How Should I Choose a Life Insurance Agent?

Buying life insurance can be complicated and confusing. The key to buying the right amount and the right type of policy at a good rate is a good agent or broker. You should choose one who:

• Works with a reputable firm that has a strong financial rating

• Understands your financial situation, including your attitudes about risk, your income and estate tax brackets, your other financial assets and obligations, as well as your personal situation (age, marital status, dependents, etc.)

• Explains – in terms you can easily understand – issues, options and planned use(s) of life insurance in your financial program

• Provides you with a personalized written recommendation that

1. records the facts of your current financial and personal situation
2. describes the features of the life insurance policy and how it fits into your situation

• Does not pressure you into a decision, but works with you until you’re ready and convinced that you are doing what is best for you

• Is prepared to review with you periodically—perhaps every three years or so—whether the product continues to be suitable for your needs and circumstances

• Is licensed by your state insurance department

• Has not been disciplined by your state insurance department or any other professional body to which they might belong

Another indicator of expertise is professional designations. It takes several years to complete them, and they can help identify agents who are committed to their profession and held to a high standard of ethical conduct. Designations you might see include the following:

• CLU: Chartered Life Underwriter

• ChFC: Chartered Financial Consultant

• CFP: Certified Financial Planner

• RR: Registered Representative

• RP: Registered Principal
  
  

If you don’t have an agent or broker who fits this description, ask for a referral. Your lawyer, accountant, friends, relatives and business associates might be able to provide you with names of insurance agents or brokers with an excellent reputation.

You can also use this link: http://www.life-line.org/find_agent.html to connect with the nearly 70,000 members of the National Association of Insurance and Financial Advisors (NAIFA), who subscribe to the organization’s Code of Ethics (http://www.naifa.org/about/ethics.cfm).

The Compensation Issue
Most agents and brokers are paid by commission, but some work on a fee basis. Typically, the largest part of the compensation is paid at the time you purchase the policy, since most of the agent’s or broker’s work occurs at that time or just before it.

As with any professional service, you should understand how your agent or broker will be compensated and how that might affect the purchase recommendation.