Step 2: Decide how to buy
Through an agent or through the insurance company
Three ways to buy insurance
1) Directly from an insurance company
Insurance companies that advertise on TV tell you to call a toll-free number or visit a web site. (Examples: Progressive, Geico)
Pro: You can call any time and speak to a call center representative. This is a good choice if you are an expert in insurance, know exactly what you need, and know which insurance company offers the best policies for what you need.
Con: If you are not an expert or if you do not know which insurance company is best, be careful. When it is time to buy, the web site or call center representative will ask you to make many choices, but will not be able to help you decide which choices are best for you. If you buy insurance this way, when you have questions about your insurance policy you must visit the web site or call a toll-free number. Information about you will be in the company’s files, but, you will probably talk to a different call center representative every time you call. If you want to get good advice from someone who is dedicated to your family’s insurance needs, this is not a good choice for you.
2) Through an insurance company’s agent
Insurance companies train people to sell, and place them in sales offices. (Examples: State Farm, Allstate) These sales people are called “agents.”
Pro: An insurance company’s agent is a good choice if you know which insurance company offers the best policies for what you need. Good agents learn what individuals and families need. They understand what options their company offers. They know their company’s policies, pricing, and practices. They do what they can to match what their customers needs with what their company offers. They make themselves available to answer questions and help their customers make good decisions.
Con: An insurance company’s agent can sell only the insurance policies that his company sells. If you are not eligible for his company’s policies, he cannot help you. If you want to compare his company’s policies to other companies’ policies, he cannot help you. Even if the agent you work with is very knowledgeable, you cannot know if you are getting the best protection for the best price. All you can know is that it is the best that his company can offer you.
3) Through an independent insurance agent
An independent insurance agent sells insurance policies from several insurance companies, not just one company. (Example: Affordable Family Insurance)
Pro: Independent agents are screened and trained by the insurance companies whose policies they sell, just like the company’s own agents are. Like agents who work for insurance companies, good independent agents work to match individuals and families with insurance policies that meet their needs. What makes them different is that they have a wider range of options to choose from. An independent insurance agent is more likely to be able to find the best insurance policy for you because he sells policies for more than one insurance company. This means you can easily compare policies from different companies. It also means that you can change insurance companies without changing insurance agents.
Con: Because he works with several insurance companies, an independent agent has more information to keep track of than a company agent does. If you are considering working with an inexperienced independent agent, make sure that he has the support of a strong senior agent behind him. An independent agency is only as good as its most experienced agent.
