How much do insurance agents make?
Exploring the earning potential of insurance agents: how much do insurance agents make? Gain valuable insights into the compensation structure of the insurance industry, including factors influencing agents' income. Discover average earnings, commission structures, and potential for growth in this rewarding profession.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
UPDATED: Jun 22, 2024
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UPDATED: Jun 22, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
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Understanding Life Insurance Agent Earnings
Curious about how much does a life insurance agent make? The average life insurance agent salary varies significantly based on factors such as experience, location, and whether the agent is independent or captive. Typically, the life insurance agent salary is structured around both base pay and commissions. A common question is, do life insurance agents make good money?
The answer depends on their ability to build and maintain a robust client base. For instance, the life insurance agent commission structure often includes a high upfront commission ranging from 40% to 100% of the first-year premium, with subsequent renewals earning 1% to 2%.
This means that how much commission do insurance agents make can be substantial in the initial years, especially for those who excel in sales and customer retention. For those considering a career as an independent agent, it’s crucial to understand the insurance agency commission structure.
Independent agents might earn higher commissions compared to their captive counterparts, enhancing their earning potential over time. The independent life insurance agent salary often benefits from a more consistent commission rate. For example, how much do life insurance agents make per policy can be significant, with an upfront commission for a $5,000 premium policy yielding up to $3,500.
Over time, this structure supports exponential income growth as the agent accumulates more clients. In summary, while how much can a life insurance agent make varies, those with a strong work ethic and effective sales strategies can achieve impressive financial success in this field.
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Exploring the Income of Life Insurance Agents
Understanding the life insurance salesman salary is crucial for anyone considering a career in this field. One common question is how much can you make by selling life insurance. The life insurance broker salary can be quite lucrative, especially for those who excel in client acquisition and retention.
When examining how much does a life insurance agent make in commission, it’s important to note that the insurance commission structure typically includes a significant portion of an agent’s earnings. The average income of an insurance agent can vary widely depending on experience and geographic location, but successful agents often surpass the national average income insurance agent benchmarks.
For those interested in health insurance, the health insurance agent salary also presents a compelling earning potential. How much can an insurance agent make depends on factors such as the volume of policies sold and the health insurance agent commission rates. Understanding how much does an insurance agent make in various specializations helps in setting realistic career expectations.
Independent agents often see higher earnings; the independent insurance agent salary reflects this flexibility and potential for growth. Overall, the licensed life insurance agent salary and how much does a life insurance salesman make can be substantial, making it a potentially rewarding career choice for motivated individuals.
How much do insurance agents make in a year?
How much does the average insurance salesman or salesperson make? The average income for a life insurance agent is $79,730 a year. An insurance producer’s salary is $55,417 a year.
If you’re looking at agent salaries as a whole, a slightly different picture is painted. According to money.usnews.com, insurance sales agents made a median salary of $50,600 in 2018.
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How much do insurance agents make in commissions?
How much do insurance agents make per policy? Insurance agents who sell auto and home insurance typically get paid based on the written premium of the policy.
Do insurance agents get a commission? What is the insurance agent commission rate? What even is the commission? Typically, the percentage earned as commission ranges between 5 and 20 percent. When a policy gets renewed, the agent earns commission again, although sometimes at a lower rate.
Agents that put in the effort to build a solid book of business can draw a considerable yearly salary simply from renewals and consistently adding to your book of business can lead to exponential income growth.
Example: A $1,000 auto insurance policy with a 10 percent commission provides the agent with $100.
Are there life & health insurance commissions?
Agents who sell life and health insurance policies are often on a different commission structure than P&C agents. In most cases, agents will earn high upfront commissions with much lower rates on renewals.
Commissions for life and health insurance brokers tend to be between 40-100 percent of the first year premium, then 1-2 percent for renewals, and after three years often go away entirely.
Example: A whole life insurance policy with premiums of $5,000 and a commission of 70 percent provides the agent with $3,500.
Read our article on whole life insurance basics if this topic in particular interests you. Now, let’s move on to how a captive agent gets paid.
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How can you get paid as a captive vs an independent agent?
Below we will cover the differences between the payment for captive and independent agents.
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What is a captive agent?
The number-one concern for all agents is attracting clients. Insurance companies have marketing budgets they spend generating interest in their brand and generating leads for their captive agents.
This benefits new agents who otherwise may have a small sphere of influence from which to attract clients. Often, simply by staying close to the phone, a new captive agent can acquire business from leads generated by the company’s marketing efforts.
Many large companies employing captive agents provide benefits and provide access to the reinsurance market. Captive agents also benefit from having a desk in an office, a receptionist, and a full suite of office equipment.
Being in an office with other agents can also be a benefit since there is a wealth of experience on which to draw. These factors add a sense of credibility to an agent.
A downside is that, since a captive agent works exclusively for one insurance company, that agent can only sell the products that the company offers and doesn’t have the ability to refer customers elsewhere when they can’t sell them a policy.
The parent company may also push certain types of policies for the agent to sell or discontinue certain types of coverage.
How do captive agents get paid?
What is an independent agent?
Many independent agents work from home or from a small office they pay for themselves. They do not have the same support from a larger carrier like captive agents but also don’t have the same red tape.
Instead of sitting by the phone in a large office waiting for leads to come in, independent agents thrive on getting out into the community and meeting clients at cafes or their places of business.
This replaces the big marketing budget of a major company. Interacting with the public expands its sphere of influence.
As independent entrepreneurs, they can offer a more personal level of service to clients who may shy away from corporate brands. Also, instead of only selling one company’s products, independent brokers can shop around to find their clients the best product for the best price. This can help the agent gain a client’s trust.
