Interview Questions for Insurance Agents

Your First Meeting with an Insurance Agent

Here are the questions you will want to answer as you go about selecting and working with an insurance agent.

Do you specialize in any particular areas?

Some agencies are full-service, others are limited to specific lines and types of coverage. For example, I have one insurance agent for my home and auto coverage and another agent who handles my life-insurance needs.

Who you can work with may be determined by your needs.

Some agencies specialize in high-risk drivers, for example, or work mostly on long-term care insurance. While you can pick individual agents for each specialty, that gets complicated and cumbersome. Generally, you will want to pick one agent for your mandatory insurance needs -- home and car coverage -- and then find a specialist, if necessary, to round out your protection.

That said, you may not want to be an agent's first foray into a new area. If, for example, your life insurance agent doesn't focus on long-term care protection but is "willing to look into it for you," you need to question whether you really need a specialist to make the best possible decisions.

How long have you been in insurance? How long with this particular agency?

Experience counts, but it isn't everything. If an agent has bounced around from one firm to the next, there may be a problem; at the very least, it should make you question whether the agent will be there to service your long-term needs.

Remember my story about my wife and George, the insurance agent she wanted on our side in case of emergency? Well, for her to get her wish and have George in place during an emergency, George needs to still be in the business and working with us. If he were changing firms all the time, chances are that we'd be stuck in the event of a disaster, with Susan frustrated about having to deal with a stranger (and if she wanted to deal with a stranger, we'd have saved the $72 in annual premiums and done the deal on our own, without the agent).

Like many financial services disputes, problem agents can sometimes get off without a scratch on their records by settling cases and resolving complaints before problems reach the state regulator. The firm that employs the agent may not be so lenient; that's why having too many past employers in a short stretch of time needs to be checked out.

How many insurance companies do you represent? How long have you worked with each company?

The more insurers an agent represents, the more options she can present you with. At the same time, an agent may have a few favorites she prefers to work with. Captive agents, of course, work with only the one firm, but those companies are likely to provide cradle-to-grave coverage options on virtually every type of protection.

Ideally, an agent with a long history in the business has longstanding relationships with the insurer(s) she works with. If not, that raises a concern that she has not been the kind of agent an insurer wants to keep. That said, there are also legitimate reasons why an insurer might drop an agent, not the least of which is state regulations that make a company decide to no longer participate in the market.

If there have been a lot of changes to the product line, find out why.

What companies get most of your business and why?

"Independence" is great, but it doesn't mean an agent won't play favorites. That's okay, so long as the agent's favorite consistently provides proper coverage, rather than the best commission structure.

The reason for asking this question in advance of doing business, however, has to do with how you will size up the agent's advice. If, after a needs analysis, the agent is recommending companies that are not the primary carriers he works with, you will want to know why. If he picks his fave, you'll want to know what makes this a better policy than other available options.

How are the companies you deal with rated?

You'd like to know about an insurer's financial strength before you buy one of its policies. The major independent research firms -- Standard & Poor's, Moody's Investor's Service, A.M. Best, and the like -- measure a company based on the depth of its reserves, the spread of its risks, profitability and investment income, the quality of management, and more. From there, the service assigns a grade.

Your agent should be willing to give you at least two ratings reports on any insurer you are considering. If he can't deliver, question what is being hidden here. While insurance company failures are rare, they are not unheard of, especially since the financial crisis that swept the country in 2008.

Unless you have a special need and a highly limited number of providers, you will only want to deal with companies that have ratings of excellent or superior. Have the agent not only show you the ratings, but explain how they work, since each system is just a little bit different.

Smart Investor Tip

Have the agent show you the ratings and explain how they work; each ratings system is unique.

What continuing education classes have you taken? What credentials, if any, do you have?

Insurance, like the other financial services specialties, is evolving; you want someone who is current on the law and on the best procedures to follow to maximize your insurance dollar. With pricing being less of an issue in insurance than other specialties, expertise is at a premium (so to speak), so make sure you are getting an expert and not just a salesman.

