How Do I Choose the Best Insurance Consultant?

There are several factors to consider when choosing an insurance consultant. The first is your own expectations regarding the type of insurance you're considering. The second consideration is whether the agent will be able to give you unbiased advice. Another factor is whether the agent is licensed and up-to-date in terms of having completed continuing training. You may also wish to consult with a fee-only agent before purchasing insurance from another vendor.

As mentioned above, the first factor to consider in choosing the best insurance consultant is the type of insurance you need advice on. If you want to review the different insurance options available to you and your family, you’ll probably want a consultant with different qualifications than someone who would advise your company on the different casualty and liability insurance products to carry. A third type of consultant will be able to advise you on the best combination of insurance products to offer your employees.

The next consideration is to find an insurance consultant who’s going to be able to give you good, unbiased advice without trying to sell you a product he or she is going to earn a commission on. Licensed insurance agents who earn commissions on the insurance products they sell have a built-in conflict of interest. Although they’re required to place your interests above their own, the only way they get paid is to sell you something. The way around this is to deal with a fee-only consultant, someone who is paid directly by the client and not by an insurance company.

All states require insurance agents to be licensed, for which they must pass difficult examinations. Most states also require license holders to stay up-to-date in the field by undergoing continuing training. These requirements help an insurance consultant to keep up-to-date on developments in the industry, which is constantly changing. Senior-oriented products like Medicare supplements and long term care benefits are two especially volatile products, and you want to be certain that your insurance consultant is giving you advice based on the most current information available.

Some states also require that anyone who performs insurance consulting services for a fee be licensed. Find out the laws in your state and if an insurance consultant’s license is required, make certain that whoever you deal with holds such a license. In addition, you should choose an insurance consultant who is licensed or certified in the areas you need advice on. Insurance is a very broad field, and someone licensed and certified in property and casualty insurance for large businesses may not be a competent consultant in the area of individual retirement planning.

Fee-only consultants are nearly always also licensed insurance agents. When you hire them on a fee-only basis, however, they earn no commission from any company because you won’t be purchasing any insurance products from them. Thus, you pay them directly for their time.

You may feel it's an unnecessary expense to consult with a fee-only adviser. This may have been true at some point in the past, when you would have had to deal with a commissioned sales agent sooner or later. Many modern consumers, though, consult with fee-only insurance consultants and then purchase the recommended insurance products directly from the insurance companies over the Internet, without going through a sales agent. Using this approach, and comparison shopping, it's possible to save a significant amount from what you would otherwise have paid a commissioned salesperson. In most cases you can save more than the amount you paid the fee-only insurance consultant.