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Independent Insurance Brokers vs. Captive Agents: Key Differences When Choosing an Insurance Representative

Quick Answer

While both can offer LTC Insurance, only an independent insurance broker is able to offer from multiple companies and has an explicit fiduciary duty to their client. This means most independent brokers can offer a broader range of products and services with fewer restrictions on them.

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Detailed Answer

Are you ready to talk to someone about Long-Term Care Insurance? Next question: should you choose an independent broker or captive insurance agent?

There are clear differences between the two that can help you make an informed decision. We’ll walk through each of them below. It’s important that you trust your insurance agent, and to do that, it helps to understand the differences in agent types.

Qualifications of Long-Term Care Specialists

When considering and shopping for Long-Term Care Insurance, there are several professionals you can seek assistance from. To sell Long-Term Care Insurance, you must be a licensed insurance agent appointed with one or several insurance companies. 

Being appointed means you’re authorized to represent and sell with a company. Some insurance agents are only appointed with a single insurance provider. Others can work with numerous companies.

Each state requires continuing education (CE), including CE courses in the Long-Term Care Insurance Partnership Program.

Thousands of professionals may be authorized to represent and sell insurance products. These include general insurance agents, captive insurance agents, and financial advisors. Other professionals like bankers or accountants who act as insurance agents, and independent insurance brokers can also be authorized.

Some may call themselves or actually be Long-Term Care Insurance specialists. A specialist has a large amount of experience with LTC Insurance and has a complete understanding of Long-Term Care Insurance regulations, policy features and benefits, underwriting, policy design, and claims. Generally, most specialists are independent brokers representing the top companies that offer Long-Term Care Insurance products.


Are There Differences Between Captive Insurance Agents and Independent Insurance Brokers?

Yes. There are several differences. But what are they?

An independent insurance broker and a captive insurance agent are two different types of professionals in the insurance industry. Here are the major differences between them:

ONE: Independence

An independent insurance broker operates independently. They are not tied to any specific insurance company. They have the freedom to work with multiple insurance carriers, offering a wide range of insurance products and options to their clients. 

On the other hand, a captive insurance agent is employed by a specific insurance company and represents that company exclusively. They can only offer insurance products from their parent company. In some cases, the insurance company may allow their captive agents to sell products from other insurance companies. Usually, though, they’re financially compensated in a way that it is not in their best interest to do so.

TWO: Product Range Differs Between Independent Brokers and Captive Agents

Independent insurance brokers have access to various insurance companies and their product portfolios. They can provide clients with multiple options and tailor Long-Term Care Insurance coverage to meet their specific needs. 

Captive insurance agents, being associated with a single insurance company, can only offer the products and services provided by their parent company. This limits the range of choices available to clients.

THREE: Objective Advice

Independent insurance brokers are generally seen as unbiased advisors as they can compare and evaluate insurance offerings from multiple companies. They can provide objective advice and help clients find the best coverage at the most competitive rates. 

Captive insurance agents, due to their affiliation with a single insurance company, may be perceived as having a bias toward promoting the products of their parent company.

FOUR: Flexibility and Customization of Insurance Options

Independent insurance brokers have the flexibility to customize insurance solutions according to the unique needs of their clients. 

Captive insurance agents, on the other hand, have limited flexibility as they can only offer the insurance products and services provided by their parent company. These products and services may have predefined terms and conditions. Since premiums and underwriting criteria can vary dramatically, an independent insurance broker is usually in a better position to match your age, health, and family history to obtain the best coverage at the lowest cost.

FIVE: Long-Term Relationships Between Client and Broker

Independent insurance brokers typically establish long-term relationships with their clients based on trust and personalized service. They act as advocates for their clients, assisting them throughout the insurance process, including policy selection, application and underwriting process, policy management, and claims handling. 

Captive insurance agents also develop relationships with their clients but may have limitations in terms of the products and services they can offer. In addition, captive agents often actively attempt to sell other insurance products offered by the insurance company they represent.

Is There a Difference in Insurance Premiums?

Insurance premiums, including Long-Term Care Insurance premiums, are regulated. No insurance agent can offer special deals. 

Premiums are also based on several factors, including the policyholder's age, health, family history, and benefit levels within the policy. Premiums can vary between insurance provider companies, but there isn’t a special discount you’ll receive with one agent over another.

Where costs can differ, though, is between insurance companies. This includes policies with identical benefits. So the number of product and company options a broker can offer is directly related to the different premiums you’ll have access to.