Can I have your insurance license number?

Ask this one early in the process and you could save some time. It's a deal-breaker.

Insurance agents are licensed by the state. Getting the license number speeds up your background check with the state insurance commissioner; it sends a clear message to the agent that you intend to do a background check.

You can laugh it off as being precautionary and being a waste of a phone call if that gets the agent to show you a license, but you should make it clear that you won't hire an agent who can't prove that he or she is currently licensed. Some states give agents a card to show, others a certificate for the wall. It doesn't matter; ask for proof, look at the document, check the names and dates.

An agent without the license on the wall may not remember the number and may not have it handy -- you should be able to search for the records based on his or her name -- but that person can look it up. Refusing to give you the number is as good as an admission of trouble. Without a problem past, there is nothing to hide.

Insurance Agent Price and Payment Plan

Now that you know the questions you need to ask when selecting your advisors, here's what you'll need to ask to figure out how much you should pay.

How do you charge for your services?

All advisors must spell out their cost structure. Insurance may be more product or commodity than service, but you still want to avoid surprises, particularly if you intend to develop a relationship and get on the phone periodically seeking advice

Insurance agents get paid more for selling new policies than for maintaining older ones, and some recoup this decline by adding hourly costs for offering ancillary financial planning services. If an advisor will put you on the clock when you call for advice, you should know it up front, especially if the charges are in addition to ongoing commissions from your insurance policies.

Smart Investor Tip

Find out if an advisor will put you on the clock when you call for advice, especially if the charges are in addition to ongoing commissions.

How much of my initial premium payment goes to commissions and fees, and how much of that commission do you get?

This is a big issue with life insurance products, for which the agent is going to get a big cut of what you spend up front to buy coverage. A big chunk of your first premium payment is going to the advisor, no matter what, so be sure the agent has shown you several options and given you the information necessary to pick the best one for you. That won't necessarily be the policy that provides the agent with the biggest payday.

How can I reduce my costs?

In all types of insurance, there are ways to cut costs, jettisoning unnecessary coverage, consolidating policies under one insurer, qualifying for discounts, and more. Ask for a list of all potential discounts. Insurers offer discounts for everything from people who stop smoking to those who enter a weight-loss program or get good grades.

In addition, discuss any situation that is "abnormal."

Say your child -- covered by your auto insurance policy -- goes to college for several months at a time and has no access to a car. During that time, you may be able to remove the child from your policy and save on premiums. Likewise, if you stop driving to work for a long stretch of time -- such as a maternity or sick leave, or if you leave a car in the garage while you travel extensively -- you may be able to stop coverage temporarily, saving on the cost of unnecessary protection.

A good agent can unbundle standard policies to at least see if you are better off financially with a menu of services customized to your needs than with the more generic, one-size-fits-all standard.

Important Questions to Ask Your Insurance Agent

And of course, you must ask the following administrative questions that let you know more about the advisor's background.

How does your firm operate? When is it open? What about after-hours contacts? How will claims reporting be handled?

There are plenty of reasons to get these questions answered before you have to put the agent to the test.

Say you decide to buy a car on Saturday afternoon, but don't know whether your current policy offers sufficient protection for the new car. If you drive off the lot and get in an accident, you could be in for a heap of financial troubles; if your agent isn't available until Monday and has no off-hours number to check in on, you may not have any way of knowing whether you are sufficiently covered on the new car.

Likewise, you have a car accident on the weekend and need to know if you can rent a car and bill it to the insurer, or there's a fire in your home and you want to know how quickly you can get people working to weatherproof the parts of your home that survived.

And because insurance affects your spouse and family, you want to make sure they know how to deal with the agent if something unexpected happens to you.

That's why you want to know how an agent pursues claims -- some walk customers through the process, others leave everything to adjusters -- and make sure you are comfortable not only with the sales pitch, but with the service you'll get after the sale.

