Should You Consult An Insurance Agent or Insurance Counselor?

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I am dually licensed both as an agent and an Insurance Counselor.  I cannot, and will not, tell you what you should do.  All I can do is give you your options and let you go from there.

A couple of Saturdays ago I checked my email to find this question.  I find that it is a common question by people looking to get insurance.  I wanted to share it with all of the readers of TIB Tips.


“I … am confused as to whether I should hire one of these companies that take a fee… Please advise me.  Many thanks”


1.  Insurance Agent

A commission based insurance agent is fine if you already know what type of insurance you want and what company you want it from.  He will know what paper-work and underwriting requirements are necessary.  He will coordinate all the requirements requested by your underwriter.  They can vary, depending on the type of insurance you request.

It may help to remember what the insurance agent’s license allows him to do.  His job is to facilitate your purchase of insurance.  Any advice or counsel that he offers is supposed to be incidental to your desires.

If you use an insurance agent, make certain you remain in control of the conversation.  Do not allow him to start talking about anything other than what you ask.

Medicare requires all insurance agents to obtain and retain a “Scope of Appointment”  before any conversation about Medicare Advantage or Medicare D.  The Scope of Appointment is an agenda of products that are permitted to be discussed during that session.

If you want to learn more about insurance products, other than what is mentioned on the Scope of Appointment, you will have to reschedule your appointment for at least 48 hours in the future.  This gives you time to cool off from whatever excitement your insurance agent caused.

The Scope of Appointment form is not a requirement when an insurance agent is speaking with people about non-Medicare products.  He is free to discuss any insurance product for which he is licensed.

To keep your insurance agent in check, know before you visit with the insurance agent what plan you want and from what company you want it.  If you already know that, you restrict the insurance agent to only the clerical part of his job.

He will not have the chance to up-sell you to something that will pay them more money.

2.  Fee Based Insurance Counselor/Adviser/Consultant

A fee based Insurance Counselor is what you need if you are not certain what type of insurance you need.  Since you pay him directly, he is not allowed to get a commission or kick-back.  That way, you can be certain that any advice or counsel you get from him is unbiased.

Be advised that a fee based Insurance Counselor will most likely want to review all of your insurance portfolio.  He is conditioned to review how your entire insurance portfolio works, identify areas that are not protected and work with you to position your insurance plans to meet your financial needs.

You are paying him to review your entire insurance portfolio and not just an individual policy in most cases.

Counselors and agents are not the same thing.  If you hire an Insurance Counselor, you will still need to use an insurance agent.  The premium for the insurance will be exactly the same as if you did not retain an Insurance Counselor.  You will not get a break on premiums by using a fee based Insurance Counselor.  The insurance agent’s commission is built into the premium and an Insurance Counselor cannot remove it.

The benefit of an Insurance Counselor is not going to be in the premium.  It will be in the nature of the advice you get.  The fee based Insurance Counselor will have no financial reason to give you bogus or biased advice.

The Insurance Agent is paid by the insurance company.  He may be tempted to advise you to use the plan that will pay them the most.

3.  Use A Second Insurance Agent

There is a 3rd option.  It is not exactly ethical.  Unfortunately it is legal.  It happens every day.

You can get your advice from one insurance agent but place your business through another insurance agent.

Keep in mind; if you elect to do this, the first insurance agent is not paid a salary.  He works on commission.  By doing this you are having him do the hardest part of the insurance agent’s job but giving the compensation to someone else.  I do not recommend this option but it is legal.  However, if you use it, you give up the moral high ground.

Since you have stolen the work of one insurance agent to enrich another, you are just as guilty of being slimy and deceitful as the stereotypical insurance agent that people like to make jokes about.

Yes, there are some insurance agents who are less than honest.  There are also some who have worked hard to make certain they know what their products can and cannot do.  They have studied hard to make certain that they can give you the best insurance advice possible.  It is just wrong to take their counsel and give the commission to someone who has not earned it.

Tim Barnes, CLU is dually licensed both as an insurance agent and Insurance Counselor in Texas.  He acts only as an insurance agent in other states.  You can read his bio and see his credentials on the LEARN ABOUT TIB TIPS page.

If you do not already have an insurance agent that you trust, we would like to apply for the job.  Use the ASK TIB tab to contact us or call us at (832) 767-8059.

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2 thoughts on “Should You Consult An Insurance Agent or Insurance Counselor?

  1. I see nothing on the TDI website that 20 years experience is required for an agent to receive and Insurance Counselor’s license in the State of Texas. Its most misleading and should be removed from the website.

    A Texas Insurance licensed agent……….

  2. The last time I looked at the requirements for an Insurance Counselor was when I got my Insurance Counselor’s license 4 years ago. At that time 20 years of experience was required. TDI updated their site in October of 2011. You are right I cannot find the experience requirement any longer on the site. Apparently, it has been removed. Still, the premise that an insurance agent is not allowed to charge for advice without an Insurance Counselors’s license is still there. I will rewrite the article and remove any reference to experience unless I find that the Texas Insurance Code does have an experience requirement. My issue is with health insurance companies telling agents they must collect fees from their clients to make up for the slashes in income. That is not good advice to an insurance agent who is not licensed as an Insurance Counselor unless the law is changed.

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