Health Insurance Agent - Guide For Consumers

So you’re shopping for health insurance? Confused? It’s bad enough that putting all the information together is a daunting task but your agent might not be looking out for your best interests!

What do you need to know as a consumer when you start dealing with an agent? A few things. First of all, you need to know the difference between a captive and independent agent.

Captive Agent:

These are agents who only represent one insurance company. There’s really no good news here. Your goal is to have someone show and compare all the available plans to find the ones that best fits your needs. A captive agent will never be able to accomplish this. So a simple question is: How many companies do you represent? If the answer is “one” then it’s time to move on and find an independent agent.

Independent Agent

These agents are able to sell through all the insurance companies available in your state. They can compare plans and rates and recommend the one’s they think best fit your needs. Again, the question is: “How many companies do you represent?” If the answer is “All of the carriers” then you have half the battle won.

Ok - I said half the battle is won. Now let’s deal with the other half:
Does your Agent have a Hidden Agenda?

Well it’s no secret that insurance agents operate on 100% commission. However, what you may not know is commissions vary between carriers and you’re also dealing with agents on advanced or as-earned commissions.

What does this have to do with you? Plenty! Say company A is paying the agents 20% commission and company B is paying 15%. Now say that company B has better plans and rates for you. You might never be shown the plans for company B!

Why? Easy - the agent only wants to push company A to make 20% commission, not 15%. It can get worse. Company A might “advance” the agent commissions and company B might pay as-earned. How does that affect you?

Say that agent would make $500 in commission. If they’re advanced that commission the agents receives all $500 up front. If it’s as-earned that $500 is spread out in monthly payments over 12 months - so that agent would get just over $40 per month.

So now you have a situation where company B is the best fit for you but not only do they pay the agent less in commission but the agent receives the commission in monthly installments. In many cases, you’ll never see the plans or rates for company B.

How can you solve this?

Easy - when you first contact your agent ask for the names of all the health insurance carriers in your state. There is no state that has less then 4 or 5 carriers - most have 5 to 8. After they name the carriers state that you’d like to see the plans and rates for all of those carriers. Yes, it will be daunting information but that’s not what you’re looking for.

What you’re looking for is hesitation. You’re looking for the agent to start talking you out of looking all all the plans and rates. Normally agents who are only going after the highest commission and advances will only want to show you one or two companies.

And there’s your warning sign. When the agent responds with something like “well showing you all the rates is too much information, isn’t necessary, etc….” then you know it’s time to find another agent.

Now…this all being said the best agents in the businesses are not going to go over the plans and rates of 8 different carriers. You’d be bored into a coma. However, they can and should justify their recommendation to you and you absolutely should demand for them to show you proof that you’re getting the best deal.

There’s nothing wrong with keeping your agent honest:

Agent: “I’m recommending the Gold Plus plan for $240 per month - that’s the best plan and rate you’ll get.”

You: “That’s fine, but can I at least see some competing rates from other companies?”

The rates of all carriers are online - it takes literally seconds for you to see quotes online through any carrier so it’s very easy for any agent to show you quotes for a few other carriers so you know you’re getting the best deal.