Role of the Agent
Are You Using a Professional Insurance Advisor? Are You Getting The Service You Are Paying For?
Would You Even Know It?
After reading this page you should have a better understanding of...
- The Role of the Agent - Summary
- The Role of the Agent in the Medicare Process - Summary
- What a professional insurance advisor does
- How you are better served by using an insurance advisor
- How insurance advisors get paid
- How an insurance advisor stays current
- What you should be getting from an advisor
- How you can evaluate your current or prospective advisor
The Role of the Agent – Summary
What you get out of your health insurance depends on how much you know and what you do. For example, how do you know if you have the right health insurance and if you're getting your money's worth?
Health insurance agents are highly qualified professionals who are trained and experienced in guiding individuals and employers through the complexities of choosing appropriate, affordable health plans. Insurance agents must be licensed by the state(s) where they reside and practice. In most states, an agent must complete continuing education every year to keep that license. They keep abreast of new developments and standards in the health insurance industry, learn about new options that may better serve their clients, and, because they usually represent a number of insurance companies, can offer a wide range of options and alternatives. Agents who operate in the health market build up clientele over a long period of time. They write new accounts and just as importantly renew old accounts. Consumers prefer to use agents. Many agents and their clients develop relationships that span a lifetime. Professional agents work for the consumer and can offer and explain the differences between a variety of different health products from many different insurance carriers. The independence of the agent offers a very important distinction in that their objective is to keep the client for a lifetime. Since the client can end the relationship at any time, the agent is motivated to help the client decide on the best possible plan for his or her needs, and provide ongoing service after the sale. As an individual or business health plan consumer representative, a health insurance agent will:
- Evaluate the health plan needs of the individual or business.
- Explain the details of different health plans and provide cost indexes.
- Make specific recommendations and tailor plans to suit needs as well as budgets.
- Review the plans periodically to update coverage and maintain affordability.
- For businesses, communicate the facts about various benefits packages to employees.
- Serve as the consumer's advocate and advisor in dealing with insurance companies, doctors, hospitals, and government agencies. This involves servicing claims, and providing advice about regulations and legislation.
NAHU believes that our members hold a unique position as an advocate for the health plan consumer and can be a valuable player in progress toward the right kind of health care reform. Our goal is to provide all Americans affordable, quality health care.
The Role of the Agent in the Medicare Process – Summary
Passage of the Balanced Budget Act was a dramatic step toward equality for America's senior citizens. For the first time, seniors will have the same types of opportunities for choice in health insurance that have long been available to those under age 65. In addition, the Medicare program will now be able to enjoy the pricing advantages available only through Managed Care plans. To fully understand the new choices available to them, seniors will be faced with a confusing array of printed materials which compare plan options, benefits, and premiums. Such printed materials might show, for example, Managed Care options with a choice of multiple provider networks for a single plan, with the requirement that all primary and specialty care be obtained through the same provider network option. Preferred Provider Organization (PPO) networks might be listed along with Health Maintenance Organizations (HMO's) that on the surface, might look the same, but are in fact very different types of options. To answer questions, older beneficiaries will be told to call an 800 number, which will be manned by an individual who may be responsible for talking with hundreds of seniors each day. This person will have an extremely limited amount of time to spend with the senior, and may become impatient with the senior's desire to talk in detail about the available choices. Feeling rushed and even more confused, the senior will decide to just stay with the familiar, traditional Medicare. There is a better option, one which optimizes the new choices for seniors, and allows them to enjoy the same right to counseling that is enjoyed by millions of Americans under age 65. Many seniors have a trusted insurance agent they have used and relied upon over the years. An agent can personally help seniors sort through their options and explain in detail and in person, how each plan option works. An agent's knowledge of the senior will enable them to point out the HMO plan that offers coverage of prescription drugs to the senior on an extremely limited budget, or the ease of a PPO plan to the senior who is unlikely to adjust well to seeing his or her primary care physician to obtain a referral for specialty care. And once plan choices have been made, the agent will, as a part of his or her service, act as an intermediary between the beneficiary and the plan, assisting the senior with questions or problems involving claims, plan benefits, and billing.
