The Ultimate Guide to Buying Insurance Through an Insurance Broker in Canada

Very simply put, an insurance broker is an individual or company that acts as an intermediary between a person seeking insurance and a company selling that insurance. Brokers support insurance seekers in comparing and buying all types of insurance, including auto, travel, home, dental, life, critical illness and disability.

Although there are several other ways of buying insurance in Canada, such as through an insurance agent or directly from the insurance company, doing so through a broker is one of the most popular ways.

If you’re wondering why this is the case, how you can buy insurance through a broker yourself, and all of the other nitty-gritty details about insurance brokers, you’re in the right place. Let’s get started! 

What does an insurance broker do?

An insurance broker advises individuals on the different types of insurance available and helps them decide what might suit their needs best based on their age, lifestyle, assets and health status. They also act as agents on behalf of their clients, fill in and submit paperwork and may also handle any claims that arise in the future. 

Can you trust them?

Insurance brokers are meant to be impartial, unbiased parties between you and insurance companies. They sell many different products and many of them do get a commission – a payment from the insurance company when the broker successfully sells the product.

Insurance brokers rarely have a monetary bias toward one product in particular and typically work with a network of different insurance providers. This makes their advice much fairer as they typically look for the most affordable policy to meet your needs from the numerous different insurance companies in their network.

Do they understand the products they’re selling?

Insurance brokers are knowledgeable about the companies and products available on the market as well as the common coverage terms, application requirements and pricing plans. Therefore, buying insurance through a broker – as opposed to directly from the provider – can give you a better picture of the market, avoid eager sales agents working for a particular company and help you make a more informed decision. 

You can compare and purchase all types of insurance from insurance brokers, including life insurance, disability insurance, critical illness insurance, car insurance and home insurance. While some insurance brokers cover all types of insurance in Canada, you are also likely to find brokers specializing in specific types of insurance, such as only life insurance or property insurance, commonly called home insurance.

Pros and cons of insurance brokers

Everything has its pros and cons, including buying insurance through insurance brokers. If you’re unsure whether they’re the right choice, it might be wise to consider some of these advantages and disadvantages.

You may realize that while buying insurance directly from the provider or an agent is possible, there are some real advantages to buying insurance from an insurance broker. These advantages are likely one of the top reasons why a large portion of insurance sold in Canada is through brokers. 

How to find the right insurance broker 

Once you’ve figured out what an insurance broker does and that you’d like to work with one, it’s time to choose your insurance broker. 

You might already know that the world of insurance can be tricky. Several multi-level marketing (MLM) companies are operating in the field, as well as agents out to make a commission and thousands of products at different price points and coverage terms. It’s hard to know where to start, let alone know whether what you’re looking at is legit. 

It’s also important to be mindful that insurance can be a sensitive subject, especially given that topics such as accidents, illness, disability and death are often involved. As such, I recommend exercising caution when choosing your insurance broker to avoid uncomfortable situations and individuals who might try to overcharge or oversell you. 

Here’s how to find the right insurance broker. 

1. Do your research and identify non-negotiables 

Having a basic understanding of what you’re looking for, what kind of products you might need, and the loose price point of such products will go a long way when it’s time to start discussing products with your broker. Consider doing this research before looking for an insurance broker in order to choose the appropriate one. As I mentioned earlier, some brokers specialize only in life insurance and some only in property insurance. Others might do a combination. 

It’s also wise to identify what you absolutely need to have in both your insurance broker and a subsequent insurance policy. Is it important that your broker is specially trained in dealing with disability insurance? Does your life insurance absolutely need to have child coverage at no additional cost? Identify the non-negotiables so you can end up with both the right broker and the right insurance policy. 

Note: If you’re shopping around for life insurance specifically, I would also highly recommend using a life insurance calculator beforehand. This helps you determine what amount coverage is appropriate for your needs so that you are neither overinsured nor underinsured.

2. Ask for recommendations 

To narrow down some options, start by asking friends and peers for broker recommendations. You can also read reviews online or “shop around” to see what feels best.  

Note: Pricing for policies will be relatively consistent across brokers as most sell the same (or similar) products. Competition is also quite high both between brokers and insurance companies. Regardless, I recommend making sure that you are getting the best deal you can when choosing both your broker and your subsequent insurance policy. 

3. Check for licenses

Once you’ve identified the broker of your choice, the last thing to do is check for licenses. Before you work with anyone (especially before you sign a contract or pay), please ensure that your broker is licensed to operate in the province where they work. If they are, you are good to go. 

In addition, keep in mind that insurance brokers work on a commission that the insurance company pays out upon a sale. As the Government of Canada suggests, it is uncommon to pay a fee for a broker and being asked for one might indicate a scam. 

How to buy insurance from an insurance broker

Once you’ve loosely identified your insurance needs and determined your insurance broker, the hard part is pretty much over. From there on out, the insurance broker of your choice will be working with you to identify and confirm your insurance needs and will walk you through the available options on the market. 

Application process

Certain pieces of information and documents may be needed from you in the application process, such as a list of your assets and liabilities, income, personal health records, lifestyle habits like whether or not you smoke, and a family history of serious health problems. Some insurance policies may also require that you undergo a health exam before a policy is issued, although this is becoming less and less common.

Whatever may be the case for the type of insurance you are applying for, you will have the support and guidance of your chosen insurance broker during the application process. Before you choose, however, here are some things to ask yourself about the insurance policy at hand: 

• Is this policy tailored to me and my needs? 
• Do I understand the coverage terms and the fine print? 
• Did I get the best value for my plan? 

Your broker should be able to talk you through anything that you may have missed or want to add to your policy. Once you’ve decided, the broker will complete the application for you and finalize the payment process. Depending on the broker, they may also support you with your claims (if you need to make one) once the coverage is live. 

How much does it cost to buy insurance from an insurance broker? 

As the federal financial literacy website suggests, it is uncommon to be charged a fee by an insurance broker. In fact, being asked for a fee might indicate a scam. 

This means that buying insurance from an insurance broker only consists of the fee for the actual insurance policy/policies that you are buying. The price for different policies can vary vastly based on their type and coverage. 

Buying insurance through a broker can also sometimes be cheaper than buying directly through the insurance provider. This is because the broker may be able to negotiate the pricing of your plan or offer you special discounts for buying through them. It is also possible to bundle different policies to take advantage of rebates, such as a combined home and car insurance plan. 

Simply put, the cost of buying insurance through an insurance broker varies vastly, but it should rarely include a fee for the broker’s services. Instead, you should only be charged the cost of the actual policy once you have decided to purchase it.

Other ways to buy insurance

If you’re not interested in buying insurance through an insurance broker, you can buy it directly from the insurance company or work with an insurance agent. By doing so, however, you are forgoing one of the biggest perks of buying insurance through a broker – the ability to compare different products on the market. If you choose to work with an agent, I recommend doing your research to ensure you get the best deal for your insurance plan. 

Final thoughts on buying insurance through an insurance broker

Insurance is an important part of financial well-being regardless of your age. If you’re not already set up with a good plan to protect yourself and your loved ones during difficult times, I highly recommend looking into this.

If you’re interested in this, there can be many perks to buying your insurance through insurance brokers. If you follow this step-by-step guide to set yourself up for success, you should have a great insurance policy in your hands in no time. 

Frequently Asked Questions About Insurance Brokers