A life insurance commission is the amount of money that the broker or sales agent gets for selling the policy.

You’ll find life insurances salespeople can be pushy and sell you into a policy. The reason for this is that for the most part they are either completely dependent or mostly dependent on their commissions on the policies that they sell.

How Rates Are Determined

The commission plan is going to be very dependent on the company that you’re working for. It will be dependent upon the plan that you sell and the duration of the policy if it’s a term life insurance policy. You’ll get a calculated amount based upon the total anticipated premium collection.

Term Life Policies

Term life insurance policies are a type of policy that is perfect for the consumer on a budget. It’s one that offers lower premiums and is only purchased for a specific term. A term life insurance policy doesn’t build any cash value of the course of the policy so this type of policy will offer a lower commission rate.

Cash-Value Policies

A policy that has cash value with it; such as, a whole life insurance policy doesn’t have a date of expiration like the term life policy, thus as long as the premiums are paid and current the policy will stay in effect until the insured dies.

The policy will build cash value over the life of the policy and the funds are accumulated on a tax deferred basis. The premiums are going to be higher with this type of policy so the commission rates are going to be higher as well. This is of course why the sale of the whole life insurance policy is more advantageous and pushed more by the life insurance salesperson.

Rates

Depending on the company that you’re working for the commission can either be on a flat rate basis and sometimes it can change over time. Usually the way it works with the continuation payments is the initial year the salesperson will get a higher rate of commission which will decrease for additional policy years.