Broker/Dealer
What Does Broker/Dealer Mean?
A broker/dealer is a company that connects insurance buyers and sellers and collaborates with insurance companies to manage securities. These securities are purchased using funds collected from policyholders‘ premiums. In essence, broker/dealers provide two valuable services within the insurance industry.
Insuranceopedia Explains Broker/Dealer
Universal life insurance and variable annuities both involve investing policyholders’ funds in securities, which are intended to grow in value over time, thereby increasing the policy’s worth. Insurance brokers do not manage these investments; their role is limited to connecting insurance buyers and sellers. However, insurance broker/dealers manage these investments on behalf of the insurance company. The advantage for insurance companies in using a broker/dealer is the convenience of receiving both services from one company, rather than needing to coordinate with two separate entities.