Underwriting standards also vary between insurance companies. To find out more about what to expect with premiums, check out our guide to Long-Term Care Insurance costs.

Fiduciary Duty: Legal Responsibilities of Independent Insurance Brokers

There are some legal responsibilities placed on insurance brokers that don't apply to captive insurance agents. These can act as safeguards for the client.

While all insurance agents must have some minimal level of competence and product disclosure, independent insurance brokers must act in the best interests of the client.

Independent insurance brokers owe a fiduciary duty to their clients. This means that they must act in the best interests of their clients and put their client's interests ahead of their own. 

Captive insurance agents do not owe a fiduciary duty to their clients in the same way, since they represent only one insurance company.

Keep in mind that this does not mean a captive insurance agent is not concerned with providing good coverage based on their client's needs, but the amount of available products to help their client is more limited.

In addition to these legal responsibilities, insurance brokers also have various ethical responsibilities. These responsibilities include:

  • Honesty: Insurance brokers must be honest with their clients about the terms of the insurance policies they are selling.

  • Fairness: Insurance brokers must treat their clients fairly and not take advantage of them.

  • Professionalism: Insurance brokers must act in a professional manner and be respectful of their clients.

These aren’t just words. They’re a core part of the certification and agreement independent insurance brokers must adhere to as a part of their position.

Captive insurance agents are not held to the same legal and ethical standards as insurance brokers. This is because captive insurance agents are not independent of the insurance companies they represent. As a result, captive insurance agents may not be as transparent with their clients or as committed to their client's best interests as insurance brokers.

Are All Independent Insurance Brokers Long-Term Care Insurance Specialists?

No, not all independent insurance brokers are Long-Term Care Insurance specialists.

Independent insurance brokers are licensed to sell insurance products from multiple companies. This means that they can help you find the best policy for your needs, regardless of the company that offers it. 

However, not all independent insurance brokers specialize in Long-Term Care Insurance.

Long-Term Care Insurance is a complex product, highly regulated, and there are many different factors to consider when choosing a policy.

If you are considering Long-Term Care Insurance, it is important to work with an independent insurance broker who specializes in this type of insurance. This will ensure that you get the best possible advice and that you are properly protected.

However, few professionals in the country are actually considered Long-Term Care Insurance specialists.

What Should I Look For in an LTC Insurance Broker?

The list of qualities to look for in an insurance agent could be quite lengthy. However, here are a few key qualities that will ensure you’re working with a qualified LTC Insurance specialist.

  1. Experience: The broker should have substantial experience selling Long-Term Care Insurance. They should be able to explain the different types of policies available and the underwriting standards of each. Most top specialists help hundreds of people every year obtain coverage. 

    • Question to Ask: How many clients have you assisted in obtaining coverage, and how many claims have you processed?

  2. Knowledge: The broker should be knowledgeable about Long-Term Care Insurance. They should be able to answer your questions and help you understand the fine print of the policies without hesitation. In addition, they should be knowledgeable about the benefits of the Long-Term Care Insurance Partnership Program, tax incentives, and the various types of qualified policies available.

    • Question to Ask: Can you explain the LTC Insurance Partnership Program for my state and let me know if a partnership policy is best for me?

  3. Commitment: The broker should be committed to helping you find the best possible policy. They should be willing to work with you to find a policy that meets your needs and budget. Generally, after interviewing you, a specialist will be able to provide you with accurate quotes from all the top companies right away. If the agent must go to someone in the back office or get assistance from someone else to get you quotes, they are not a specialist. However, for individuals with unusual health issues or several health problems, even a specialist may have to speak with underwriters before providing you with an accurate quote.

    • Question to Ask: Are you a fiduciary? How many Long-Term Care Insurance companies are you able to represent?

Captive Agents vs. Independent Brokers: The Key Difference

Ultimately, the key difference lies in the level of independence and product offerings. 

Independent insurance brokers provide a wider range of choices, objective advice, and customization options. Captive insurance agents represent a single company and offer a more limited selection of products.

It's important to note that while captive insurance agents work exclusively for a single insurance company, they still have legal responsibilities to their clients. These responsibilities include providing accurate information and acting in the client’s best interests. 

However, independent insurance brokers may have a broader scope of responsibilities due to their ability to work with multiple insurance carriers and offer more options to their clients.

If you’re ready to have a conversation with a representative, it’s best to establish if they’re independent or captive. It’s also good to know what their level of responsibility is to their clients, and what companies and products they’re authorized to represent. If you do this, you’re well on your way to finding a great specialist that can help you find the best long-term-care insurance for you.

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