Life Insurance Consumer Advocacy Center

The Life Insurance Consumer Advocacy Center (LICAC) has released the results of a nationally representative survey revealing significant gaps in consumers’ understanding of the life insurance purchasing process, including the role and obligations of agents, whom they represent, and how they are compensated.

 

The survey, which polled individuals who purchased a life insurance policy within the last 10 years, was designed to answer a key question: “What do consumers know about the roles and responsibilities of their life insurance agent?” The survey results were clear. There is a significant gap between what consumers believe about their relationship with their life insurance agent and what the agent’s role and obligations actually are. These findings highlight the need for stronger consumer protections and greater transparency.

 

Read the Survey Executive Summary: https://lifeinsuranceconsumeradvocacycenter.org/wp-content/uploads/2026/09/LICAC-Consumer-Survey-Executive-Summary.pdf.

 

Key Finding – Best Interest Obligation

Over 65% of respondents incorrectly believed their agent had a legal obligation to act in their best interest at the time they purchased their policy.

 

Key Finding – Whom the Agent Represents

Only 10% of respondents understood that their agent primarily represented the insurance company. Over 40% of respondents incorrectly believed that their agent represented them as the policyholder, and another 36% incorrectly believed the agent represented the consumer and the insurance company equally.

 

Key Finding – Source of Agent Compensation

Only 35% of respondents understood that agent compensation is commission-based and determined as a percentage of the premium paid by the policyholder.

 

Key Finding – Amount of Agent Commission

Almost 60% of respondents believed their agent’s commission rate was 50% or less of their first-year premiums paid, and over 35% said they did not know their agent’s commission rate. Only 6% of consumers understood that agent commissions can exceed 100% of first-year premiums.

 

Key Finding – Consumer Trust

A large majority of respondents reported their agent as either “good,” “very good,” or “excellent” in terms of trustworthiness, which is perhaps not surprising given that most consumers believe that the agent is legally obligated to act in the consumer’s best interest.

 

In 2024, California consumers owned 10.2 million individual life insurance policies and paid nearly $22 billion in life insurance premiums. LICAC believes the survey findings demonstrate the need for policymakers and regulators to examine whether consumers have sufficient information and protections when purchasing these products.

 

“Consumers are making decisions about products that can affect their financial security for decades, yet this survey shows many don’t understand something as fundamental as who their agent represents,” said Brian Brosnahan, President and Executive Director of LICAC. “Too many consumers get victimized buying life insurance because they trust their agent more than they should, which may lead a consumer to accept a recommendation without really understanding what the consumer is buying. There are many honest and highly professional agents out there. But there are also many agents who are much more interested in the commissions they can make than in what is good for the consumer.”

 

Based on these survey findings, LICAC believes that California should follow New York’s lead and impose an obligation on agents to act in their customer’s best interest. This would protect and benefit consumers, while bringing agent obligations in line with what most consumers already think they are.

 

Until California imposes a “best interest obligation” on life insurance agents, it will be important to educate consumers through disclosures at the beginning of the consumer-agent relationship.

 

This includes:

• That the agent represents the insurance company
• That the agent does not have an obligation to act in the consumer’s best interest.

 

Consumers also deserve to know how and how much the agent will be compensated if the consumer accepts the agent’s recommendation; this will help the consumer evaluate the recommendation and make informed, thoughtful decisions.

 

“Closing the gap between consumer beliefs and reality is essential,” said Richard Weber, Treasurer of LICAC. “We need stronger consumer protections and clearer disclosure requirements. These are issues that deserve the attention of policymakers, the insurance industry and candidates for California Insurance Commissioner.”

 

California voters will elect an Insurance Commissioner this November. The office plays a significant role in enforcing the state’s insurance laws, regulating insurance companies and protecting consumers, making this an important time for a broader discussion about consumer protections in the insurance marketplace. While much of the recent public attention has focused on homeowners insurance, LICAC believes life insurance should also be part of that conversation.

 

Consumers should not have to discover after purchasing a policy that they misunderstood important aspects of the transaction. The findings of this survey demonstrate why greater transparency, clearer disclosures and stronger consumer protections matter.

 

The nationally representative survey was conducted by Research America Inc. in early 2026 and polled over 200 individuals who had purchased a life insurance policy within the past 10 years.

 

Additional survey details can be found at: https://lifeinsuranceconsumeradvocacycenter.org/wp-content/uploads/2026/09/LICAC-Survey-Results-Presentation.pdf.