Who pays for brokers' services?

In practice, it all comes to a simple math within insurance policy. Here is a simple explanation to dispel your uncertainty. The salary of insurance advisors is based on commissions they obtain from insurance company when policy comes into effect. In other words, brokers or agents are paid by insurance company, so that, customers do not have to worry about any kind of fees to be paid for their services. As a customer, your critical task is to find an efficient person who will put all in an effort to help you find a good deal at a low figure.

As a matter of fact, all kinds of insurance products have distribution costs included into a total price of the policy. As a consequence, insurance commissions cannot be negotiable. If you are aimed to diminish the price of your policy, haggling won't be applicable in this case. Commissions appear to be an essential part of the policy and are not to be altered.

Thus, life insurance commissions depend on the premium of the policy. That is to say, high premiums will require same high commissions. The Whole and Universal policies compared to a Term type have higher initial premiums. But, you make one-off purchase and don't have to worry about its renewal when it expires. Whereas, in the case of Term life insurance you will have to buy several of them and cover distribution costs same number of times. Not only you pay commissions as you buy a new Term insurance policy every single time, you also pay higher premium because you become older. Also, if your health seriously deteriorates with the time it will be reflected on your premiums accordingly.

To sum up, every person to be insured should have proper understanding of how much Life insurance they need and how different types of life insurance work.