Life Insurance Agents Key Terms

Understand the terms used for life insurance agents to learn about their role

The role of life insurance agent is to assist you with your life insurance planning, but there are many different kinds of life insurance agents and they can work in different ways. It is important to learn about common terms used to describe life insurance agents and their role in helping you with your insurance needs. Life insurance agents can work with whole or term life insurance or with annuities and securities, and some can help with personal and business financial planning. Life insurance agents can also vary in their education and licenses obtained. The following are some common key terms used for life insurance agents.

 

Underwriting

The process of underwriting insurance is to analyze information and determine the level of risk for insuring someone. This process can help to classify the amount of insurance a person qualifies for and the premium required to purchase the insurance. The life insurance agent's role in the process of underwriting insurance is to ensure that the information collected is accurate and reliable.
Try: Financial Web provides further information about underwriting and the role of the insurance agent in this process.

Annuities

Annuities are investment portfolios that are paid to the investor over a specified period of time. Annuities are sold by insurance companies and are often part of retirement planning as they provide tax deferral and a fixed payment schedule. Some life insurance agents are licensed to sell these along with life insurance products.
Try: Investment FAQ provides a detailed description of annuities as they relate to insurance, as well as the differences between fixed and variable annuities.

Broker

Some life insurance agents can also act as a broker. This means that the agent acts on your behalf to search out the insurance arena to find the best coverage for you. A broker does not work with just one insurer, rather with many insurers and insurance products.
Try: The Princeton Review discusses insurance agents and brokers.

Captive agent

A captive agent is an insurance agent who works on the behalf of one insurance company. The insurance products he or she sells are from only one company, versus independent agents who might represent a number of insurance companies.
Try: InsureMe explains captive agents vs. non-captive agents in detail.

Chartered Life Underwriter (CLU)

Chartered Life Underwriter is a professional designation for life insurance agents, indicating that they have special training and knowledge in life insurance planning, taxation and investments.
Try: For an example of training for CLU designation, visit AB Training Center.

Financial planning

Many life insurance agents also refer to themselves as financial planners. Financial planning is the process of setting long-term plans for achieving financial goals. It can include investment strategies as well as insurance plans in order to protect assets.
Try: The National Association of Insurance and Financial Advisors gives a detailed description about the role of insurance in financial planning.

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