Life Insurance Agent Commissions and How to Protect Them
November 11, 2020 by Bernard F. Pettingill and Federico R. Tewes
Life insurance agents work strictly on commissions, but the figures vary from company to company and agency to agency.
Commissions paid to agents vary upon the size of the policy and the product type being sold. For example, products such as variable universal life insurance, variable insurance, and universal life insurance tend to have the highest profit margins for the life insurance company and therefore pay out the highest commission rates to agents. The “bread and butter” product of life insurance companies is the whole life insurance policy.
1. You cannot talk about commissions on life insurance, without mentioning distribution channel.
2. What about indexed life? It appears that it is not on the author’s radar?
3. It is unclear what “bread & butter” is supposed to mean, but generally whole life is most relevant to those distributing through career agents; this is not a staple for ALL life insurance companies.
4. The stats cited on insurance agent burnouts are inaccurate. LIMRA indicates that 13% of agents were retained at the end of year 5.
5. Independent agents may be able to offer the “best deal,” but their products also frequently become less attractive once the business is issued.