Annuities and life insurance the main insurance products; they're typically sold on commission by an insurance agent. This essentially increases their cost to the buyer. On the other hand, products sold directly by an insurance company without the use of an agent have reduced costs. They're considered 'no-load' insurance. Let's consider their pros and cons.
*The pros:
Though agents and brokers can market no-load annuities, most products come directly from the issuing company. Nevertheless, most no-load annuity contracts will still charge some fees, such as mortality and expense fees, and investment management fees in variable annuity contracts.
Typically, these fees are less than on conventional annuities. As an example, no-load annuities usually don't charge 12b-1fees like conventional contracts do, because these fees usually cover marketing and distribution expenses.
No-load life insurance charges lower fees than traditional policies, too. Your premiums for a no-load policy are much less during the first year than a comparable policy that pays an agent or broker because much of the first year's premiums go to pay his commission. Also, most no-load policies also have no cash surrender fees and allow for earlier access to any cash value in the policy.
Whether policies are called no-load or low-load, they generally offer substantially lower costs. That often makes them attractive for fee-based financial planners to offer. He'll charge a separate fee for recommending the product and servicing it once it's in force.
Clearly, paying less for a given product is an advantage. Faster cash value build up and earlier accessibility of funds are important too.
*The cons:
But a key disadvantage of buying no-load products on your own is the loss of an insurance agent to service and help you with policy problems and modifications. You may be left with only a customer service representative to assist you.
Additionally, such products often have none of the frills of traditional policies. As an example, no-load variable products that rely on subaccounts for investments may not offer money-management services like portfolio rebalancing and asset allocation.
Insurance riders often sold with traditional policies may not be available either. That can reduce the flexibility to modify what you might need in the future.
Competently buying no-load insurance products requires you to have a somewhat sophisticated level of understanding of what you're buying and what you need now and possibly in the future. Lacking that knowledge may cause you more money in the long run.
*Discretion on your part:
Obviously individuals who like to handle their investments in more detail will find the lower cost of no-load investments advantageous. They must understand their lack of need for any features available under loaded investments. But if you probably need advice and really don't have the time to go into the detail required, then seek guidance from an agent and let him explain the pros and cons for your situation.