) Act 1984, the Insurance Contracts Act 1984, the Trade Practices Act 1974 and the State Fair Trading Acts
  • Provide information relating to the insurance coverage to the customer promptly
  • Provide necessary documentation relating to the insurance to the client promptly
  • Provide details of the charges and fees from the insurer in writing and detailing any fees charged for the broker service separately
  • Ensure that the accuracy of the insurance documentation is checked
  • Make sure that no non-disclosure or misrepresentation takes place

The above are some of the key duties and responsibilities of insurance brokers in relation to helping consumers to find insurance plans and policies that will suit their requirements and will fit in with their budget.

Tips to Find an Experienced Life Insurance Broker

Being able to find a good insurance broker is like finding a gem and in order to do that you have to know where to look for it, and the standards you can use in spotting a good insurance broker.There are several places and methods where you can find an insurance broker. Below is a list of some of those places and methods.

  • Through word of mouth - Where else can you find an insurance broker but through the grapevine. Surely, you have family and friends who have used or are using the services of an insurance broker. One of the advantages of finding an insurance broker through your circle of friends is that you can get first-hand information and honest review about a certain broker. However, you should also try to do a little homework when checking out the broker being referred to you as rapport between a client and a broker is very important.
  • At online review sites - Another easy way to find an insurance broker is by clicking your mouse and browsing through different review sites dedicated to insurance brokers. Exercise caution and discernment when using this method, though, in order to sort out which review is real and which is not. You can do this by checking out the brokers within your area and set up an appointment with them in order to assess them. Examine their credentials and track record - do a little legwork.
  • At the NIBA - The National Insurance Brokers Association is another good place - one which is teeming with 'fish' so to speak. Looking for one through the NIBA gives you the assurance that what you are getting someone who is licensed and certified.

It might be easy to work out where to find an insurance broker but it can still be quite a feat to find a good one. What qualities should you look for and what things to consider are just some of the things that you need to reconsider. Here are a few tips how to find a good insurance broker.

  • An insurance broker should disclose his commission. Insurance broker's commissions depend on the cost price of the premium. It is, therefore, a rule that insurance brokers should disclose how much commission they are getting from you. Also bear in mind that an insurance broker should not charge you with a separate fee when helping you secure an insurance policy.
  • An insurance broker should help you in every step of the process. This includes reminding you of the necessary actions you need while processing your insurance application, such as a physical or medical examination. Getting a physical examination beforehand might pose an extra burden from you, but a good insurance broker knows that it will be easier to find a better deal if your medical condition is already confirmed. This means that if you have a pre-existing medical condition, it will be easier to find a policy that will fit the needs you have; and in case you are healthy, you can get a discount.
  • An insurance broker should not force a policy on you. A good insurance broker helps you find a policy which complements your needs and your wallet. He should consider your needs first and gives you ample time to sort through various policies and think through your decision. A good insurance broker will never impose a policy on you nor hasten you to make a decision.
  • An insurance broker should have a wide range of insurers in their portfolio. A good insurance broker is someone who has a wide portfolio of various insurance providers. The reason for this is so that he can give you more options and expose you to better policies.
  • An insurance broker should be licensed. Look at an insurance broker's license and credentials. This means that you are dealing with someone who is accredited by the state and not just by someone with questionable reputation. You should also look at the reviews given to him and his track record in assisting clients. By doing so, you will be able to sort out the strengths and weaknesses of a certain insurance broker.

You might think that hiring an insurance broker might be a burden to you so why hire one? The answer is easy. Since you are hiring an expert who already knows his way around the insurance industry it will save you time and money. You don't have to undergo a trial and error thing and you can find a better policy in a short time.

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