If you are planning to make a career in selling insurance then you may think, “How much commission does an insurance agent get?” Well, then you need to know that insurance agent jobs are blooming. At present, there are more than 500,000 insurance agents in the United States. And this number is expected to rise by about 7% till the year 2030. So, whatever may be the condition of the national economy, people are going to buy insurance.
To be an insurance agent, you need to be a high school passes out, a diploma, or similar other degrees. And you don’t have to have any job experience to become an agent at the entry-level. You can join the insurance industry and be an agent to sell more than one type of insurance.
We come back to your question as to how commission work for insurance agents. Well, there could be two ways in which you can earn money. You can start your insurance agency and employ a sales staff on a salary. The other option is to be an independent agent and sell insurance products to several insurers. You will get paid with commissions for that.
You can get some idea of how to do commission work in insurance from the below information.
1. Commission on the term premium
The commission amount will depend on the type of policy that is being sold. It is expressed as a percentage of the term premium. For car coverage, an agent is paid 10% of the premium while for a general liability policy; the commission paid will be around 15%.
2. Extra incentives or group commission
If an agent achieves his monthly target then he may be paid extra dollars by insurers. This is a reward for all the good work that is done every month. But it is paid at the end of the year after an assessment of the agent’s performance.
3. Monthly payment in the form of a salary
If you work as an agent in some company then you will get a salary every month. The same is also true if you work as a producer for a big insurance agency. But how many insurance policies you sell each month will show up on your performance for the year.
Let us now see how insurance commissions work.
As per the United States Bureau of Labor Statistics, the median wage of insurance agents per year is $52,180. But the range is wide. The lowest 10% of agents in this range earn less than $29,000 per year and the highest 10% in the same range earn more than $125,000 per year.
Besides, the reward got by an agent will depend on how much sales he has done throughout the year. And there are some other factors like how many policies were retained, the loss ratio, and much more. This means if you have clients that renew the coverage every year then you will do well. You will be earning more money in such a case.
Now that you know how to commission work in insurance sales, you also need to know about its pros and cons. It is good to earn hefty commissions but it might also create some stress in your life. If you work as an agent on a salary, you will be sure to get a fixed income every month. But to earn a big commission, you will have to work hard and sell more policies. Still, you will be your boss and it is the biggest benefit.
However, it is hard to earn commissions on a steady basis unless you develop a good network with your clients. And this network must grow year over year to get more leads and push your insurance sales upwards.
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