How Do Life Insurance Agents Get Paid?

Shawn Plummer

CEO, The Annuity Expert

What does a life insurance agent earn when you acquire a life insurance policy? We’ll answer the frequently asked “How do life insurance agents get compensated” question today. In addition, we’ll go over some ways to make sure your agent is looking out for you and not just their pocket. Hopefully, before you purchase your coverage, you’ll better understand and be better prepared.

How Do Life Insurance Agents Get Paid?

This is one of the most frequently asked inquiries by life insurance purchasers, and it’s an excellent question to ask. Shoppers want to know if their agent gets a commission or any hidden components to the sale.

When you buy life insurance, the agent gets a commission. This is money that they get for finding your insurance. The commission is based on how much the premium of your policy is. Therefore, there are no extra costs or fees when you work with an agent.

Life Insurance Commissions

It shouldn’t be surprising that most life insurance agents make their living through commissions. Did you realize, though, that there are several other methods they may use to make money?

Commissions, service fees, financing arrangements, and bonuses are all possible ways to make money as an insurance agent.

Life Insurance Commission Payout

Life insurance agents get paid a one-time commission based on how much of your total premiums they take from you for the first year. Life insurance companies have commissions paying agents up to 115% of your first year’s premiums.

Life Insurance Commission

Which Type Of Life Insurance Agent Is Best To Buy From?

There are two types of life insurance brokers available to you: captive agents and independent brokers.

Captive Life Insurance Agents

A captive insurance agent is someone who only works for one firm. The captive agent can only promote the goods offered by this single organization. Commissions and/or a salary may be paid to the captive agent. There are a few things to consider when purchasing insurance from a captive agent as a customer.

  • Life insurance plans are limited to only the products from that company.
  • The products may be more expensive when compared to other carriers.
  • Always compare rates from multiple life insurance companies to find the best policy at the cheapest cost.

Captive Life Insurance Companies

Independent Life Insurance Agents

An independent life insurance agent does not represent any one insurance company. However, because the independent agent represents several life insurance companies, they can offer various life insurance policies.

Because independent agents can offer more than a single insurance company, they will generally get the best bargain for their clients. Independent agents can also help find the best policies for pre-existing medical conditions such as:

The key is to discover the best product for your circumstances. Unfortunately, this can’t be accomplished with a Captive Agent since they only have access to one company.

How Do Life Insurance Agents Make Money

Who Offers The Cheapest Price?

When considering coverage, life insurance rates are identical. That implies that the prices remain fixed regardless of whether you go through an independent agent or a captive agent. Life insurance prices are controlled and determined by each state’s Department of Insurance.

What You Should Know About Agent Commissions

Because the first-year premiums you pay go to your agent, they may try to persuade you to purchase a more expensive policy. For example, some life insurance agents have attempted to push for a more costly coverage type, such as permanent life insurance rather than term life insurance.

Make sure your broker gives you a variety of options such as:

  • How To Buy Life Insurance
  • How To Go Around The Insurance Agent And Buy Direct Term Life Insurance

Need Help Getting Life Insurance Coverage?

Feel free to contact us if you need help purchasing a life insurance policy. The service is free of charge.

Life Insurance Inquiry

Frequently Asked Questions

How much do life insurance agents make?

Life insurance agents make a commission on the policies they sell, so their income can vary greatly depending on how many policies they sell and the commission rate. The average life insurance agent makes $47,860 per year, but the top 10% of agents make over $100,000 per year.

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed insurance agent and annuity broker with over a decade of first-hand experience. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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