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Captive vs. Independent Agents
Miguel Acero
June 30, 2022
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What’s the difference?

In various industries, people that sell you something have a certain designation and based on their credentials can only sell specific items to you.

It’s no different in the Medicare industry and it’s important that beneficiaries and individuals considering becoming an agent understand the distinction between “captive” and “independent agents.”

First…let’s talk about shoes

Yes, shoes. You’ll see why.

Let’s take the Nike outlet as an example. When you go to the Nike outlet, there is only one particular brand of shoes you can purchase- Nike’s (yes Jordan brand also, but it’s under the Nike umbrella right?). You can also buy Nike clothing, but really, you’re very limited in what you can purchase.

Now, let’s go to the mall- yes they still exist.

There, we will find Finish line, Footlocker, and Famous footwear. Now, when you walk into those stores, you have several brands that you can choose from. You can choose Nike, Adidas, Fila, Reebok- you name it. The point here is that there are different brands to select.

Captive agents are the Nike outlet. They work for a specific insurance company and they can only write health plans for that particular insurance company. It’s not a bad thing. It’s just important to be mindful that they’re only going to be able to sell that particular brand and nothing more

Independent agents, on the other hand, are Finish line, Footlocker, and Famous Footwear. These are people that are contracted with different insurance companies so they can sell more plans. Thus, it gives you more options.

Who is it best to work with?

For a consumer, if you like a specific insurance company and you’ve gone with them most of your life, it might be ideal to work with a captive agent. It’s a safe option, and when you’re working with that agent, they’re going to be very knowledgeable about those particular health plans.

If you’re going with an independent agent, it’s because you want options.

This let’s you ask-

What if there is something else that’s out there for me that I qualify for or I can get additional benefits from?

Based on your specific situation, independent agents can tell you about the different health plans offered in your area as long as they are contracted with those insurance plans. There is no preference for a specific company and the only goal is to find a health plan that fits your needs.

What’s the best path to becoming an agent- captive or independent?

Some individuals start off as captive agents. They learn about the industry, learn how to enroll clients, and learn how to speak about the features that make each health plan unique.

Then they evolve into being an independent agent where they go out on their own, contract with different insurance companies, and share more options with clients.

There’s no particular best path. Starting as a captive agent helps with understanding the industry and best practices whereas starting off as an independent agent will require on-the-job training or mentorship.

If you are a consumer looking at Medicare plans or helping somebody with choosing the best plan, this information is helpful when you’re sitting across the table making decisions.

If you are thinking about getting into this field, I hope this provides you clarity in understanding both types of roles.

Click here to learn how you can work with an independent agent. If would like to work with Spark Advisors, you can learn more here.

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