Insurance Agents Salary

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An Insurance Agents Income is Derived From Selling Insurance Policies And Being Paid A Commission.

Insurance Agent Salary or Commission Sales?
Page 2 of 2 pages


Is there an insurance agents salary in the life insurance business? Maybe, but only during training.

This is page (2) of the discussion of an insurance agents salary. It shows an example of how commissions and renewals are paid.

However, you should first read page (1) - Why would any one want to go from a weekly paycheck to a commission income business?

As an agent, when someone buys an insurance policy from you, you are paid a percentage of the annual premium based on the type of product you sell. This is called a commission, which is a percentage of the premium that you sell.

Lets say you sell one policy and you could have made $2,000 commission on that sale, would you want to be paid an insurance agent salary of $500 for that week or the $2,000? In the end this is why we don't want an insurance agent salary. 

Some products like term insurance may pay 45% of first year premium, other products range from 6% on up to 80% commission. Each company has its own commission schedule. There is not an Insurance Agent Salary. It would defeat the purpose and take away the opportunity of building your own business.

Below is a generic example of how insurance commissions
are created and how you get paid.

Obviously each and every insurance sale will vary by size of premium and type of commission and type of renewal, however I want to illustrate how the 1st year commission and renewal concept works. (I am only using generic numbers and a simple example for illustration purposes.)

So let’s say you sell someone a term policy for $900 year and the first year commission is 50%. You will earn $450 dollars first year commission. Do that 5 times a month and you earn $2,250 per month, or $27,000 per year?

(Year one) = $27,000 first year commission

Additionally, many companies pay some type of renewals. So let’s say the renewal rate is 10 % per year for 5 years. That means for the next 5 years, assuming the client keeps the policy and pays premiums, you will earn 10% of annual premium, in this example $90 each year, for the next 5 years. If the client continues the policy then a renewal is paid to you to service that client and will provide a second source of residual income to you.

Now comes the good part- renewals

So let’s say you generated 200 clients (40 clients year) over a 5 year period doing the above, your renewal check alone would be $1,500 per month at the end of the 5th year. (200 X $90 = $18,000 or $1,500 per month)

Adding your first year commission and your cumultive renewals together would result in the following income scenario.

Year one) = $27,000 first year commission

Year two) = $27,000 plus $1500 renewals = $28,500*

Year three)= $27,000 plus $1500 + 1500 = $30,000*

Year four)= $27,000 plus $1500 + $1500 +$1500 = $31,500 year*

And so on.

This income illustration is based on less than one sale per week. A successful sales person will be doing much more than this.

(*notation: Some companies may pay a higher first year commission and pay no renewals.)

Use our insurance forum to ask additional questions or request help.

When coming into the insurance business there are basically
two different ways to enter the business.

One is called the Captive Insurance Agent and the other is called the Life Insurance Independent Broker. I have a dedicated topic page that goes into more detail on each of these areas, but here is quick overview.

The Captive Insurance Agent Concept. This is where you come to work for a specific company and you are a captive agent. You sell only their portfolio of products. These companies may help you transition into the insurance business with some type of training allowance, (a draw against future business that you will have to write.) But keep in mind, but there is no Insurance agents salary. They also provide much more training and help than the broker concept.

Many of the captive companies allow you to transition into the life insurance business by starting you out part time and feeling your way in. I always liked the person who burnt their bridges behind them and jumps in 100% and moves forward. Keep in mind, your going to be building your own business. You will be hanging out your business shingle. You will be your own boss, and there in no insurance agents salary, so it is a good idea to have some financial reserves when starting this career.

The Independent Insurance Broker Concept or Independent Agent concept. Here you are your own person. Again there is no insurance agent salary. You pay for everything. You can represent as many companies as you want. You are on a true earned commission. There usually is very little help in terms of a training allowance or training help. The broker concept is usually for someone who has several years of the insurance business under their belt, and may want to start their own agency. I tried both concepts. It just depends on what degree of time, effort and money you want to spend.

And then there are some companies that use a combination of both concepts.

This business is not for everyone, but for those that do make it, it is a wonderful way to go through life.

Bottom line is there is no Insurance agents salary in the sales business. If you want to work for a salary and are not comfortable with a commission type career, then stay where you are. Just remember that fear is the difference between success and failure in many cases.

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