When you’re ready to buy health insurance, you should start by getting quotes from multiple insurers so that you can find the best price. While you can compare rates online, it could make more sense to have an insurance agent show you your options.
What is an insurance broker?
A health insurance broker is someone who acts as an intermediary between you and an insurance company. They know your background and have insider knowledge about insurance, so they’re able to find the best policy best to suit your needs at a reasonable price. This can save you time and money, but you may need to pay them a fee. Even so, it can be less expensive.
When should you use an insurance broker?
Not everyone needs to work with an insurance agent. The way you purchase your health insurance is a personal matter. However, an insurance agent is usually best suited for those with complicated insurance needs.
How is an insurance broker paid?
Once you understand how a health insurance broker is paid, you’ll be able to differentiate between one who only cares about making money and one who wants to find you the right policy. There are two different ways in which an insurance agent can make money: a broker fee or commission. Sometimes they’ll charge both. This is something you’ll learn about upfront since most states require them to disclose such fees. Nevertheless, you should still ask them what fees you’ll need to pay besides your health insurance premiums.
Commissions
An insurer will give an insurance broker a commission when they place a client with that company. Just how much of a commission will vary depending on the policy and the company. Typically it’s a percentage of the premium, and it pays more to place someone with a new company than to renew their policy. This is important to understand because it can be a big motivator for an insurance agent to sell you more insurance than you need. Therefore you need to use caution when choosing someone to work with here.
Besides maintaining a good reputation, there’s also a financial reason why an insurance agent will want to find you a policy that you like and will want to maintain. When you cancel it or stop paying for it, during the first few years, they may have to repay the commission to the insurer because the policy price automatically includes the commission.
Since agents receive a commission from each of the companies they work with, they shouldn’t be advocating for one insurer over another. Nevertheless, you’ll find that some companies will offer bonuses or gifts for bringing them, clients. These larger incentives for bringing in more business can sway an agent to try to sway you towards that insurance policy. This is why you should always ask up front how the commission works.
Broker Fees
Besides earning commissions, some brokers will also charge their clients fees. These fees must be reasonable and disclosed to you upfront. It’s also possible that your state has restrictions regarding these fees (e.g., broker fees in Florida are capped at $35). Typically, these fees are non-refundable. This means that even if you cancel your policy, you won’t get your money back.
What are some of the other ways to buy health insurance?
There are ways in which you can avoid paying a broker fee. For instance, you can buy it directly through the insurance company, through a captive agent, with an independent agent, or by working with us at Gemini Insurance Company in Palm Harbor, FL. We’ll help you shop around for the best insurance at the best price. Give us a call today.
Picture Credit: VistaCreate