Understanding Insurance Agent Compensation: How They Get Paid

Insurance agents are paid on commission, meaning you're paid after you supply the business to the company, based on a predetermined percentage of the monetary value of the investment from the client and/or investor.

Get in Front of Clients

If you are an independent agent you'll probably need to generate your own sales leads through informational mailings and follow-up calls. If you are a captive agent, meaning you only represent a single company, it probably will send you to an appointment it set up in the same way.

Submitting the Check

After your client is given enough information to be confident in the advantages of the investment, you then send your check and paperwork to the company that will service the investment.

Advances

Often, you'll receive a payment quickly, within 30 days of submitting business to a company. This initial payment is often considered an advance on funds that the investment hasn't earned for the company. So, if the investment is dropped before a certain time period passes, the payment may have to be returned to the company. That's why you want to make sure your clients are informed.

Commission Example

The average annuity is $30,000. The average commission on an annuity investment is 8 percent. The paycheck on this investment would be $2,400, paid after the investment is submitted and approved by the insurance provider.

Insurance License

A state insurance body must license you before you can offer an insurance product for sale. You may then pay fees to be licensed in additional states without having to retake an insurance exam. However, continuing education of 30 hours every three years usually is required. State regulations can vary slightly.