Questions to Ask Your Insurance Agent Before Signing a Policy
Translated & summarized from Calcalist by baba
Consumers should question insurance agents about potential conflicts of interest stemming from commissions and agency ownership, as these can influence recommendations. In 2025, commissions in Israel's insurance and savings sectors reached NIS 13.2 billion, with many agents earning substantial amounts. Agents typically represent specific companies, not the entire market, and some agencies are owned by insurance giants, potentially biasing product offerings. For unbiased advice, consumers can seek independent pension consultants or bank advisors, and should always ask agents about their affiliations, compensation, and alternative options before making decisions.
The story in 6 lines · by baba
- Insurance agent commissions reached NIS 13.2 billion in 2025, with many agents earning over NIS 1 million annually.
- Agents often represent only a few companies, potentially limiting the options presented to clients.
- Some insurance agencies are owned by larger institutions, creating a bias towards their products.
- Independent pension consultants offer advice without ties to specific financial institutions.
- Consumers should ask agents about their affiliations, compensation, and alternative product options.
- In 2025, Israel had 11,782 pension insurance agents compared to 410 pension consultants.
Consumers are advised to critically evaluate recommendations from insurance agents, especially when considering new policies or transferring savings to different companies. While agents may appear professional and have long-standing relationships with clients, potential conflicts of interest can arise from commission structures and ownership ties between agencies and insurance providers. A report from the Capital Markets Authority in 2025 indicated a significant 27% increase in commissions paid to licensed individuals in the insurance and savings sectors over the past three years, reaching NIS 13.2 billion. Notably, one-third of surveyed agents received over half a million shekels annually, and 13% earned more than a million shekels before expenses, highlighting the substantial financial incentives in the industry that could influence client advice.
Understanding the roles of insurance agents, pension consultants, and pension marketers is crucial. Pension insurance agents act as intermediaries between clients and insurance companies, offering products from entities they partner with. Pension consultants, in contrast, provide advice independent of specific institutions and are legally obligated to select the best product from the entire market. Pension marketers are employees of institutional bodies, promoting their employer's products. In 2025, Israel had 11,782 pension insurance agents, significantly more than the 1,263 pension marketers and 410 pension consultants.
Licensed pension insurance agents can offer a wide range of products, including pension funds, provident funds, study funds, investment provident funds, and managed insurance policies, as well as life and health insurance. Selling general insurance like car or home policies requires an additional license. Investment advice, however, is a separate regulated field overseen by the Israel Securities Authority.
Agents are typically compensated by the insurance companies and institutional bodies whose products they sell, through one-time acquisition fees and ongoing commissions. While agents are legally bound to act in the client's best interest, the commission structure can incentivize switching policies or companies, even if not always beneficial for the client. For instance, an investment provident fund may offer tax advantages over a savings policy, making it important to question an agent's recommendation for a savings policy, especially if the annual contribution limit for investment provident funds (NIS 83,641 in 2026) has not been reached.
Many insurance agencies have marketing agreements with specific institutions, meaning they may not present all available options. A 2025 inter-ministerial report found that insurance agencies, on average, marketed products from only about two institutional bodies in the pension sector. Furthermore, some agencies are owned by insurance companies or institutional bodies, creating a potential bias towards the parent company's products. In August 2023, around 120 agencies were fully or partially owned by institutional bodies, with these agencies marketing approximately 88% of pension accounts and policies from their parent companies in 2022.
For independent advice, consumers can consult licensed pension consultants who operate without ties to specific institutions. These consultants may charge fees directly to the client and, in some cases, receive distribution fees from institutions under strict regulations. Banks with appropriate licenses also offer pension consulting services. Key questions for any agent include: Which companies do you work with and are there alternatives you are not offering? Are you independent or part of an agency, and who owns the agency? Who pays you, and are there incentives that vary by product or company? Why this specific product, what are the alternatives, and what might I lose by switching?