Can you trust your insurance agent?
One of my favorite shows on TV is 'Entourage'. The main character, Eric, is his best friend's (Vince) Hollywood agent. Eric is always looking-out for Vince and he's trying to do what is best for him. He battles with the studios, co-stars and Vince's other friends - all for Vince. Sure, he get 10% of Vince's earnings and Vince could fire him if he doesn't like his performance. They both know, however, that their future fortunes are strongly linked together.
Quick quiz: when it comes to your Insurance Agent, are you Vince?
Answer: not unless you own the insurance company.
Here's the deal - insurance agents are acting as agents for the insurance companies, not you. This means that their legal and moral obligation is to maximize profits for the insurance company, not necessarily to give you the best value for your insurance dollar.
Are there honest agents who serve consumers very well? Absolutely.
Are there agents who sell consumers over-priced policies that they don't really need? Absolutely.
What's a consumer to do? Well, if you really trust your agent, go ahead and stay with them. Just make sure you shop your policies around to make sure you're not spending too much.
If you're a financial do-it-yourselfer (like me), learn as much as you can (I just completed an insurance course at The American College) and use the internet to find the best policies.
If you don't understand insurance and have no desire to understand insurance, find yourself an insurance broker. Unlike agents, insurance brokers have a fiduciary responsibility to serve your best interests. Brokers have access to many insurance companies and can help you navigate the complexity of the insurance business. They still may want to sell you more insurance than you really need, so be on guard and ask questions.
Better yet, find yourself a fee-only Certified Financial Planner to help you through your insurance decisions.