How Do Life Insurance Commissions Work?

Insurance salespeople are sometimes described as pushy, much like used car salesmen. This is simply due to the fact that their incomes are based entirely on whether or not you decide to purchase a policy from them. Once all is said and done, all of the hard work is directly reflected on the commission check.

The exact commission rate depends on the company you work for and the specific plan that company offers. Other factors that impact the amount of commission one makes are the policy type and length of the policy. The commission rate can either be paid as a flat rate or it can fluctuate over time. With some companies, you can expect to have a higher rate during the first year of the policy, followed by lower rates throughout each following year. For example, your commission rate may begin at 20 percent for the first year and continue at 5 percent for every year afterwards.

There are two different types of policies, which further garnish two different types of commissions. Term life insurance is geared towards consumers who are on a budget. It consists of low premiums and is only for a specific term, or period of time. The commission rate on this type of policy is not very high, due to the fact that it does not build in cash value. Although some companies may go as low as 10 percent or as high as 70 percent, the average range of commission for term life insurance is between 30 and 50 percent.