Insurance agents must be licensed by the state where they reside and practice, and in most states, must complete continuing education every year to keep that license. Agents are used extensively by the insurance industry to market health insurance and related products. There are several very good reasons for this which are beneficial to the consumer:
First, the use of agents is cost effective for insurance carriers. Agents are not employees of insurance carriers - but are instead independent contractors for the carriers. Carriers do not have the associated costs of an employee, costs such as benefits, expense reimbursement, employer FICA match, and so forth, when they use an agent. They simply have the straight cost of the agent's commission. The commission is paid monthly if the case is in force, and is usually the same percentage each year. Agents who operate in the health insurance market build up clientele over a long period of time. They write policies for new clients and just as importantly renew and update policies for existing clients.
Consumers like to use agents and many develop relationships with an agent that spans a lifetime. Agents are different from the salaried employee of an insurance carrier. The agent works for the consumer and can offer and explain the differences between a variety of different health products from many different insurance carriers. The independence of the agent offers a very important distinction in that the agent's objective is to keep the client for a lifetime. Since the client can end the relationship at any time, it is in the agent's best interest to help the client decide on the best possible plan for his or her needs, and provide meaningful service after the sale. NAHU believes that the insurance professional is the best equipped source to provide information and expertise about the new Medicare+Choices. Meaningful education about the new choices will have a positive effect on seniors as they move from a "one size fits all" plan to one which is suited for their own particular needs. And with a greater understanding, seniors will be more willing to enroll, and continue that enrollment, in the cost effective Managed Care plans that have saved so many dollars in the private sector and hold the same potential for a financially strapped Medicare system.
1. Why should I use a professional insurance advisor - are they especially qualified?
Whether your professional insurance advisor is an agent, broker, consultant or benefit manager, professional insurance advisors are the critical link between you, the consumer, and insurance companies. They provide and service insurance products while educating and advising you on how to manage risk and make informed insurance choices. Dramatic changes in the insurance marketplace make the insurance advisor's role increasingly important to individuals and small businesses in finding cost-saving measures and coverage options. Advisors are highly trained insurance professionals who will guide you through the complex task of choosing appropriate coverages at an affordable cost. Advisors are dedicated to serving the long-term interests of consumers. Many career insurance advisors have completed a sequence of college level courses leading to a professional designation, such as Registered Health Underwriter (RHU), Health Insurance Associate (HIA), Registered Employee Benefits Consultant (REBC), Certified Employee Benefits Specialist (CEBS), or Chartered Life Underwriter (CLU).
2. How does an advisor get compensated? What is my advisor's incentive to give me superior service?
Insurance advisors have strong financial and professional incentives to give their clients a lifetime of quality products and service. Advisors seldom are salaried employees of the insurance companies they represent. Usually they are independent agents who represent many companies. Most advisors are compensated on a commission basis - a percentage of the premiums you pay your insurance company. Others are compensated on a fee basis directly from employers. In each case, the advisor's loyalty and compensation rests with you, the consumer. Regardless of the method of compensation, advisors have strong incentives to place consumers with strong, financially stable carriers and provide superior service on an ongoing basis. Advisors are a vital link in the American system.
3. What should I expect from a professional insurance advisor, and how can I evaluate my current one?
An advisor will guide you through the complex task of choosing appropriate coverage at an affordable cost. The following is what you should expect from a professional insurance agent. Use this checklist to evaluate your current advisor. Your professional insurance advisor should:
- Work with you to evaluate your needs for insurance coverage.
- Explain the details of different insurance plans.
- Make specific recommendations and tailor plans to suit your special needs and budgets.
- Review your plans periodically to update coverage and limit costs.
- Serve as your advocate and advisor in dealing with insurance companies, doctors and hospitals, and government agencies involving claims, services and regulations.
- Help you as a business owner communicate benefits packages to employees and demonstrate how various provisions can complement personal and government financial plans.
4. How does a professional insurance advisor stay current with the myriad of plans and changes in today's marketplace?
Many career insurance advisors belong to the National Association of Health Underwriters (NAHU). The association offers seminars, workshops, courses and other educational forums to ensure members meet the highest standards of client service. It also requires members to subscribe to a strict professional code of ethics. Insurance advisors are licensed and regulated by state insurance departments. Prospective advisors receive training regarding insurance and applicable laws before taking a qualifying exam for licensing. The majority of states now require continuing education to maintain license status.