Life insurance companies may sell their insurance policies through full-time agents, brokerage markets, direct sales, or mass marketing.
Full-time life insurance agents are usually licensed by the state and by a particular insurer, and they cannot sell life insurance for other insurance companies without the primary insurer’s consent. They usually work through a general agency of the insurer. A general agent recruits and trains other agents, and the applications submitted through those agents are processed by the general agent. Field agents, also called producers, also sell life insurance. A soliciting agent usually has less authority from the insurer than a fully licensed agent does.
An insurance broker is traditionally the insured’s representative, except that he is the insurer’s agent when he collects the initial premium and delivers the policy. A general agent of the brokerage market life insurer is compensated on the basis of the production of the brokers who work for him. The brokerage market also includes agents who have not contracted to sell insurance for one particular insurer.
Few life insurers sell life policies through direct sales. Those that do utilize direct mail or advertising by television or radio calling for coupon or telephone response. The reason for the lack of use of direct sales is because selling life insurance tends to require a personal touch to deal with the topic of death. Group life insurance, however, is a popular product sold through direct sales, usually as large sales to companies and employers.
Mass marketing is the presentation of a selling message to induce a number of insureds at one time to purchase life insurance policies. Mass marketing allows the insurer to issue volumes of policies at lower costs because it does not pay agents for one-on-one sales. An insurer may choose to conduct the mass marketing program itself through direct mail, radio, television, or publication, or it may be accomplished by cooperating organizations, such as credit card companies. The organization solicits its own customers to purchase the insurance and then bills the customers for both the organization’s product and the insurance premiums.
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