The downside is they take on more financial burden with getting started, are almost fully commission-based, and it can be difficult to get appointed.
Specifically for new agents, when attempting to become an independent agent, it can become very challenging to get appointed by insurance carriers without an existing book of business and solid business plan. It may be worth it for the independent insurance agent commission rates.
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How do independent agents get paid?
Independent agents are paid primarily on commission. The more clients they serve, the more money they make. And as those clients renew each year, independent agents continue to make commissions on those policies.
In general, however, independent agents receive larger commissions than captive agents. A captive agent at Allstate might make 10 percent off of an initial sale of a homeowner’s policy.
How much does an independent agent make? An independent agent who sells that same Allstate policy might make 15 percent. This may not sound like a big difference, but if you write $500,000 in premiums in a year, it’s a difference of $25,000 to your salary.
Going forward, independent agents’ renewal commission percentage normally stays the same. A captive agent’s commission percentage structure might be 10-8-6 for the first three years of a policy which further decreases overall compensation.
An independent agent’s commission percentage structure might be 15-15-15. Independent agents typically earn the same as non-salaried captive agents off of health and life insurance policies, and independent agents have no opportunities for performance-based bonuses.
Example: A $1,000 auto insurance policy for an independent agent, renewed for three years at 15 percent commission, provides the agent with a total of $450 (Year 1: $150, Year 2: $150, Year 3: $150). A $1,000 auto insurance policy for a captive agent, renewed for three years at decreasing yearly commission (10-8-6) provides the agent with a total of $240 (Year 1: $100, Year 2: $80, Year 3: $60).
What role does experience play?
Time on the job is a big factor in determining income potential for both captive and independent agents since commissions accumulate over time.
If an agent continues to generate the same number of new clients each year, and the agent’s existing clients renew their coverage each year, that agent can increase his income exponentially over time.
Since independent agents’ renewal commissions tend not to drop year after year, they have an advantage in the long run over captive agents, whose renewal commissions decrease.
Entry-level agents have few clients and thus earn the lowest income. Experienced agents have likely accumulated a large number of long-term clients, and as such make a comparatively larger income.
Example: $500,000 in premiums written in year one with 15 percent commission nets $75,000 in commissions. If 80 percent of that premium is renewed in the following year, a 15 percent commission rate would provide you with $60,000. Selling another $500,000 in written premiums that year would boost your salary by another $75,000 for a total of $135,000.
Another way experience plays a role in the income of an insurance agent has to do with people skills. Regardless of whether an agent is captive or independent, success is all about relationship building.
The more experience an agent has, the better the agent can anticipate and fulfill the needs of a client. If a client feels taken care of by an agent, that client will likely continue to renew.
Another advantage of independent agents is that they can change their clients’ policies to new companies if they find a better deal. Also, if a captive agent changes companies or decides suddenly to go independent, he will likely lose his book of business and cease to get his renewal commissions, therefore having to start from scratch.
Read more: How to Sell Car Insurance: Expert Tips for Success
How much do insurance agents make by location?
The cost of living, crime rate, health statistics, and accident rates in a city can all affect insurance rates, causing fluctuations in the size of premiums and therefore the size of commissions. Location can also affect how many potential customers are available compared to how many agents are working in the market.
When deciding where to work, an agent should consider the cost of living, the likely value of premiums, and the likely amount of competition, and pick the market that best suits his desired lifestyle.
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Frequently Asked Questions
How much do life insurance agents make?
Life insurance agents can make a substantial income, with many earning between $50,000 to $100,000 annually, depending on their sales and experience.
How much commission does an insurance agent make?
An insurance agent typically makes between 5% to 20% commission on each policy they sell, with variations depending on the type of insurance and the agent’s experience.
How much do car insurance agents make?
Car insurance agents often earn between $40,000 to $70,000 per year, with income heavily influenced by their sales volume and commission rates.
How much do insurance brokers make per policy?
Insurance brokers generally make a commission of around 10% to 15% of the premium on each policy they sell.
How much commission do commercial insurance agents make?
Commercial insurance agents typically earn a commission rate ranging from 10% to 15% on the policies they sell, which can vary based on the complexity and size of the policy.
How much commission does a life insurance agent make?
A life insurance agent can earn a commission of 40% to 100% of the first year’s premium, with renewal commissions being much lower, often around 1% to 2%.
Which insurance agents make the most money?
Insurance agents specializing in life and health insurance often make the most money due to high commission rates and the potential for large policy sales, with top earners making well over $100,000 annually.
What factors determine how much insurance agents make?
Insurance agent salaries are typically a combination of salary, commission, and bonuses. However, the amount an agent makes depends on whether they are an independent or captive agent, their location, and their experience.
What is the average salary of an insurance agent?
According to the U.S. Bureau of Labor Statistics, the average insurance agent’s total pay (salary, commission, and bonuses) in 2013 was $48,210 with the bottom 10 percent earning an average of $26,120 and the top 10 percent earning $116,940. The average income for a life insurance agent is $79,730 a year, while an insurance producer’s salary is $55,417 a year.
What is a captive agent?
A captive agent works for a specific insurance company and benefits from the company’s marketing budgets, which generates interest in their brand and generates leads for their captive agents. Captive agents also benefit from having a desk in an office, a receptionist, and a full suite of office equipment. However, they may be restricted to selling only the products of the company they work for.
How does experience affect an insurance agent’s income?
Experience plays a role in an insurance agent’s income, with more experienced agents earning more than new agents. Agents who have built a solid book of business can draw a considerable yearly salary simply from renewals.
How do independent agents get paid?
Independent agents are paid on commission, with the commission percentage varying depending on the type of policy. They can also earn bonuses from the insurance companies they work with.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.