A credit insurance broker is a person who helps individuals obtain quotes for credit insurance and select the most appropriate policies. Unlike insurance agents, credit insurance brokers don’t sell the insurance products offered by a single company. Instead, they usually maintain connections with many different insurance companies. As such, they can offer their clients access to a range of credit insurance companies and more options than are usually available through an insurance agent.
A credit insurance broker sells credit insurance. The phrase credit insurance typically refers to a type of coverage that benefits a lender rather than the person who purchases it. Credit insurance pays benefits to a lender in the event that the covered party defaults on a loan or fails to pay his bills for a certain amount of time. For example, credit insurance may pay a lender in full in the event that a borrower loses his job or becomes disabled and is unable to pay. Credit insurance may also make payments for a credit card holder in the event that he suffers a loss of income or illness that interferes with his ability to make timely payments.
Rather than working as an agent of one insurance company and selling its insurance plans, a credit insurance broker usually establishes contracts with multiple insurance companies that sell credit insurance. When a person wishes to buy credit insurance, a credit insurance broker works to match him with the best option. This typically means matching him with an insurance company that includes the terms he needs and the amount of coverage he wants within his price range.
A credit insurance broker is considered an expert on credit insurance. For this reason, a credit insurance broker is often able to carefully consider an insurance purchaser’s unique situation, needs, assets, and risks and advise him on the policies that may offer him the most complete and advantageous protection. While a person could contact a credit insurance carrier or an insurance agent himself, he may find that some agents have far less expertise. Additionally, an insurance company representative won’t usually inform a buyer of the potential for finding better or less-expensive coverage.
In most cases, a party who is interested in purchasing credit insurance can enlist the services of a broker without paying any upfront fees. Brokers typically earn fees from the insurance companies with which they are contracted, and in some cases, a broker's fees are incorporated into the policy holder's premiums. Often, however, policy holders are charged the same amount for premiums regardless of whether or not they use a broker.
