Only contribution insurance adviser sounds like a good idea. Since we can never know if an insurance agent / broker really works in a client's interest or secretly anticipates a commission check, the idea of an independent second opinion that is not motivated by a potential payday seems quite good.
the use of only fee insurance advisers is very few and very far from. Furthermore, the number of insurance consultants without fee pales in comparison with the number of insurance agents / brokers. So why does this seemingly good idea fail to be a widespread and successful industry?
What is a Fee Insurance Advisor? start with a definition, not only in practical terms but also in terms of legal review, and one quickly begins to discover why this may be an idea doomed to failure. A fee insurance advisor is someone who charges a fee to an insurance advisor. This advice may take the form of offering an opinion on the relative fairness of a particular premium paid for an insurance, on the adequacy of a particular type of insurance used for a specific purpose, the need for insurance of any kind and on the basic construction of a life insurance design (we do that with full life insurance and universal life insurance for free).
It seems reasonable and understandable, but there is a legal nuance to charging an insurance advice fee that quickly makes the prospect of being involved in this business-inducing headache.
Not the same as financial or investment advice
A huge misconception in the financial sector is incorrect assumption that someone who holds a license to charge a fee for financial advice or investment advice is thus licensed and qualified to provide insurance advice for a fee. There are many states that do not agree and many of these states will impose severe sanctions on those who ignore this fact. This also helps explain why many advisors with colored in-the-wool fees are pretty quiet about the insurance topic.
There are currently 19 states that have specific licenses for people who want to charge an insurance advice fee, but even among these 19 there is a lot of variation in what holding the special license means.
For example, in my home state of Vermont, having an insurance consultant license one to have an agent / broker license and also prevent one from hiring, being employed by, or partnering with someone who has an agent / broker license. Vermont law also expressly prohibits any compensation to an insurance consultant for conditional sale of insurance made through the individual's recommendations. Consulting licenses do not necessarily restrict one from holding an agent or broker license (New York State still recognizes a difference between agent and broker licenses), and New York State has decided that agents and brokers may charge fees to their clients if they want to provide the fee structure. be revealed and approved before the work is carried out for which the fee will be charged.
Adding to the confusion is California's newly added license insurance analysts who in a way make them the 20th state to have a separate license for individuals who want to charge a fee (applies only to people who want to charge a fee and live in State of California).
For after 30 states that do not have a specific license to charge a fee for consulting, most will allow someone who has an agent / broker license to charge a fee for various work they do if they so wish. .
The Numbers, They Do Not Do It Scream Success
The toll-free insurance industry started mainly in the early 1980s and it has been a relatively obscure industry ever since. This is at least one of the fee's only insurance adviser's world advocates, Glen Daily.
To make a comparison of the number of people advising on a fee versus sales insurance for a commission, says the New York Department of Labor (taken from NY because they have the most available and accurate data) states that there are currently 370 licensed insurance consultants (this is what New York calls the license for individuals trying to focus on charging a fee rather than selling insurance products for a commission) in New York State compared to 143,083 lives – / accident insurance agents and 55,808 real estate / accident agents.
Our thoughts on non-contributory insurance advisers  Our official position regarding non-contributory insurance advisers is that we have no position on them. We have had customers use them before and I have seen them in action. I can not say that I was ever impressed by most of what they brought to the table, but I note that because we are already trying to optimize the benefits for our customers, these meetings served as a validation when the advisor blessed our design / plan – We never have encountered a fee advisor who did not.
There have been a handful of occasions where advisers have only made some awkward recommendations for situations where we were not originally involved. It was especially an event where a fee adviser constantly recommended a certain life insurance company for an entire life purchase even though the carrier performed quite poorly both in terms of projected and guaranteed values against some other carriers.
I see a value, but knowing that many insurance agents do not always work in the most honest way. But there is a potential pitfall for fee advisors when it comes to knowledge of the industry and the product. As they are generally not appointed to an insurance company and do not have easy access to the latest information on insurance products, their approach to insurance design and evaluation may be a bit dated. Most states also do not require continuing education for insurance consultants (those who are specifically licensed to charge a fee), so staying up to date is largely updated by personal desire.
In the end, do not personally discourage the use of only fee insurance advisors. What you as an individual need to decide is whether the average $ 1,500 to $ 2,000 you pay for their advice is worth the time saved to research the subject yourself.