Life Insurance

Loyalty Is Overrated… When It Comes to Your Insurance Agent

Jeff Cuellar



It’s not personal. It’s strictly business.” This famous line from the Godfather perfectly explains the approach you should be taking when dumping your insurance agent to buy insurance direct – if you already know what coverage you want.

I make that distinction because let’s face it, if you know absolutely nothing about insurance (auto, health, life, etc.) and you buy direct, chances are you’ll either end up paying too much for coverage you don’t need or too little for coverage that doesn’t provide enough protection.

But if you’ve already had the same insurance agent for a few years now, think about this – do you know exactly what you need in an insurance policy by now?

If you do, then keep on reading. If you don’t, keep on reading – because the only thing separating you from saving money is knowledge.


Loyalty Is Costly When Buying Insurance

Ever get the feeling you’ve been cheated?”  Johnny Rotten of the Sex Pistols posed this question to his loyal fans after playing a terrible final concert. While not related directly to insurance, this example shows how customers expect to get their money’s worth for their loyalty, regardless of what they’re buying.

Unfortunately, loyalty doesn’t automatically mean you’re going to be rewarded for it in the form of lower prices. In fact, when it comes to insurance, chances are you’ll probably see an increase in your premiums over time. In fact, if you should take a few minutes after reading this article to see how much your insurance premiums have risen over the last few years.

If it has risen over the years, you might just be paying for more of a “friend” than an agent, and it’s because of two major factors:

  • Commission Markup: Your insurance agent might not be a bad guy, but when you go out to meet face-to-face with him/her over a “free” cup of coffee or lunch – it’s not really free, you’re paying with your premiums, which include a 20% (or more) markup added in for personalized service that you may not need if you’re knowledgeable about insurance.
  • Your Agent Is Also Loyal to an Insurer: Most insurance agents only offer policy options from one insurer, claiming it’s the “best.” The reality is that these agents don’t really know what policy is the best one because their job is to push only insurance products from one insurer – which might happen to be the most expensive insurer out there, (but your agent might not tell you that).

If you’ve seen your premiums rise substantially over the years, it’s a very good indication that you’re only paying for a “friend.”  And the only difference between your insurance agent and Johnny Rotten is that he actually told his loyal customers that they were overpaying for rubbish – your agent didn’t.


Knowledge Makes Insurance Less Costly

“An investment in knowledge pays the best interest.” Ben Franklin hits the nail right on the head. If you’ve had an insurance agent for years, by now you should have learned a lot about not only about insurance (coverage, cost, etc.), but what your coverage needs for each should be.

I know you’re so used to having your agent do everything, but take a minute and think about this question – if you didn’t have your current agent, could you tell another agent exactly what you want in an insurance policy?

If you can tell another agent what you want in an insurance policy, you know enough about your needs to buy insurance direct.

And if you don’t know anything about insurance, buying insurance direct, you can get off to a good start by reading our articles on the big 3: Life Insurance, Health Insurance, and Car Insurance. But if you want to spend an extra 20% or more on your insurance products, you can hire an agent – just make sure you get your money’s worth by asking questions about your policy and learning about your coverage needs.

Once you’ve reached the point where you’re knowledgeable enough about insurance to know what you want – then you can really start saving money by buying insurance direct online from an insurance comparison site that’ll give you the best policy to fit both your needs and budget.

Final Note:  If you’re looking for a place that makes it easier for you to compare and choose insurance policies from the big 3 (life, health, and car), then head over to MoneySmart to find the right policy, hassle-free!


Is loyalty more important to you than saving 20% or more on your insurance policies? Share your experience on Facebook! And to find even more useful information on everything personal finance, visit MoneySmart today!

Image Credits:
Kansas Sebastian

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.