The commission earned by the insurance agent varies from company to company. Must read on who makes more money: Insurance agent or mutual fund agent. We will learn about the insurance agent commission structure in India and how the Insurance Agent Commission is defined by the Companies. Learn how you can become an Insurance agent in India.
Insurance agents are the intermediaries between insurance companies and those who seek insurance policies. Keep reading on the types of insurance agents in India. These agents may sell the clients one type of policy or a variety of insurance policies. Must read on the guide to the tax return on Insurance agent. There are multiple insurance policies type: Health, Life, Property, Disability, etc. But which is better: buying insurance policy online or offline through an agent.
List of few top Life insurers:
- Life Insurance Corporation of India
- HDFC Standard Life Insurance Co. Ltd
- Max Life Insurance Co. Ltd.
- ICICI Prudential Life Insurance Co. Ltd
- Kotak Mahindra Life Insurance Co. Ltd.
- Aditya Birla SunLife Insurance Co. Ltd.
- TATA AIA Life Insurance Co. Ltd.
- SBI Life Insurance Co. Ltd.
- Exide Life Insurance Co. Ltd.
- Bajaj Allianz Life Insurance Co. Ltd and more you can find the full of list Life Insurance companies Here.
List of few top General insurers:
- Bajaj Allianz General Insurance Co. Ltd.
- ICICI Lombard General Insurance Co. Ltd.
- IFFCO Tokio General Insurance Co. Ltd.
- National Insurance Co. Ltd.
- The New India Assurance Co. Ltd.
- Oriental Insurance Co. Ltd.
- United India Insurance Co. Ltd.
- Reliance General Insurance Co. Ltd.
- Royal Sundaram General Insurance Co. Limited
- Tata AIG General Insurance Co. Ltd. and more you can find the full list of General Insurance companies Here.
Commission structure of Life Insurance Agents
The insurance agents earn a commission that is earned from the corporation. The commission that is earned depends on various factors namely:
- It varies from policy to policy
- It also depends upon the term of the policy
The term of the policy and type of the policy (Endowment, Money Back, etc.)will determine the first agent commission. You can also read how you can sell insurance policy online. We will provide the information about the commission that an Insurance advisor gets. But what are the steps you need to take to establish your own insurance agency? The commission of the insurance agent is also based on the type of policy which is available on the insurer’s website.
The commission is adjusted according to these terms:
- For 15 years, the maximum commission an agent gets is approx 25%
- And the commission is cut down to approx 5% after the 4th year.
For Endowment Natured Policies with 15 years or more term the first-year commission of 25% and a Bonus Commission on the same to the extent of 10% on the First Yr Premium. Keep yourself informed on Life insurance vs mutual fund. 35% is payable if the Agent is eligible for Bonus. Otherwise, the maximal Commission payable to be 25 % on the First Year Premium. furthermore, the sale of Life Insurance gives repeated commission payments for one sale. Learn what are the benefits you get being a PoS insurance agent.
- The first-year commission will be 40%
- 10% for every renewal premium
Regular premium products bundled with investments
- The commission for the first 5 years will be 15%. This commission will be 35% over 12 years.
- There is also a renewal premium of 7.5% per annum.
- So from the 12th year onwards, the commission will be 42.5% per annum.
Insurance agent commission structure from 1st April 2017
Single-Premium Products (insurance agent commission structure)
|Category||1st Maximum Commission payable|
|All Life insurance products (except term plans)||2%|
|Immediate/Deferred pension or Annuity plans||2%|
|1-year renewable Group Term plan||5% of the premium paid or Rs.10 lakhs (whichever is lower)|
|Group Term plan||5%|
Regular premium products (insurance agent commission structure)
|Category||1st year||Renewal commission|
|Individual Term Insurance||40%||10%|
|For 5 year policies||15%||40%|
|For 6 year policies||18%||7.5%|
|For 7 year policies||21%||7.5%|
|For 8 year policies||24%||7.5%|
|For 9 year policies||27%||7.5%|
|For 10 year policies||30%||7.5%|
|For 11 year policies||33%||7.5%|
|For 12 or more year policies||35%||7.5%|
|Individual Deferred Annuity/pension||7.5%||2.0%|
Health Insurance agent commission structure
|Health Group (Employer-Employee)||7.5%|
|Health Group (Non-Employer-Employee)||15%|
|Health Group (Credit linked up to 5 years)||15%|
General Insurance Agents Commission structure
|Category||Commission to agents||Commission to intermediary|
|Fire-Corporate (Risk SI<=2,500 crore)||10%||11.5%|
|Fire-Corporate (Risk SI>2,500 crore)||5%||6.25%|
Vehicle Insurance Agent Commission structure
|MOTOR (Stand-alone TP)||2.5%|
LIC insurance agent commission structure details
|1st commission||Depend on the term & the type of policy|
|1st-year commission||Commission payable on the 1st year premium|
|Bonus-commission||Subject to conditions|
|Renewal Commission||Depend on the term and type of policy|
Types of agents commission in LIC
|Year||1st Type (Money-back)||2nd Type (Endowment)|
|Bonus Commission||40% commission||40% commission|
|4th Year onward||6%||5%|
Factors affecting how much money an insurance agent will make
- Client-base of the agent
- The number of companies an insurance agent work for
- Experience gained
- The money made will be more if the agent sells insurances for different categories
- Whether they are in agreement with an employer or an independent agent.
