We explore agents role in life insurance on the premise that consumers are of limited rationality and their life insurance purchase decisions are reference-dependent and regretinduced.Our analysis provides a unified interpretation for both the bright and dark sides of the agency system that is still a predominant form of distribution in life insurance markets.On the one hand, consumers are passive in life insurance purchase even with complete information of mortality risk and agents can increase their welfare by promoting a larger insurance amount, in the meanwhile increasing profits for the insurers.On the other hand, agents can manipulate consumers into buying an excessively high amount of insurance.We further examine the supply side of the agency system and find that consistent with market realities, the agency system is often more welfare enhancing in whole life insurance than in term life insurance.