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How To Find A Qualified Life Insurance Advisor – Forbes Advisor

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All life insurance agents are not the same. Life insurance policies can be complex, so depending on your needs, you need an insurance agent who is qualified to help you find the right policy. Your agent should also be committed to providing ongoing service.

There are two main types of insurance agents:

  • Captive agents. These agents primarily represent one specific insurance company.
  • Independent agents. These agents represent multiple insurance companies.

This an important distinction, as captive insurance agents will generally recommend policies only from their primary insurance company. Captive insurance agents will in some instances offer policies from other companies—such as when the primary company does not offer the specific type of policy wanted or the client is not able to qualify for insurance.

Keep in mind that a life insurance agent is a paid representative of the insurance company. This means that the agent’s first duty is to the insurance company and not to you.

Tips for Finding a Good Life Insurance Agent

There are over 400,000 insurance sales agents in the U.S., according to the U.S. Bureau of Labor Statistics. Here are some tips on how for finding the right life insurance agent for you:

  • Referrals. Referrals to a life insurance agent can be helpful, depending on the source. Someone who is knowledgeable about insurance will make a more trustworthy referral than your uncle or neighbor. Professional advisors such as financial planners, estate planning attorneys and accountants can also provide quality referrals. However, you will still want to make your own assessment.
  • Experience. You want an agent who has been in the life insurance business for at least three to five years. If they have less experience they should have a relationship with an experienced agent who will be part of the process.
  • Expertise. Life insurance agents should maintain a baseline of product knowledge, competence and continuing education relevant to life insurance. If an agent sells you a life insurance policy that they don’t understand, you may end up with a completely unsuitable policy.
  • Licensing. Check with your state’s insurance department to be sure that the agent is properly licensed and in good standing. You can often check license status online, such as California’s license lookup page. Any person selling insurance must be licensed with the insurance department in the state where the policy is sold.
  • Complaints. When you check on licensing, you should also see if the agent has had any complaints filed with the insurance department, such as California’s enforcement actions search.
  • Internet search. You can do an internet search with the agents name + complaints, example: “Jane Doe complaints.” If you do find a complaint on the internet, be sure to check the source to determine credibility and if the complaint is reasonable.

How to Judge a Life Insurance Agent’s Credentials

The life insurance industry has many credentials and designations. The requirements to earn and maintain specific designations will vary significantly. Professional designations indicate a commitment to the profession and ethical business practices.

You can start out by asking the agent about their designation and how it is helpful and relevant to you.

There are basically two types of designations for insurance:

Professional Designations

These are designations that are earned through education and testing. They indicate that the agent is serious about professional development:

  • The benchmark professional designation for life insurance agents is the Chartered Life Underwriter (CLU).
  • Agents who are also financial planners may carry such credentials as Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), or Personal Financial Specialist (CPA–PFS).

There are other professional designations, however these are the most common.

Rogue Designations

These are designations that are available to anyone who pays for them. They can be earned through a short seminar or cursory online course. Insurance regulators have banned numerous designations, particularly those that are senior specific. In California, these designations include Certified Retirement Financial Advisor (CRFA), Certified Senior Specialist (CSS) and Elder Planning Counselor (EPC).
You can check with the credentialing organization to see if the agent is in good standing with their designation.

Questions to Ask to Vet a Life Insurance Agent

A great way to find any type of advisor is to ask them questions. It will help you learn more about them and give you a sense of whether you’ll be able to communicate well with them. Here are some questions to ask:

  • Do you represent more than one company? If the agent only represents one company, then they will not be able to offer you a range of life insurance quotes for different choices.
  • How do you handle medical issues? An agent should have a process for life insurance buyers who have medical conditions. They should review medical issues with an insurance company underwriter on an informal basis, before you even submit an application.
  • How do you select a product to recommend? While it’s beneficial to have a product with the lowest premium, the lowest premium is not always the best option.
  • How do you keep informed? Your agent should have a formal policy review process. This would include determining whether any changes are needed to your life insurance coverage, such as updating the beneficiary designation or changing the coverage amount.
  • Do you follow a specific code of ethics? Life insurance agents who have professional designations or are part of an agent association will have a code of ethics that they have pledged to follow. The largest life insurance agent association is the National Association of Insurance and Financial Advisors (NAIFA).

Red Flags with Life Insurance Agents

Most life insurance agents are professionals who want to help their clients. As with any profession, there are some insurance agents to avoid. Here are some red flags.

  • Dodging questions. The insurance agent does not directly answer questions. They provide partial responses or change the subject.
  • Lack of written documentation. Responses and proposals are mostly done orally, rather than in writing. It’s important to request that any offers and proposals are provided to you in writing.
  • Time pressure. You are not allowed time to consider a proposal.
  • Isolation. You are discouraged from having a third party present or discussing a proposal with a third party.
  • Limited choices. You are presented with only one or two choices. The insurance agent starts off by pushing a particular product, even before they’ve assessed your needs.

A qualified life insurance advisor will listen to you, assess your needs and help you find the right product. They will also be dedicated to providing you with excellent service so that your coverage continues to meet your needs.

Life insurance policies are for the long term, so it’s important that you have a good relationship with your life insurance agent.

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