A life insurance broker and agent are both involved in marketing and selling of insurance policies. A broker, in particular will represent your interest and advice you regarding the most suitable coverage that suits your specific needs.
Here are some interesting facts concerning brokers, which may prove to be quite helpful when dealing with such entities:
Not All Brokers Can Call Themselves "Insurance Broker"
You shouldn't assume that you can get the best service from any person or entity that claims to offer insurance brokerage services. This is because, any person or entity that intends to provide such services must be appropriately licensed.
Under the Financial Services Reform Act 2001, the only time that a broker would be allowed to use the term "life insurance broker" or "insurance broker" is under authorization, following compliance with specific conditions in the license. Unlike brokers, agents acting as authorized representatives of licensed insurers don't need a license.
A Code of Practice for Brokers
A code of practice in the financial services sector is a set of industry-specific standards guiding conduct of all entities within it, which represents good industry practice.
The Code Compliance and Monitoring team of the Financial Ombudsman Service administers and monitors compliance of financial service entities, with regard to four separate codes of practice. One of this is the Insurance Broker's Code of Practice.
If your broker is a member of the National Brokers Association (NIBA), such a business entity would be automatically bound by this code. The provisions of such a code are intended to foster good relations between intermediaries, clients, insurers and every other entity involved in the insurance industry. These provisions also help in ensuring efficiency in transactions within the industry.
Some of the service standards covered in the 2014 code include:
(i) Compliance with applicable laws.
(ii) Proper management of situations involving conflict of interest.
(iii) Disclosure of who the broker acts for.
(iv) Disclosure of a broker's scope of services.
(v) Diligent and fair action in service delivery, which exhibits utmost integrity.
(vi) Disclosing to policy holders or would-be policy holders how the insurance intermediary is remunerated.
(vii) Handling of money in an appropriate manner.
(viii) Competence in service delivery.
(ix) Proper response in the event of catastrophes.
(x) Managing disputes properly to produce a fair resolution.
(xi) Avoiding actions that are likely to bring the broking profession into disrepute.
(xii) Promoting the code of practice.
Brokers Know More Than You Do
When you read about all the interesting features on an insurance company's website, you might assume that's all there is to it. However, you also need to understand the "fine print" that goes along with it. The product disclosure statement provides a more exhaustive explanation of what you can expect from the policy.
A broker is intimately aware of all the underlying terms and conditions for a wide variety of life insurance policies. Moreover, such an insurance intermediary is also likely to have vast experience within the industry, which is useful in understanding what works best for different individuals. Having served many clients with similar needs and preferences as yourself, would provide a sound basis for selecting the most appropriate coverage for you.
Kerrie Peacock shares her best insights regarding the personal insurance industry. This information can help you make competent decisions when selecting the best coverage. You can visit MeCovered for more professional consultation. For details on a cover that can work for you visit www.mecovered.com.au/life-insurance-broker/.