A poster on a forum that I frequent, and to which I often contribute, asked about a particular on-line insurance quoting service. He was “reading about insurance and stuff on yahoo,” and got a “quick quote that seemed reasonable.” At that point, he stopped because he “was concerned about giving out too much information to a potential scam.” The poster wondered if anyone else at that forum had used this service.
I replied that if he was concerned about his privacy, he should try term4sale, an online quoting service only (they don’t sell insurance).
I further suggested that he “meet with a professional, independent agent, preferably one with 5-7 years experience. He can help you determine how much and what kind of coverage(s) you need, and is accountable to you if/when there's a problem.” And I concluded that “contrary to popular belief, DIY life insurance does not save you money.”
My friend and co-blogger Bob chimed in, suggesting that I “expand on that statement.”
And so I did:
The "promise" behind the on-line/DIY insurance websites (be they for life or health) is that one can purchase insurance at a lower rate than working with a professional agent.
This is, of course, nonsense.
Insurance carriers charge the same rates whether you use an agent or not. In fact, one might argue that the carrier-based sites are even more expensive, because they keep the commission, but do not provide the services of an agent.
Those sites which are agent-based (eg Matrix Direct, et al) charge the same rates, but offer the services of a "remote" agent, i.e. an anonymous and unaccountable "someone" at the other end of the 800 line.
So there is no premium differential (savings).
Further, using a local, professional agent buys you several key features:
First (and foremost) is accountability. That is, an agent will work with you, helping you determine the proper amounts and types of cover, and must answer to you if he screws up. In addition, he has a vested interest in making and keeping you happy: he counts on your goodwill for referrals and to maintain his reputation.
Second, an independent pro has access to not only the "regular" markets (just like the web-based services), but to impaired risk markets, as well. Don't believe me? Try getting a life quote for a diabetic from either a carrier- or agent-based website.
Third, an agent is there at the most important time in the whole process: delivering the death-claim check. Didn't think of that, right? Most of us don't want to, but of course it's the underlying raison d'etre (literally, "raisin to eat") of the whole process. Do you think that your widow(er) wants a "check in the mail?" If so, then maybe you have some other issues to consider.
The same is true with health insurance [ed: I’ll skip commenting on the Gecko, and leave that to the P&C pro’s]: there is no price difference difference between the on-line services (or buying directly from the carrier) and using an agent. And again, the agent is there for you.
I would argue that, in the case of health insurance, the agent provides an even greater benefit: as an advocate. After all, there’s really only one claim on a life insurance policy (and it’s pretty easily adjudicated). But there may be many claims on a given health plan, some of which may not be adjusted correctly. The independent agent works for you; that is, if/when there’s an issue, he’s on your side, and knows a bit more about how to get those issues resolved (after all, it’s his livelihood).
And, of course, health conditions make an even greater difference in health insurance than in the life field. A pro will know which carriers to use, and which ones to avoid.
LAGNIAPPE: The original poster had one more question: “Is it best just to open the yellow pages and just pick an independent agent?”
I replied that, while the Yellow Pages are one source, I don't consider them the "best." Referrals are usually the most helpful: ask friends and family who they use (and if they're happy with that choice), one’s auto/home agent will generally know who the good life guys are, and the local chapter of NAIFA (that's the professional association for life folks) may be of help, as well. Look for someone with at least 5 to 7 years’ experience in the field, and who has access to more than one carrier. Don't hesitate to interview more than one such: sometimes there's a "fit," and not.