Commission

Posted: Fri Dec 11, 2009 01:19 pm Post Subject:

Are you talking about compensation from an insurer to an agent or from an agency to an agent?

If you mean from an agency to an agent, expect that the GA will take 20-30% of the gross commission off the top. You have to ask, what did he do for me to deserve that?

One of the answers is probably going to be: I showed you how to prospect, set appointments, make effective sales presentations, and (most importantly) how to close business. Another is, I am your record keeper, supervising principal, and knowledge base.

At some point, with enough experience of your own, you may not need the GA's help anymore, and will be able to do things on your own, so you open your own agency and keep all the commission for yourself. Then you hire new agents and take 20-30% of what they earn for showing them how to do the business. And when they're ready to go it alone, they become your competition.

If you're asking what the commission rates are for specific products that's different. When you are appointed by an insurance company, they give you a contract that spells out your commission schedule. Life insurance can be 90% or more, first year advance, but only one year on term insurance, additional years of lower (1-5%) renewals on cash value policies, health insurance is typically 20-25% of the current premium, "as earned" (monthly) first year, 5-7% renewals as long as the business is on the books. Fixed and Variable annuities 6-8% on the initial purchase premium and any additional purchases in the future, but VAs also pay quarterly trails on "assets under management" which is nice to have as your book of business grows.

Just make sure your clients understand the advantages AND DISADVANTAGES of the product(s) you offer -- especially the VAs. Can't only talk about the "good" without an equal, if not more complete, explanation of the "not so good". And don't rip off any senior citizens, or guys with 85 year old moms like me will come looking for you. :)

Posted: Tue Dec 15, 2009 02:29 am Post Subject:

Max makes a good point about spelling out cover limitations. As you will eb aware, you are responsible for any representations you make regarding the cover you recommend. If you recommend an unsatisfactory product, or misrepresnt the level or typwe of cover provided you may find you career in insurance a short and painful one!

Remember this - customers frequently forget when you give them advice they don't want to hear, but if you tell them something is covered, they'll remember it forever.