Benefits of Working With a Health Insurance Broker vs. Agent

If you are shopping for health insurance, you probably consider the journey to be a frustrating experience. Not only do the rules for purchasing health insurance seem to change every year, but the number of confusing terms can be maddening.

• Premium
• Deductible
• Enrollment period
• Special enrollment period
• Co-insurance
• Medically necessary

You get the picture, and these are just the terms that define a health insurance policy. What about the professionals that offer health insurance policies?

Both insurance agents and brokers act as the intermediaries between consumers searching for coverage and the insurance companies selling the policies. Which of the two professionals should you choose as your intermediary?

The answer comes down to learning about the benefits of working with an insurance broker vs. an insurance agent.

What is an Insurance Broker?

An insurance broker represents a consumer, instead of acting as the intermediary for an insurance company. Brokers earn a commission if you select a policy that they recommend. You sit down with an insurance broker to discuss your health insurance needs, and then the broker compares policies from different insurers to find the policy that matches your health insurance criteria. The broker does not consummate the purchase of health insurance. You have to finalize your deal with a representative from the insurance company.

What is an Insurance Agent?

Insurance companies work with agents to sell insurance products. Agents actively sell policies, with captive agents working for just one insurer and independent agents representing two or more insurance companies. Insurance agents sell health insurance policies that are promoted by insurers, which means agents work for the best interests of insurance companies, not the best interests of consumers.

What Are the Similarities between Insurance Brokers and Agents?

Both insurance agents and brokers must obtain licenses to offer insurance policies. States mandate the requirements for acquiring a license, but typically the requirements include pre-licensing classes that end with the completion of a written examination. Brokers and agents obtain specialized licenses to offer certain types of insurance, such as auto, life, and health insurance.

What Are the Differences between Insurance Brokers and Agents?

The main differences between insurance agents and brokers are the party they represent and how they develop policies. Compensation between the two insurance professionals varies as well.

Representing the Insurer vs. Representing the Consumer

Insurance agents represent one or more insurance companies, and they have extensive knowledge as to the type of policies offered by insurers. They receive support from insurers that includes office space and customer referrals.

Insurance brokers represent consumers, which means they work to find policies that match the criteria established by their clients. They help their clients complete health insurance applications, as well as compare quotes for the different policies that match a client’s budget.

Initiating a Policy

Insurance agents have the power to initiate insurance policies. On the other hand, brokers must receive an insurance binder that is signed by an underwriter representing the insurance company. Because an agent can initiate policies, the time lag between agreeing to a policy and signing off on a policy is shorter than the time it takes an insurance broker to consummate the sale of a health insurance policy.

Insurance Broker vs. Agent: Advantage Broker

The longer time it takes a broker to consummate the sale of a health insurance policy is a drawback, especially for consumers that need to have a policy in place quickly. However, several other factors lead to one conclusion.

Insurance brokers provide more benefits for consumers.

Your Interest Are Priority Number One

Insurance brokers have a fiduciary obligation to you, the buyer of a health insurance policy. Contrary to the broker model, insurance agents represent the best interests of insurance companies. Your health and financial interests come first when you work with an insurance broker.

Save Time

Yes, the policy initiation process takes longer when your work with a broker. Nonetheless, you save time because a broker brings the research information to you, instead of you having to conduct research on your own. Insurance brokers take the guesswork out of an often complicated buying process.

You Get a Competitive Rate

Competitive pricing is perhaps the greatest benefit of working with an insurance broker. Since an agent works for an insurer, your budget means little to nothing when finalizing a deal. Contrary to an agent’s motives, an insurance broker works to find you the most affordable health insurance policy that mitigates the health risks that you want to be mitigated.

One more benefit of working with an insurance broker: You establish a long-term professional relationship. This means that after signing off on a health insurance policy, you can reach out to the same insurance broker in a year or two to discuss purchasing a life insurance policy.

Learn more in 6 Benefits of Using a Health Insurance Broker.