- Differences between an Insurance Agent and an Insurance Broker
An insurance Agent is effectively an ”out sourced” sales person representing the insurer who is the insurance company. Agents are generally paid on a commission basis that is calculated on a percentage of premiums introduced to the insurer. Individuals, partnerships or small businesses are authorized under agency agreements to sell insurance on behalf of one or several insurance companies (Berwick, 2007). This therefore means that some agents are agents for several companies, while others are exclusively agents for one particular company. Although those representing several companies may be a little more independent than those who represents only one company, it is inadvisable for the insurance consumer to rely on them for independent advice. An insurance consumer would want total independence from the the person who they rely on to purchase their insurance, and they won’t get that from an agent who is still tied to his or her parent company.
An insurance broker on the other hand is an independent middleman who is not tied to a particular insurance company, due to the vast number of companies they represent. An insurance consumer can place his or her bet on the insurance broker because they are able to recommend them the best insurance available on the market, no matter which company may be providing it.
Why Life Insurance Agents and Property Insurance Agents have different Grants of Authority
An important distinction between the life and the property insurance agent’s activity is the limitation on the life insurance agent’s grant of authority. Although the property agents can, and sometimes have the legal authority to bind a principal to an insurance contract, the life insurance agent never has this grant of authority. The main reason for this difference in authority is that property insurance contracts may be typically cancelled by the insurer at any time after a short notice period. While life insurance companies on the hand, after a brief initial period cannot cancel contracts except for nonpayment of premiums. To minimize fraud and misunderstanding, the home office solely remains with the grant of authority to bind life insurance contracts (Dorfman, 1998).
Factors a Consumer should consider in choosing a Property or Life Insurance Agent
Some important factors should be considered by a consumer so as to make a knowledgeable choice when selecting a property or life insurance agent. The insurance agent must have a considerable knowledge of the protection being offered, and also understands related areas of personal finance. The agent should be a person of high ethics who puts the consumer’s interest first while also communicating clearly, so that the consumer understands the needs the insurance fulfills and the rights and duties created by the contract. The availability of the agent is also paramount and should be easily reached and available to answer questions. This will show the agent’s full commitment to the insurance career.
- The Difference between Blue Cross and Blue Shield
Blue Cross plans were founded on a nonprofit hospital expense prepayment plans designed primarily to provide benefits for hospitalization coverage, with certain restrictions on the type of accommodations to be used. While on the other hand, the Blue shield plans are prepayment plans offered by voluntary nonprofit organizations covering medical and surgical expenses. Blue Cross pays hospital expenses while Blue Shield pays physicians’ and other medical expenses (Hetico, 2007).
Blue Cross has however expanded the scope of benefits offered and have frequently included deductible and coinsurance provisions similar to other to those being used by other insurance companies. When there is a deductible, a covered person is required to pay expenses up to some limit, out of his or her own pocket before benefits are paid. On the other hand, when coinsurance is used, a covered person is required to pay a percentage of some or all expenses, the remaining portion being covered under the medical expense plan (Beam and McFadden, 2004). Apart from this, Blue Cross is widely different from other insurance companies on the fact that they have concentrated on medical insurance and expense benefits, therefore making it a leading choice for consumer’s. Another main factor that makes Blue Cross different from other companies is that, most of their plans pay participating hospitals on a per diem basis for each day a subscriber is hospitalized. Periodic negotiations with Blue Cross determine the amount of this payment for each hospital.
References
Beam B. T. and McFadden J. J. (2004). Employee Benefits. Dearborn Trade Publishing.
ISBN-0793139600, 9780793139606.
Berwick G. (2007). The Executives Guide to Insurance and Risk Management: taking control of your insurance programme. QR Consulting. ISBN-0957886616, 9780957886612.
Dorfman M. S. (1998). Introduction to Risk Management and Insurance: Sixth Edition. Tsinghua
University Press. ISBN-730203205X, 9787302032052.
Hetico H. R. (2007). Dictionary of Health Economics and Finance. Springer Publishing Company. ISBN0826102549, 9780826102546.
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