What is your philosophy on working with insurance companies and consumers in settling disputed claims?

This is one of those areas in which an independent agent may have an edge. If your agent believes the insurance was wrong in denying a claim, she should step in and lobby on your behalf. When an agent represents one company, she may not want to put up too big a fight or could wind up out of business. An independent agent, meanwhile, has the threat of moving business to another company.

Under any circumstances, beyond knowing how an agent will help in processing claims, you want to know if they will go to bat for you when a claim goes against you.

Who will have the primary responsibility for handling my account?

If an agency is big enough, the salesman may only close the deal, leaving subordinates or clerical staff to do the actual paperwork and much of the research. If that's the case, find out who will have responsibility for your account.

Could I get the names of a few recent clients who you have worked with?

Ideally, you'd get the names of customers whose cases are similar to yours and who use the advisor for the same types of situations.

Extra Questions for References

Aside fyrom the standard questions to ask references in Chapter , be sure to ask about the claims experience the customer has had and whether the agent was involved in producing a satisfactory outcome. Be sure to ask about how the insurer was to deal with, too, as you will also have to deal with the company if there are issues in the future.

Have you ever been the subject of any complaints to the insurance commissioner or any lawsuits? If so, for what and how do we make sure that situation does not happen again?

The advisor knows you are checking. Lying will only get him or her tossed from your list of candidates. Still, if anything comes up, make sure the explanation jibes with what you learn of his disciplinary history, and that it sits well with you and does not give you the shakes. If you believe the action that landed him or her in trouble is unforgivable, move on.

Know Your Insurance Agent's Relationship and Investment Style

With this information in hand, below are questions you should ask to learn about the advisor's relationship and investment style.

After the initial sale, when will I hear from you, and why?

If the agent is transaction-oriented, you'll get calls only when there are other products to pitch, most likely at policy renewal time when he might convince you to upgrade.

If the advisor wants to pursue a relationship, he should call periodically, notably when he notices a major life change in the offing (kids getting ready to leave for college, mortgage debt almost retired, etc.)

Good agents can be good salesmen, but they earn that distinction by taking care of their clients first and filling their sales ledgers second. If you plan to have a long-term relationship with an advisor, make sure he is willing to work with your other financial advisors and will meet with you at times when there is no pressing need for service, just to do an insurance checkup and make sure you have not outgrown your financial safety net.

Smart Investor Tip

If you want a long-term relationship with an insurance counselor, make sure he is willing to work with your other financial advisors and will meet with you at times when there is no pressing need for service.

Do you value my business enough to look after me?

This question sounds odd, but it comes from a disturbing personal experience. After the death of my father-in-law, I took over most of the finances for my mother-in law, who was in poor health herself. In sorting through the family's various insurance policies, I came across a surprising find, seven small term policies -- none valued at more than about $2,500 -- that had been purchased over a few years about a decade earlier.

They had been allowed to lapse.

Truth be told, I still am not quite sure why they were started, but my assumption is that my father-in-law got them to help cover funeral costs, to protect the family without doing a prepaid funeral (which was not his style).

Whatever the reasoning, what made me angry was that the agent -- who had worked with the family for more than a decade, taking over from his partner, who had been the family agent for a quarter century -- never called my in-laws to say the policies were lapsing. As my mother-in-law's health declined, she apparently thought she had paid the premiums when, in fact, she had made payments on their primary insurance contracts (and thank goodness, in her mounting confusion, she never missed any payments there).

Truth be told, the advisor should have recognized that something was amiss the moment a family that had never missed a payment suddenly goes into arrears on the account. It's no big deal to him if the policy lapses -- he had made his money on the sale -- but the moment he saw a notice that the account had not been paid, he should have been checking in with the octogenarian customers. I believe he owed it to long-time customers to look after them.

