5 Differences Between Captive and Independent Insurance Agents

Fran Majidi March 11, 2019
captive agent vs independent agent

Chances are that you’re either an insurance agent or you are thinking of becoming one. You may be wondering how insurance agents get clients and assume the answer is straightforward, but things get complicated based on what kind of agent you are. What you should know above all else is that a road paved with quality leads is the only road to success for any insurance agent. If you keep coming back to this truth and make the leads rain, you will succeed.

You will only close a small percentage of the leads you generate yourself or buy so prepare to hustle, especially if you’re an independent agent. When you are a captive agent, however, you are not only given your marketing materials, but you’re also given leads or client referrals at the very least. With that said, you’re getting paid a lower commission than independent agents (and spending less if nothing on leads).

Both types of insurance agent jobs have their perks. Read more below to see which type of job suits you better.

1. Captive vs Independent Agent

As a captive agent, you can only sell your company’s insurance products. You’ll likely know the ins and outs of the insurance you’re selling better than an independent agent but you’re limited to the brand that pays you.

How do you get clients? Captive agents are most often given sales leads. Sometimes, especially in the area of life insurance, captive agents buy leads at a discount from their employer to grow their business. In both scenarios, the clients are the company’s clients which should be managed as per company rules and priorities.

Independent agents have many brands and verticals to sell and can be more objective about what works for one client versus another. It’s also possible to cross sell from other carriers, mixing and matching to create a custom plan for clients. Independent agents are almost 100% on their own to generate leads, but then again, they are their own boss and the clients (and higher commission) are theirs. Independent agents are their own boss.

2. Generating Leads or Getting Leads: Which Is Better for Me?

Honestly, it all comes down to personality. Do you want a higher ceiling but the expectancy to climb the wall all by yourself or do you want someone to give you a ladder and set you up on a less lofty ceiling that is closer to reach? If you’re of the first set, you’ll work hard but you’ll probably meet the kind of success you’re seeking as an independent agent. The hustle is more grueling but the payoff can’t really be beat. Do keep in mind that you will have to invest your own money, which means risk. It’s much like the stock market or any financial market: The risk matches the potential for a high return. If this is you, buy leads from SmartFinancial.

If you need the assistance, for whatever reason, the main one being that you’re not necessarily the most self-motivated individual, being a captive agent is much easier. But by no means is it easy. Even though you’re not making as much money per close as an independent agent, you’re working hard as a captive agent too. Being a captive agent is much like investing your earnings in a 401K versus a Roth IRA: there’s not much risk. You’re still earning, but the potential is greater with a Roth IRA -- and so is the potential for loss. You cannot become an independent agent without spending money on buying insurance leads, business cards, direct mail material and advertising costs. So, choose whichever road suits you better.

3. Where Do Insurance Leads for Captive Agents Come From?

When you’re a captive agent and your company provides you with leads it means that they are spending money finding leads for insurance on your behalf. Whether you’re working for an agency or a carrier, your company probably has a well developed marketing department or they work with a marketing agency that receives a hefty check for generating leads, which are then handed off to you and your colleagues. Often, these carriers and agents also buy books of leads, lead bundles and live-transfer lead calls. Every method of lead generation has a price tag, so you’re never getting anything for free; hence the lower commission.

If you’re comfortable with the idea of being a captive agent and making a little less per sale, you may even decide that you’ll work really hard and will have success, especially since you have leads fed to you on the regular. Yes, that motto can work for you. Note, however, that some (but not most) companies will charge you upfront lead costs for selling certain types of insurance. If you’re thinking of working for a company with this practice, compare those rates what an independent agent would be paying to buy the best organic leads from a reputable source like You’ll see which makes for a better return on investment (ROI). In most cases, captive carriers and agencies (some agencies are owned by carriers, even when they say they are “independent”) will not charge their agents for leads. This is beneficial to both parties as long as the agent sells.

4. How Do Insurance Agents Get Paid?

As a captive agent, you’ll likely be making either a salary or a salary plus commission. You may even get an end-of-the-year bonus. As an independent insurance agent, you’ll either work for an independent agency or as your own boss. In the former scenario, you will again be paid a small salary with a commission (and a possible bonus). As your own boss, you’ll be paid only on commission, so you’re always out to close.

5. As an Independent Agent, Should I Buy Insurance Leads?

There’s been a pretty healthy debate on this question ever since technology companies began to leverage their Internet skills for a large profits. Now, it seems that most insurance agencies and carriers are looking to tech firms to give them a large chunk of their leads. So, the answer is yes, you should buy your leads, but you should use these leads wisely. For one thing, you cannot shore up on leads and take your sweet time reaching out to them. Often, the leads are actively looking to make a purchase so if you’re not calling right away, it’s just one fat loss. If you plan to buy leads and call them all right away and begin the process of pursuing until they give in, then do it. Make sure to work with leads companies like SmartFinancial, which also fosters the growth of their partner agents. Buy the leads at a fair price, but don’t expect them to all pan out. Just like the leads you generate, not all of them are golden eggs. Go into the process with realistic (but positive) expectations and you will win.