- The compensation agreement with the insurance company
- Whether the agent has expenses to pay out of the commission such as rent, staff, and supplies.
A Sample of insurance agent commission structure
|Policy Type||Premium paying term||Upfront commission (1st year)||Trail commission (2nd & 3rd year)||Trail commission (from 4th year)|
|Endowment/term plans||15+ years||25-35%||7.5%||5%|
|Endowment/term plans||10-14 years||20-28%||7.5%||5%|
|Endowment/term plans||5-9 years||14%||5%||5%|
|Endowment/term plans||Single premium||2%||0%||0%|
|Money back||15+ years||15-21%||10%||5%|
Example of the calculation of insurance agent commission structure
Type of policy: Endowment policy
Term of the premium: 20 years
Premium/annum: Rs.1 lakh
Top 5 Insurance companies in India
1. Life Insurance Corporation (LIC)
LIC is India’s biggest government-owned company which deals in insurance products. LIC India finances 24% of outlays of the Government of India.
Products: LIC offers employee and individual group insurance products
2. Bajaj Allianz
It is a private insurance company that deals with general insurance. It is a joint venture between Bajaj Auto Limited and Allianz SE and enjoys a reputation of strength, proficiency, and stability. Bajaj Allianz has a vast network in over 200 towns across the country
Products: It offers motor, travel, health, and corporate insurance products
3. ICICI Lombard
It is also a private insurance company that deals with general insurance products. ICICI Lombard is a joint venture between ICICI Bank Limited and Canada based Fairfax Financial Holdings Limited.
Products: Offers motor, health, and home insurance products
4. Tata AIG
Tata AIG is a joint venture between TATA sons and the American International Group. It is a private insurance company that deals with general insurance products.
Products: It offers a wide range of general insurance products like travel, personal accident, property, home, automobile, energy, marine, and casualty, etc. It offers individual, small business and corporate insurance products.
5. National insurance
It is owned by the Government of India and is a subsidiary company of General Insurance Corporation of India (GIC)
Products: Offers rural, industrial, commercial, and personal insurance
WealthBucket tips to become a successful insurance agent
Always keep on learning:
An insurance agent must be up to date with the changes in tax and insurance laws. This could be achieved by attending conferences and seminars sponsored by various insurance organizations. Then the agent must create a one-stop destination where anyone can get detailed knowledge about financial services and insurance products.
Gain some competitive edge:
With the advent of the internet, every business is now expanding via online services only. So, an insurance agent must create an online platform where customers can remain in contact with their agents and get daily updates/information about the investments. There could be an effective insurance agent’s advertisement policy to market the offers.
Provide good customer service:
Last but not least, most of the customers confide with offline agents. So, it is important to build a good level of trust with the customers through effective communication and pre-sale & post-sale of insurance products. For this, you can appoint a customer service executive who will handle client requests & any queries for the same.
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Frequently Asked Questions
The insurance agents can provide services like risk management, claim consultancy, risk mitigation, risk advisory, risk audit, etc.
An agent represents a company and a broker represents a consumer/policyholder
An agent must be of 18 years of age or older.
An agent must be at least 12th pass.
There is no such cost associated to become an insurance agent, though there are some expenses associated if one wishes to do well in insurance selling.
• Overhead costs (rent, staff, and other supplies)
• Website, CRM, software making costs
• Staff for lead generation