How Does An Agent Get Paid On Life Insurance?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Agents that are hired by an agency may be paid a salary by that agency. Agents that sell independently, or in an agency that pays according to production, get paid commission. The sale of a life insurance policy will pay the agent a commission if the policy is retained for up to a year. Some policies will pay a "residual" commission (much smaller than first year commission) for each year the insured person keeps the policy.
    Answered on September 17, 2013
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  2. 2775 POINTS
    Joe 'Gravy' Graves
    Owner, I Hate Buying Insurance, Nashville TN
    Generally speaking, an agent is compensated by the insurance carrier with a percentage of the annual premium. The percentage depends on the product sold. Some line of business, Like Workers Compensation, might be as little as 5%. Your average home/auto insurance compensation is in the 8-15% range. TO address your life insurance question... The compensation is much higher than your property based plans. Maybe as much as 50%+ % of the first year premium. Property insurance agents are compensated (typically) at a level rate for as long as the client stays with them. That's 15% year after year. With life insurance, the ongoing compensation is very little, if any at all. Nearly no term life product pays ongoing compensation. It's a one and done thing. Don't think, "WOW. That's a lot."... let's look at the math... You buy a term life policy for $50 a month. Let's assume the agent earns a whopping 100% of the first year premium. If you keep the policy for the entire 20-year term... the math... the agent was only compensated 5% of the total premium. I hope your question isn't asked out of worry over the agents’ compensation. :-( DON'T worry about the agents side..... Worry about getting the best value for the best plan for your specific needs. If you have any questions, please reach out!! -gravy.
    Answered on April 2, 2016
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