Captive vs. Independent… What is the difference?


Posted on 25th March 2014 by Rita in Life Insurance |Retirement and Estate Planning

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captive agent vs independent agent

Many of us consult with an insurance representative for our insurance needs, and for good reason. Insurance representatives (agents) help us understand the complex world of insurance and help us get the best deal and/or the correct insurance coverage for our needs.

Which one should you speak with about your insurance and financial needs? There are big differences between these two types insurance representatives. Choosing the right agent for yourself is an important decision. Lets look at the differences between these two types of agents.

Captive Agent: Is an insurance representative who works exclusively for one insurance company (carrier). They offer only that one companies products, services, and coverages. Captive agents have an in-depth knowledge of insurance products for the insurance company they are employed by and are may be able to offer optimized product packages that save you time and money. Unfortunately, this also means the agent is limited to one company’s insurance products, guidelines and pricing structure. Therefore, they may not be able to assist a client who does not need or qualify for that company’s products.

More often than not a captive agent is paid by the insurance company either by salary or a combination of salary and commissions. The Insurance Company may provide the captive agent with office space and offer employee benefits. The employing insurance company may require their captive agents to meet sales quotas on a lousy product or be told what products they can sell to meet a product quota.

There are many well known and respected insurance carriers who employ captive agents. A few examples are: Allstate, State Farm, Nation Wide and Farmers.

Independent Agent/Broker: This type of insurance representative offers a wide variety of products from many different companies. Which in turn may give you more choices and savings because multiple options can be reviewed to find the right coverage and rates to fit your needs. An independent insurance representative is not employed by the insurance provider(s) (carriers). In most cases they are paid a commission on the policy/product sold to their clients.

Independent agents/brokers are generally viewed as representing you, the client, not an individual insurance carrier. Independent agents are free to look for what is the best product for their client, without restrictions from a captive company telling them what they can or cannot sell.

On the flip side of this – not all independent agents will be your “One Stop Shopping” for insurance needs. In some cases a captive agent will have better pricing and coverage depending on the risk involved in your situation and insurance needs. They may NOT be able to bundle your life, auto, home, boat and business insurance into one. Note: this is not always the case and some independent agents can do all this for you.

Some Independent insurance representatives specialize and cater to only one type of risk or line of business. For example Final Expense insurance is their specialty but they may shy away from other lines of insurance such as health, auto or commercial.

What should you do? As you can see there are pro’s and con’s to both types of insurance representatives. Not all Independent insurance representatives will offer all lines of insurance to their clients. Everyone’s insurance needs are unique. There is no right or wrong answer to who is the best insurance representative to go with simply because everyone’s needs are not the same.

When shopping for your insurance needs, you should get quotes and information from both captive and independent agents to see what kind of pricing, terms and service you will be receiving.

Generally speaking a well rounded independent agent will have more choices for you to choose from. But that may not work for your insurance needs if you are looking for one specific type of coverage. You may need to seek out the insurance agent who specializes in the coverage you are looking for. Do your homework before you make a decision.

Have a question? Feel free to contact me. (contact info. below)

Established in 1965 in Spokane, WA. North Coast Life Insurance Company (NCL) is focused on providing solutions for you and those you love most. Receive genuine personal service and guidance on all your insurance needs.
Note: This blog is designed for general information purposes only. All information presented on this site should not be interpreted as legal advice and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information. For legal and tax advice contact your attorney or tax adviser.
Rita Sollie, Direct Insurance Representative with North Coast Life Insurance Company (NCL). Providing solutions for your financial needs. INSTANT Term-Life Quote:
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