Advantages and Disadvantages of using Insurance Brokers

In the contemporary world the insurance market has seen a steep rise in citizen’s interest in the financial support services. Customers nowadays are watchful when it comes to selecting the offers from the insurance companies, agents, or using insurance brokers. You may have been familiar with terms like insurance companies, agents, etc but there may be little awareness about the term insurance broker. In this article, we shall cover the practical aspects of using Insurance brokers i.e., their advantages and disadvantages, but before that let’s have a brief understanding of insurance brokers.

Who is an Insurance Broker?

An insurance broker is a person who on behalf of Insurance Company sells the insurance policy to a person. The insurance broker works as an intermediary between the person buying the insurance and the insurance company. The prime objective of an insurance broker is to gratify the interests of his customer. The insurance broker is someone who has an in-depth knowledge about the insurance and the insurance market. They offer a variety of offers from which a customer can choose the best policy for him and the broker may assist you in finding one.

What is the need of using Insurance Brokers?

Insurance may be a complex term for many and one may require the assistance of an expert who shall guide them in finding the best policy as per their need. Insurance brokers are persons who are abreast and updated about the latest changes and developments in the insurance market therefore they play a vital role in determining which policy is best for an individual as per their need.

Difference between Insurance Agents and Insurance Brokers- Using Insurance Brokers

The basic difference between an Insurance Agent and an Insurance Broker is specified below.

• Insurance agents may represent only one company and they aim to work for the betterment of a company that they represent whereas Insurance broker sells insurance policies of a variety of companies as they don’t have a commitment to a particular company.
• As insurance agents represent a company they are trained by their companies before selling their products but brokers are not trained by any particular company because they are involved in selling many products.
• Insurance agents get higher commission than what an insurance broker may get and their income is also stable as they serve one company. The commissions for insurance brokers are dependent on the amount of sale they make.
• The amount of business for an insurance agent may be limited as they deal with the product of only one company, on the contrary, an insurance broker deal with many insurance products in the market and have a bigger amount of business at their repository.

Advantages of using Insurance brokers

Following are the advantages of Insurance brokers:

• Less cost

An Insurance broker is paid a commission by the insurance company for selling their policies and products hence one doesn’t need to pay for their time and in the future also there is not much that you need to dish out.

• Expertise of insurance brokers

The expertise of insurance brokers may come in handy for you while selecting an insurance policy. As they have worked in this field all day long therefore they have a much better understanding of which policy suits you best.

• Tailor-made policies

An insurance company may sell you policies that could be like “one size for all” kind of product where you may not have a variety to choose from but with insurance broker he shall ensure that you may get the best policy suited for you.

• Making claim

One of the most significant advantages of using an insurance broker is that your claims are taken care of. Your insurance broker can help you make a claim and deal with any challenges posed thereto. In case of buying insurance directly, one may face a lot of hassle as one may be required to encircle the insurance company for making a claim.

• Saves time

Buying insurance from an insurance broker may assist you to save your time and effort by finishing the task on his own without overloading you.

• Accurate Information

When you consult an insurance broker it may take a little time but it is to be noted that he shall help you get accurate information which you can choose and finalize the policy thereon.

Disadvantages of using Insurance Brokers

Following are the disadvantages of using Insurance brokers:

• Lack of professionalism

Sometimes the insurance brokers may show a lack of professionalism. They may pose as specialists and look to scam others and make money. They may even work without a valid license or work using a fake license. Therefore one must ask for a license prior to using an intermediary service.

• Lack of experience among brokers

A novice broker who may be new to the field may not be aware of the discounts and all. It may disorientate the applicant.

• Limitation of offers

It may be noted that all brokers don’t work with every insurance company hence there may be limited offers.

• Additional charges

One may be required to pay additional charges apart from the premium. This additional charge pertains to the broker fee.

• Insurance broker aiming to close the sale

It may be difficult to presume whether he is a good insurance broker or a salesperson. It is due to the fact that some brokers may be aiming to close the sale rather than understanding what you actually need.

Takeaway

Just as every aspect has its advantages as well as disadvantages, the insurance brokers also have theirs. One must always vary while using insurance brokers to choose appropriate brokers. Always choose a professional in these matters to have the best result.