Life Insurance Brokers

By definition, an insurance broker or agent matches the customers, who would like to get insurance services, to their desired policy and insurance provider.  The three top ranking insurance brokerage firms in the world are: Marsh & McLennan, Aon, and Willis Group Holdings.

An insurance broker is different from an insurance agent.  An agent directly represents the insurance company.  It is generally assumed that they prioritize what is best for the insurance carrier.  An insurance broker is independent and does not have a contract with a specific company. Brokers use their own methods for negotiating with insurance carriers.  Since insurance brokers represent the insurance buyer, the impact of this in negotiations is significantly beneficial to them.

This industry is regulated in the United State and most of the states require an individual to have a brokerage license. Large firms are prohibited from handing out rebates or any discount on policy prices.  Due to this set-up smaller firms can easily compete with larger ones. Services offered by insurance brokers aren’t limited in sales and general insurance, though they can earn between 2% to 8% of premiums for small groups. Part of their function includes helping small firms search for health insurance for their employees.  They can also aid in enrolling the employees to the policy and in settling benefit disputes.

In the U.K., insurance brokerage is often correlated to general insurance for cars, houses and the like, but mostly not life insurance.

The insurance industry offers one of the highest commissions because they are quite difficult to sell. It can be extremely lucrative for people who prosper in this type of business.  The right skills, an ability to convince people to face the reality of mortality and invest in intangible products can guarantee huge earnings.

Commissions vary depending on the rates of insurance companies and the type of insurance sold, but typically brokers can receive 30% to 50% on term life insurance. These are policies that can be paid for a limited time, between 10 to 30 years.  For whole life insurance products brokers can get up to 90% to 95%.  These rates are the first year commissions based on the premium.  For the succeeding years’ commission, they tend to be lower that is between 4%-6%.

The insurance brokerage industry is highly competitive.  In order to be successful in the business, one must always ask for feedback from people who have more experience in selling insurance policies. There are a lot of online resources such as blogs, groups and forums.  Research is necessary because there are different requirements for each country or state.  Examinations are, often, necessary.

There are hidden costs and membership fees.  It is good to be prepared for these expenses.  Newcomers can start up a small office from home with an organized work space.  There are several necessities like: a desk, chair, printer, business stationery, calling cards, computer, and legal office software.  It adds more credibility to a broker when an office is in place. It is advisable to invest in an outside office space once the business has started growing.