Health Insurance Broker Makes $$?

Updated on December 04, 2014
N.R. asks from Chicago, IL
6 answers

I worked with a broker a couple of years ago - a friend of a friend - to find our current health care plan. Recently, she called to set up a meeting to see if we needed to switch plans etc. with all the changes happening in health care. It was nice of her to be proactive. We met, went over various options and both decided it would be in our best interest to stay with what we have. My question is, how does she make money? If we aren't switching, does she make anything with us just staying where we are? I feel badly though she was the one who called me. Should I offer some sort of token of appreciation or is this just how she does her job? Not sure how to handle it. Certainly don't want to take advantage of her and her time.

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answers from Washington DC on


It's HER JOB to stay in touch with clients. She makes a commission off you when you renew your policy or pay monthly - whichever set up she has.

No. You do not send her any money, gift or anything like that. She did her job. She reached out to you to see if you needed any changes. You didn't. All is well in the world!

5 moms found this helpful


answers from Dallas on

You don't owe her anything. She followed up with you because she sold products to you in the past and she was simply looking to see if you might find a better deal right now. It is wise to occasionally go over insurance policies and more to see if you need up make changes and updates. No harm done if you don't find a better deal.

Insurance brokers work on commission just like other sales people. They get paid from the insurance companies. No person in sales expects to make a sale each time they make a call... it does not work that way.

You did not take advantage of her. You simply made sure the plan you currently have is still a good plan to keep. It is her JOB to follow up with her clients. If she doesn't, then she is a poor sales person because there is a lot more to sales than closing a deal and walking away for good. To be a good sales person, you have to have follow up, communication and provide good customer service.

Be comfortable that you know you still have a solid plan and are protected!

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answers from Boston on

She makes a commission from the insurance company - while they have their own employees, they also have brokers who are essentially freelance agents who make work for one or more insurers. It's advantageous to the insurer because they don't have the overhead of a full time employee or other taxes like unemployment or workers' comp. It's advantageous to the broker because she can work for more than one insurer (and ideally offer you more choices) and she can make her own schedule.

She knows that she's not going to make a sale every time she goes out to meet with people. It's not different than a car salesperson or a vacuum cleaner sales rep or a Mary Kay seller who makes money only with the sale. She called you - that's part of her job. But if you are renewing with her, she gets a commission for that whether you switch to another plan or not.

You don't have to feel badly - in fact, you shouldn't. You gave her a chance, and she (or the companies she represents) didn't have the plan that suits you. End of obligation. If you want to let her know what features and prices you stayed with, that may be helpful to her, but she mostly likely wants to move on to the next prospect. Everyone in sales understands that you have to get a bunch of "No" answers before you get a "Yes". It's part of the industry.

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answers from San Francisco on

Even if you stay with what you have, she will still make a commission from the insurance company every time you renew your policy (usually yearly). Our broker always seems thrilled when we renew our policies, probably because that means a payday for him. ;) Insurance brokers only lose money if you buy your new policy from another broker - so it was definitely in her best interest as well as yours to meet and make sure that you have a policy that meets your needs.

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answers from Phoenix on

I can sell home, auto, life and health. Depending on the insurance company, the agent gets paid per month, usually for the first couple years, then nothing after that. My health ins policies paid around $20 per month. Most life insurance policy commissions are paid in full right after the policy is effective. If the policy cancels before the anniversary, the agent get's a "charge back", which means they owe the insurance company back the commission that was paid to them up front. Some policies will pay a SMALL annual commission after that, usually only for the first 5 years, then nothing after. Same thing for your home and auto policies. Percentage paid depends on the insurance company. So yes, your friend of a friend was just doing her job. It's smart to make sure ALL your policies are still working the way you need them too. And on a side note, commissions DO NOT come out of your premiums paid, they come from the PROFITS of the insurance company. So basically, if someone is trying to sell you something, just say you are not interested instead of stringing them along...THAT is a waste of their time since they are ONLY paid if they sell something, not for their time hourly or gas. Hope this helps. Good luck.

2 moms found this helpful


answers from New York on

I work as a health insurance broker. We get paid a small commission (much lower than most other lines of insurance coverage) on the premium. The amount we get paid depends on the state and the insurance company and type of policy. We may get a percentage (3% is the highest these days - it used to be 4%) or a flat $ amount each month -maybe $20 monthly. For her to sit and go through options with you is appropriate - but she's not making much money at all on your policy if it's just for you and your family. She's probably doing a little better than breaking even when you take into account the time it takes to keep up with all the changing legislation (Healthcare reform has made this industry much more complex and difficult and has decreased the amount insurance companies pay to brokers) and impact on the policies.

Insurance brokers in health insurance really only make a living when working on group plans - and even then until a group gets to about 15+ employees they aren't really doing much more than breaking even.

But a gift is not neccessary - al though it's so sweet of you to think about it! She's doing her job.

1 mom found this helpful
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