As if insurance wasn’t a complicated enough topic for young adults, some also have to contend with even more confusing terminology. I mean, insurance agents and brokers? Odds are if you haven’t had any interaction with the world of insurance, then you have absolutely no clue what those terms could refer to.
This is to a lot of people’s disadvantage. Insurance is often that last layer of protection between you and a very memorable tragedy that might just flip your life upside down – and I’m not talking about being sent to Bel Air.
If you don’t know much about insurance and would like a simple explanation, then make sure to read this article. I’ve quickly explained what insurance is as well as the difference between agents and brokers. This way, you’ll know how to approach the topic next time it comes up.
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Insurance Explained Simply
Insurance is essentially a contract or agreement between you and a company so that you receive financial compensation in the event of a specified loss, lawsuit, damage, illness, death, or other. This is in exchange for a premium you pay at the start of the agreement which more often than not is a percentage of the financial sum covered.
Most people have some type of insurance or another, whether they’re aware of it or not. For example, if you’re employed, then you most likely benefit from insurance given to you by your employer. The most common type of employer-received insurance is health insurance, which is ubiquitous across the country. This is not always the case, however.
The idea behind insurance is that it’s perfect when you have it, and anxiety-inducing when you don’t: especially if you’re an event host, for example. Since almost everything can happen at any moment in time, being prepared for a potential tragedy is always better than being surprised.
Let’s say, for example, that you’re taking your daily commute to work. Except something happens on the way there, you fall, slip, or are pushed, and you manage to break one of your bones. You’re in pain, you won’t be able to go to work for a long time, and you’ll also have to contend with a medical bill that might empty your bank account.
If you have insurance, on the other hand, a huge percentage of that medical bill is going to be paid directly by the insurance company. This doesn’t just apply to health insurance: as previously mentioned, event hosts also frequently choose to benefit from event insurance, which offers them protection against unwelcome surprises, such as a guest setting the building on fire by accident.
Difference Between Insurance Agents and Brokers
One thing is clear from the start: both agents and brokers have made insurance their career. An insurance agent is essentially the employee of an insurance company who tries to outreach in order to sell their packages to potential clients. Close to the idea of a door-to-door salesman, although the process of garnering clients has become easier with the advent of modern solutions.
There are arguably two types of insurance agents: “captive” agents who work for a single company, and more independent freelance agents that are able to do business with several instead.
Additionally, there is also the concept of an insurance broker. If an insurance agent works for a company to attract clients, a broker works directly for the client in order to attract good insurance packages. Most people don’t need brokers as their services are quite specialized and dedicated, though if you run a business that is looking for the perfect package, then a broker will be more up your alley.
Don’t Put Yourself at Risk
You might think everything is going to go fine for the rest of your life, but at one point or another, you’re going to have to deal with a highly unpleasant situation. Having insurance at that point will allow you to recover within a much shorter timeframe. Otherwise, get ready to stress or even despair.