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How Do Life Insurance Brokers Work?



A life insurance broker differs from a life insurance agent in that a broker typically represents the person or entity interested in purchasing life insurance. In contrast, an agent usually represents the company involved in selling life insurance.

Since life insurance brokers work with different insurance companies, they should be familiar with how different companies are willing to handle various insurance risks.  A broker can help an applicant figure out which company can best address the applicant’s specific insurance needs.

A life insurance broker may also be able to set up any medical exams and collect any medical records that the insurance company may require. They may also be able to arrange for a medical technician to visit you in your office or home if all that is necessary is to collect some information and take samples of urine and blood.

Experts in impaired risk

Some life insurance brokers specialize in reduced risk. Someone with an existing medical condition that may be difficult to find insurance may want to consider using such a broker.   Some people with a history of cancer, diabetes, or heart disease may fall into this category, as well as people with a history of drug abuse. Even if people with these or other potentially difficult-to-insure conditions can find life insurance on their own, a broker may be able to do so more quickly since he or she will know where to look, and may also know where to find the best deal.

Life insurance brokers specializing in impaired risk may also be better able to find life insurance for people who engage in risky activities such as hang gliding, scuba diving, or cigar smoking.

Advice on estate planning

Some people prefer permanent life insurance to term life insurance because of the potential investment benefits.  Money can build tax-free inside the policy, and beneficiaries will not be required to pay income taxes on the payout of a cash-value policy. A life insurance broker may offer advice concerning crafting a life insurance policy for estate planning. A broker may also provide support for legal and tax issues.

A business may use a life insurance broker when arranging employee benefits.  Instead of looking at offerings from different companies, the industry could work with a broker to come up with a customized life insurance plan for employees.  Then the broker would match the program with an insurance company that is willing to assume the plan’s risks.