Finding the right life insurance broker is one of the most important steps in purchasing life insurance. It can mean the difference between getting the perfect policy and buying something you’ll regret a few years down the road. For that reason, it’s especially vital to do your due diligence when looking for a life insurance broker. Here are some tips and things to look for when finding a life insurance broker.
Identifies your needs
As with any other major purchase, an understanding of your needs is necessary before the broker can recommend a product. A good life insurance broker will take the time to discover your needs.
For example, in the event of your death, do you want the mortgage paid off? How many years of income do you want to provide for your family? How many children do you have and how much education funds do you need to leave them? The answers to these questions are referred to as your risk management goals. Your broker should have a clear understanding of them before offering products for you.
There are many insurance policies and products out there, each serving a different purpose and demographic. A good broker should have a thorough understanding of the different products and be able to explain why the policy he/she has chosen is most suitable for you.
On the surface, while a single term insurance policy may be seem like a perfect fit, combining and layering different policies could be more appropriate and save you more money in the long term. This is where the prevalence of choice undoubtedly benefits the consumer.
A good broker should also shop around for the best rates. Some push the products of a single carrier. This may be because the broker wants to qualify for compensation on top of the commission, in the form of a bonus, conference programs or other incentives. Needless to say, more choice is better for you, and a broker who only sells a single company’s products may not be acting in your best interest.
The broker should disclose the forms of compensation he is eligible to receive, as well as the names of the companies he represents. Disclosure is usually done in writing on the first meeting, and benefits consumers by enhancing transparency.
It doesn’t take much qualification to sell life insurance in Canada. All one needs to do is take and pass the Life Licensing Qualification Program (LLQP), then complete the provincial licensing exam. Can you justifiably rely on the advice of someone who has taken only a few months to acquire their insurance license?
To err on the side of caution, you should look for brokers who have more than the bare minimum licensing requirements. Brokers who have designations such as the CFP, CHS and CLU show long term commitment to their profession and their clients. They are more qualified to give advice and have more experience in dealing with life insurance.
As with many things in life, word of mouth references are great even when it comes to selecting a reliable life insurance broker. If a family member or friend has had good experiences with a particular broker, it is a good idea to meet with that broker to see if he/she can help you with your life insurance needs too.
Finding a good life insurance broker seems like a tough task, especially if you’re following all the criteria listed above. But at the end of the day, you need to trust your broker to find the best policy for you, and due diligence should be done so that you don’t regret your purchase down the road.
Brian So, CFP, CHS, is an insurance broker and blogger at briansoinsurance.com. Follow him on Twitter for his musings on life insurance and why the Vancouver Canucks will win the Stanley Cup next season (Seriously).
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