The Type of Life Insurance CompanyYou Should Consider
There is more than one type of life insurance provider, and it’s the internal structure and operating personnel which make them different.
One type of company is called a mutual life insurance company, and the other is a stock held life insurance company.
A mutual company is one who is owned entirely by those who do business with the company.
The only way to own a piece of the company is to own their product, and they answer directly to their customers. Typically, dividends, or excess gains and funds acquired throughout the year, are distributed back to consumers.
These dividends are never guaranteed, but some companies have been paying them out for over 160 years in a row. The type of agent you’ll deal with is more likely to be an in-house, or captive, agent, so you may need to find a local agent or call the company directly to make a purchase.
A stock held company is one who has gone public, and it’s not owned by its policy owners.
They are traded on a stock exchange, like the New York Stock Exchange (NYSE) available for anyone to become a part owner. In other words, profits go back towards those who own stocks first, not those who own a life insurance policy, like a dividend paying company might.
Types of Agents You Have Access To
As briefly alluded to above, there are also two types of agents: captive life insurance agents and independent life insurance agents.
By choosing a certain type of agent you prefer, it could limit what life insurance companies you have access to because of what affiliations (called appointments) your agent has.
Captive agents are those who are employed directly by the company for whom they offer insurance. They typically do not sell for any other life insurance companies, although certain types of contracts now allow it.
However, first and foremost, they must continue to sell their company’s insurance in order to keep their active status. These will also be local agents more often than not, operating in small towns to big cities all across America.
Independent agents are those who are not employed directly with any one company, but rather as many of the life insurance companies as they need. If you’ve heard of the coined term broker in regards to life insurance agents, they are one in the same.
By offering many companies at once, they are able to ‘shop your rate’ quickly and efficiently, and knowledgeable independent agents are well versed in different products and their underwriting guidelines.
If you want access to a mutual life insurance provider’s policy, however, they may not be
able to assist you.