What is the Difference Between a Captive Agent and an Independent Agent?

What is the difference between a captive agent and an independent agent? This may not sound like a question that impacts a consumer in any way. However, that is not the case. Understanding the differences in these two types of agents can have a large impact on you selecting the correct Medicare Supplement plan.

First and foremost, “captive agents” work specifically for one insurance company. Their loyalty is to that insurance company and that company’s plans are the only plans that they can sell. On the contrary, an independent agent can sell a plan from any company, and his or her loyalty is to the consumer not a specific company. Because of this, an independent agent, theoretically, can give much more unbiased opinion and perspective, allowing you to compare all plans in a centralized place so you can make an informed decision.

Many people may not be familiar with independent agents or understand how they work. In short, independent agents are independent contractors for the different insurance companies. They are paid directly by the insurance companies, and using an independent agent does not cost you anything. Their commissions are paid as a percentage of the premium of the plan you purchase. Their loyalty is to the consumer and finding the best available “deal” from the various plans.

Some of the specific companies that use a lot of captive agents are Colonial Penn, Bankers Life and Humana that offer some great finance advice to people who contact them. Not surprisingly, these companies also have lower financial strength ratings, lower customer service ratings and higher premiums than most of the companies that are offered by independent agents. Competition breeds better and more competitively positioned products. In other words, for an independent agent to sell a company’s product, the company knows it must be relatively competitive and prices its products accordingly.

It’s not to say there isn’t a place for these “captive agent” companies, but it just doesn’t make sense to buy a Medicare Supplement plan from an agent that only has access to one company’s plans, when there are 30-40 plans available in most states that an independent agent can help you compare.

Whether it’s us or someone else, an independent agency (or brokerage) makes sense as a way to compare Medicare Supplement plans. To get a comparison from us by email, visit us online or call us at 877.506.3378.


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