Should You Use A Captive Or Independent Insurance Agent?

OpinionI started my career selling Life insurance but do not like trying to convince people that one type of insurance will meet all their financial planning needs.  It will not!

As I read the proposed rules by the Department of Health and Human Services for Navigators I was initially offended at the implication that all insurance agents are dishonest because they work in an industry that pays commissions rather than salaries.  I disagree with that implication but I understand how people, press and politicians can make that generalization.

As my career evolved and I learned to think for myself, I have come to the conclusion that rather than buy Life insurance because it was sold to you by a slick insurance sales-person, you should take some time to do your own investigation.  You should buy only the insurance that you need.

In recent years, the politicians and press have done their best to convince Americans that all insurance agents are crooks.  According to them, since we are paid by commissions, all of us are selfish jerks.

Unfortunately, I have to admit that there are some “unprofessional” insurance agents in my industry.  Most of them do not last for long.  I have yet to meet an insurance agent, with more than 4 years experience, who was anything less than professional.

Insurance agents who have been around that long have learned that nothing good comes from “selling” policies.  They have learned that their job is to help people buy insurance.  They have learned that they will earn a better income if they stick to helping people get the insurance they want rather than trying to manipulate clients.

After 17 years of working as a “captive” insurance agent, in 2004 I took the plunge.  I became an independent insurance agent.  I have not regretted my decision for even a second.

In this post I want to share with you the difference between a “captive” and an “independent” insurance agent as I see them.  Both systems have good and bad qualities.  It is up to you to decide which type of insurance agent you want to use.


A captive insurance agent works directly for a single insurance company.  As a rule, they are sales-people for their primary insurance company.

The contract they have with their primary insurance company may, or may not, permit them to sell products from select insurance companies when those policies do not directly compete with the products of the primary insurance company.

While most captive agents are still paid commissions, their insurance companies provide several benefits in return for their restrictions.  A captive agent often get a good group insurance package, supplies, office space and training.  Some companies even pay new agents a guaranteed salary or draw against future commissions when they first start.

In return for these perks, captive agents are only able to sell the plans that are provided by their parent insurance company.  Some, but not all captive agents are allowed to find a different insurance plan to meet your needs if you ask for it and it is not in direct competition with the insurance company they work for.


Many independents started their careers as captive agents.  We spent time learning the insurance industry before we went out on our own.  We had to convince ourselves, and our spouse’s, that we had enough experience and training to make it on our own.

Life as an independent insurance agent is different.   As an independent agent, I do not have the same perks as my captive colleagues.  I have to pay for my health and life insurance, office over-head and training.  I no longer have a sales-manager to keep me focused.

However, I am not restricted on what I can do for my clients.  If one client wants Life insurance, another one wants Health insurance and yet another one wants Long Term Care, I am free to help all them get the insurance they want.

Also, I am no longer subject to sales quotas.  As a captive agent I was constantly pressured to sell specific policy types.  In order to do that, I was taught how to emphasize the positives of a policy and ignore the negatives.

(Now that I think about it, I understand why the Obama Administration does not want insurance agents involved in the Exchanges.  We were trained to do the same thing that politicians do.)

As an independent insurance agent I do not have to sell the policies of any insurance company who tries to impose a quota on me.  One very well known insurance company tried that B.S. on me a little over a year ago.  I have not voluntarily sold a policy for them since.


Whether the insurance agent you use is a captive or independent agent, you are still not off the hook.  Both captive and independent agencies have professional and unprofessional agents.

The professional agent is going to take time to listen to what you want and make recommendations based on your needs and desires that will allow you to meet your financial goals.

The unprofessional agent will monopolize your conversation.  He will try to impress you with his vast knowledge and sell you something that will “work just as well as… but not cost as much.”

If you do your homework before you even call an insurance agency, you will protect yourself.  Know what you want to accomplish with your insurance dollars and what insurance company you want to use.

If you know ahead of time what you want to do, it will make very little difference what type of insurance agency you use.  Both captive and independent agents can help you with the required paper-work if you know in advance what you want.

What scares me is that in October every American under the age of 65 who is not exempt, must enroll in one of 5 different Essential Benefit Plans.  The details about those plans will not be available until August, at the earliest.  The Navigators who are being hired to explain the policies have no experience with insurance, by definition.  I am afraid that millions of Americans are going to base their decisions purely on price since Navigators are not trained, nor qualified to discuss other insurance options.



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