Grappling with salespeople over the phone isn't a desirable use of time. Especially when it involves life insurance.
Aggressive sales tactics combined with a hard-to-understand product can make buying an insurance policy a chore. Agents will sometimes push you into making immediate decisions without showing you options or claim you need to act now to take advantage of a special rate.
For some, just finding a reputable life insurance professional they're comfortable working with is so difficult that it makes people procrastinate instead of taking action.
Just as you can buy almost any product online, so too can you now purchase life insurance. Many companies sell term life insurance directly to consumers. You apply online with the company and go through underwriting, including a medical exam and blood work.
If you qualify, the company will offer you a policy for a certain amount of premium. You can choose to accept it and be issued the policy, or turn it down and start the process over with another carrier.
Although it’s possible to get term life insurance without the help of an agent, physicians need to ask themselves whether they should go this route?
Here are three considerations:
Insurance companies do not discount the cost of policies sold direct. They will charge the same amount of premium whether a policy is sold through an agent or online.
That’s because the cost of life insurance is based on rate tables established by the insurer, which are calculated based on the risk involved in insuring groups of people. These rate tables are filed with state insurance departments. Legally, insurers can’t offer a policy at a discount, even if they sell it online and don’t have to pay an agent’s commission.
However, you might save money working with an independent agent. An agent working with your best interest will compare multiple policies to find you the best deal.
A third scenario is that you might save money buying direct because agents are paid on commission. This payment structure gives some agents an incentive to sell a higher amount of insurance coverage than the client needs. It could also lead an agent to offer you a policy that costs much more than another policy with similar features and options, or to add costly riders and features that are optional.
One of the benefits of working with an independent agent is you can shop around with several carriers.
An independent agent is typically contracted with multiple carriers, but has no obligation to any of them and can therefore put their clients' interests first. A qualified independent insurance agent has the knowledge and expertise to understand the complexities of the life insurance market. They can advise their physician clients on the appropriate amount of insurance coverage needed.
Independent agents often work with intermediaries to obtain quotes from multiple insurance carriers. The agent can then review multiple quotes and offer the client the best option available.
Another advantage of using an agent to buy term life insurance is the support you receive during the application process, provided you select a customer-focused professional.
Applications can take several weeks, whether you buy direct or use an agent. There can be multiple follow ups, scheduling of exams, and a lot of time potentially on the phone with an insurance company. An agent and his or her staff will take care of all these details and will follow up with the insurer if there are any delays.
What’s more, if you can’t get the right coverage at the right price with one company, the agent can simply take your paperwork and submit it to another carrier. If you buy direct and this happens, you have to start the process all over.
Instead of trying to find an agent on your own, ask a colleague or trusted advisor to recommend a insurance professional. A fellow doctor who had a positive experience with their agent should be happy to recommend them to you. Likewise if you trust the opinion of your banker, accountant or financial advisor, they may know a good agent as well.
Learn more about life insurance with:
The Ultimate Guide to Physician Life Insurance in 2021
Joel Palmer is a writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.