Many consumers still don't know that they can bypass an agent and buy life insurance directly from some companies. It is generally comparable to no-load mutual funds. Low-load policyholders usually pay no sales commission. And there may be no surrender charge, or penalty, for cashing in a whole life or universal life insurance policy. But, as with mutual funds, all life insurance policies have built-in marketing and management fees.
Nothing is free.
By allowing consumers to bypass an agent and deal directly with the company, low-load life insurance helps eliminate abusive sales practices, consumer advocates say. In recent years, agents at some insurance companies have been investigated for churning - advising customers to terminate a policy and buy a new one, just so the agent can earn a new commission. Insurance industry groups stress that abusive practices are not widespread. And they say most consumers are satisfied with agents and need help making a decision. But if consumers need help, they can get more objective advice from a fee-based financial consultant, consumer advocates say.