Buying Life Insurance From An Independent Agent vs. Captive Agent


When potential clients decide it’s time for them to purchase a life insurance policy, it’s more than likely they don’t know where to start. At this point, they should decide if they want to deal with a captive agent or an independent agent.

Both have their ups and downs, but ultimately the client needs to choose one.

An independent agent is someone who has connections to multiple insurance companies, whereas a captive agent is only connected to one insurance company, therefore he or she will only sell products from that specific company.

We asked one of our good followers, Jerome, on Twitter what he thought about the situation:

Personally, at LSM Insurance, we think an independent agent might be the better choice.

You may be curious as to why we think that. Well, here are the top five reasons why we suggest independent agents may be what you’re looking for.

1. Experience And Knowledge

When you’re looking to make a good purchase, you want to make sure that the person who is doing the selling is knowledgeable about the product.

You want to hear all the perks and advantages that the product has to offer. And you also want to make sure that the pros outweigh the cons. The same goes for life insurance purchases.

Life insurance is an important part of life, because it is a back-up plan to help your family if anything were to happen to you.

Therefore, it’s clear that you would want an agent that is knowledgeable about the products each insurance companies out there have to offer.

Front line Insurance says, “An independent agent evaluates the financial stability of each company he or she works with, providing you with an added level of confidence.”

This is great for those who don’t know where to start or don’t know how to deal with companies directly.

It’s often wiser to go through an independent agent who has years of experiences dealing with big name insurance companies.

2. Will Offer You The Best Price In The Market

Independent agents will go out of their way (it’s their job) to shop for the best prices according to your budget.

Insurance Advice states, “Independent insurance agents drop and pick up different insurance carriers all the time, and can save you some time by allowing you to get many quotes from different companies.”

It’s very important that, as a potential client, you get many quotes as possible. By getting a lot of quotes from different companies, you will be able to explore your options and it will allow you to determine which quote best fits your current budget.

When dealing with a captive agent, he or she will sell products of one company that they work for. Optimum insurance says, “An agent does business with one company, so they are only able to offer you what their company has available. Insurance products can vary considerably from one insurance company to the next.”

Therefore, he or she will have information that is limited to that one specific provider. If you are looking to explore your option, they may refer you to an independent agent instead.

If you already have a company in mind that you want to buy life insurance from, then a captive agent might be a good idea.

They will direct you with the products that the company has to offer. However, if you don’t know which company will be suitable for you, we suggest finding an independent agent.

3. They Will Do The Shopping For You

This point is a big plus. You don’t have to do the work. Your independent agent will do it for you.

All you have to do is provide them with all the necessary information and the needs that you may have. They will take care of the rest.

Lone Star Insurance Agency states, “If an existing client’s rates go up, the independent agent is at will to ‘re-shop’ the clients needs in order to present the client several options again. An independent agent allows the consumer an opportunity to maintain the relationship with an agent they know and trust even if their particular insurance company takes actions that adversely affect the customer.”

Assuming that you, as a client, don’t know much or anything about life insurance, it’s best to leave it up to the experts to find the right plan for you. It’s also cheaper because you don’t have to pay the independent agent anything!

4. Deals With Various Companies

Dealing with different companies gives independent agents the ability to pick and choose the right policies for their clients. Ideally, you want your agent to have contact with different insurance companies.

Commercial Insurance states, “Along with providing a variety of insurance carriers, independent insurance agencies are thought to offer their clients greater customization of policies, the potential for substantial savings in premiums from comparing those policies and are seen as representing you, the client and not an individual insurance provider.”

Who wouldn’t want to save on their premium? It’s one of the best advantages of having an independent agent.

They know the industry more than anyone else and therefore know how to negotiate and make deals with the companies to make premiums comfortably affordable for you.

5. Offers Long Lasting Relationship With Client(s)

It’s important to have long-lasting relationship with your agent because after all, they were the one who helped you get your life insurance.

And it’s always good to keep in touch since there will be cases when you need to ask questions regarding your policy down the road.

They’re committed to lifelong learning, ensuring that they are informed on the latest changes and adjustments to insurance policies and legislation to give you the best options available when you purchase your next home, auto or life insurance policy.

Tamara Humphries, insurance expert from LSM insurance notes, “Many insurance companies have also introduced a direct arm as way of selling life insurance to the public via salaried employees. In a sense, direct distribution networks are very similar to captive agents as they are only selling products from one carrier. At first glance, it seems like a good deal, you are bypassing all those nasty commissions. But the reality is commissions are paid directly to the broker by the insurance company and are built into the premium as a distribution cost. Direct distribution costs can be high for insurance companies as they must market themselves and must pay their employees salaries regardless of the number of policies sold. These costs are passed on to the consumer. The options available to the consumer are also more limited via direct carriers.”

And there you have it, some of the reasons why we believe independent agents have more to offer in regards to sticking with your budget, your needs, and your other circumstances.

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  • Tom
    September 17, 2014 at 2:41 pm

    I think your point about having a long lasting relationship with your agent is important. I’m looking for a good agent who is reliable and is out for my best interest. Do you know any ways to spot out someone who is NOT looking out for my best interest, as in they just want to get paid.

    • LSM Insurance
      September 17, 2014 at 2:47 pm

      Thanks Tom. You could ask for testimonials from past clients or see if there are any outstanding complaints or actions against the agent or broker

  • Tommy
    September 9, 2014 at 2:11 pm

    I’m pretty busy throughout the week since I own my own business. Will an agent be able to come to my place to consult life insurance or do I have go to the company directly for assistance? And how will I know the agent is showing me the best rates as possible?

    • LSM Insurance
      September 9, 2014 at 4:24 pm

      Thanks for question. We are happy to help and can see you at your home or business. We work with over 15 carriers so we’ll make sure you get the best deal possible.

  • Daniel K
    August 30, 2014 at 4:45 pm

    Does Sun Life use a captive agent. I want to make sure I’m getting a good deal on my Term 20 policy. I was rated for diabetes and I’m not happy with the explanation they gave me.

    • LSM Insurance
      August 30, 2014 at 5:04 pm

      Hi Daniel, Sun Life uses both captive agents and independent brokers. You could try submitting a preliminary inquiry with another carrier this is an inquiry where your personal details are not given. If you do end up submitting an application with another company make sure to do a replacement form and make sure the new plan is inforce before cancelling the old policy.