He never did, the policies lapsed while no one noticed, and I will forever be frustrated, not by the lost money but by the fact that decades of doing business didn't inspire the advisor to step in. Make sure your insurance agent looks after clients the way you want to be looked after.

Smart Investor Tip

Find out how involved the agent is in your community. A top independent agent once told me that "the more ingrained in the community an agency is, the more it has a selfish reason to serve customers to its utmost ability."

Unlike someone who is transient and just passing through, an advisor who is tied in to the community can't just pull up stakes. The business will not necessarily survive a move, so the agent is stuck where he is. That's good news for you, because it means that preservation of reputation is crucial.

Remember, an agent has the inherent conflict of working for both you and the company, a firm that may have no ties to your community. His ties to the community strengthen your safety net, because no agent in your community wants the bad word-of-mouth that occurs when he or she can't orchestrate a fair, if not happy, ending.

How to Prepare for Trouble with Your Insurance Agent, Just in Case

Conclude your interview with an advisor by asking about problems.

How will we resolve complaints if I am dissatisfied?

Most times, real problems will wind up in mediation, but find out how the process works and which chain of command your complaint will follow. That way, if problems do arise in the relationship, you can pursue redress immediately.

How can I terminate this relationship? How do I get out from under these insurance contracts?

You may be able to walk away from the agent, but not the insurer. Your contract may specify a period of time during which your policy is in force, with financial penalties for early cancellation.

If you are satisfied with the coverage but not the agent's service, you might call the company and ask for names of other agents in your area; the insurer will be happy to oblige because it is less likely to lose your business.

As with any financial arrangement, however, it is important you know ahead of time how you can get out if you are not satisfied with products, service, or performance.

Knowing Your Rights Illuminates Relationship Warning Signs

Years ago, the leading insurance industry groups got together and drafted the "Insurance Consumer's Bill of Rights." Essentially, as a customer, you have right to protection, to be informed, to choose, to be heard, to redress, and to services. The danger signs of a bad relationship with the advisor show up when these "rights" are violated.

Let's examine each situation separately:

  1. The right to protection. Obviously, you are paying to receive adequate protection. If your policies do not meet your need, or you find out through dealing with other financial advisors that your needs were not properly met, you have not received the guidance you were paying for.

  2. The right to be informed. Insurance is a mysterious business, cloaked in jargon and with so many subjective, hard-to-assess judgments. If you are not kept abreast of changes in your policy, in laws that affect you, of the basic assumptions made in calculating your needs, and in adjustments made to those assumptions over the years, you're in the dark. The less informed you are, the more you are one of those customers who is sold a product, rather than given personalized advice and solutions.

  3. The right to choose. Your choice may come down to finding another agent, but you always have options. If an agent says that you have no choice and no options -- remember, giving up a policy and paying surrender charges is an option, no matter how unattractive -- something is wrong.

  4. The right to be heard. You are the leading voice in decisions that affect you, and you should be treated with the respect accorded the key decision maker. That means prompt response from your agent and insurance company. If your agent is not listening to your concerns or keeps pushing something at you that is not in accordance with your wishes -- or if your agent is not quick to resolve problems -- the agent has stopped listening to you.

  5. The right to redress. Legitimate claims should be settled quickly. If not, and the agent isn't taking up your cause, be prepared to pursue a case with your state insurance commissioner's office.

  6. The right to service. You are entitled to prompt, fair attention. An insurance agent should want to be a part of your financial team and should never be afraid to justify your policies to the other members of your advisory squad; if she can't show your other experts how she has served you well and acted in your best interests, something is amiss.

  7. Beyond those basic rights, the other big sign that may there's a problem you're your insurance agent is surprise. The whole idea of insurance is protection. The catastrophe that forces you to make an insurance claim -- whether it is an auto accident, a house fire, or a death in the family -- is traumatic enough. If the coverage or service in those times of need does not live up to expectations, or if the protection you thought was sufficient turns out to be faulty, the relationship probably was based more on making a sale than on your needs.

By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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