How Consultants & Brokers Choose Benefits

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How Consultants & Brokers Choose Benefits

While consultants do not sell benefits and are paid a fee for their service, agents and brokers sell benefits and are paid a percentage of the premium.

Difference between consultants, brokers, and agents

  • A consultant does not sell benefits and represents and works on a fee. The consultant has a contractual agreement.
  • Both brokers and agents act as intermediaries who sell benefits. "While a broker represents the buyer, an agent represents one or more insurance companies."
  • A broker uses his knowledge and experience to help assess unique insurance needs, find the best coverage and value, and provide assistance when making a claim.
  • The captive agents typically represent one benefits company and independent agents compare policies from multiple vendors. However, they do not have access to all the vendor’s policies.

How consultants choose which benefits to sell to employers

  • Benefits consultant conduct an in-depth analysis of the business of a company to determine a budget and deduce if certain benefits offer tax advantages over other types.
  • They use the method whereby they have a list of what other companies in the geographic region and industry are offering to ensure that they provide competitive recommendations.
  • A consultant does not sell benefits and is on a contractual agreement.
  • The benefits consultant knows how to negotiate with insurers and leverage their resources to provide their clients with the best value possible.
  • As stated in an article published by BBG Business Benefits Group, "Businesses often hire benefit consultants as a cost-effective way to bridge a gap in the skills and knowledge within their company".

How brokers choose which benefits to sell to employers

  • A commission is paid by insurers to brokers for every employer they sign up.
  • The brokers help companies buy, manage, and choose healthcare plans.
  • Some brokers may work for the company providing the benefit exclusively and therefore direct them only through choices from that provider.
  • Others may not be tied exclusively to the company providing the benefit or specialize only in one type of benefit.
  • The brokers perform a plethora of duties for businesses in search of the right insurance by comparing the coverage of various insurers to get the best conditions and rates.
  • The fee is usually a healthy 3 to 6 percent of the total premium and can be even higher, up to 40 or 50 percent of the premium.

Research Strategy:

The research team initially conducted a search on the difference between an agent, a consultant, and a broker. We used credible sources to substantiate the fact that while consultants are paid a fee for their service, brokers are paid based on commission from the products sold. Consequently, we pulled together all relevant information to identify how consultants and brokers selling voluntary and other benefits choose which benefits to recommend and sell to employers.