Trust is a critical component of your insurance relationship. Since insurance is a long-term commitment, you want a relationship with an institution that will be willing and able to help you now and in the future. Work with individuals and institutions that make you comfortable. If you feel pressure in any way to purchase a product, find another insurance agent; you do not want an insurance agent who is there just for the sale. The key is to find an agent who will work in your best interests and help you achieve your goals.

Know how insurance agents are paid. As much as possible, minimize the potential for conflicts of interest by understanding the costs of insurance products and how insurance agents are paid for selling these products. For example, the commission paid on cash-value life insurance policies to insurance agents can be ten to twenty times higher than commissions paid on term life insurance policies with the same face or policy amount. While the former are much more complex products and may have other benefits, it is important to understand the potential for conflicts of interest.

Evaluate the insurance company carefully. You want to make sure that your insurance agent and the insurance company will be around for a long time; make sure the company is financially sound before you purchase their products. The lowest-priced insurance products will do you little good if the insurance company goes out of business. You can also evaluate the insurance company by checking the company’s rating with various insurance-rating firms.