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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:

  1. Life Insurance Corporation of India
  2. HDFC Standard Life Insurance Co. Ltd
  3. Max Life Insurance Co. Ltd.
  4. ICICI Prudential Life Insurance Co. Ltd
  5. Kotak Mahindra Life Insurance Co. Ltd.
  6. Aditya Birla SunLife Insurance Co. Ltd.
  7. TATA AIA Life Insurance Co. Ltd.
  8. SBI Life Insurance Co. Ltd.
  9. Exide Life Insurance Co. Ltd.
  10. 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:

  1. Bajaj Allianz General Insurance Co. Ltd.
  2. ICICI Lombard General Insurance Co. Ltd.
  3. IFFCO Tokio General Insurance Co. Ltd.
  4. National Insurance Co. Ltd.
  5. The New India Assurance Co. Ltd.
  6. Oriental Insurance Co. Ltd.
  7. United India Insurance Co. Ltd.
  8. Reliance General Insurance Co. Ltd.
  9. Royal Sundaram General Insurance Co. Limited
  10. 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.

Life insurance policies

For single premium category

  • An agent will get 2% for individual life product
  • 7.5% for individual pure risk products
  • 2% for individual immediate and deferred annuity products
  • 5% for group pure risk products

Pure risks Regular premium products

  • 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)

Category1st Maximum Commission payable
All Life insurance products (except term plans)2%
Term plans7.5%
Immediate/Deferred pension or Annuity plans2%
1-year renewable Group Term plan5% of the premium paid or Rs.10 lakhs (whichever is lower)
Group Term plan5%

Regular premium products (insurance agent commission structure)

Category1st yearRenewal commission
Individual Term Insurance40%10%
For 5 year policies15%40%
For 6 year policies18%7.5%
For 7 year policies21%7.5%
For 8 year policies24%7.5%
For 9 year policies27%7.5%
For 10 year policies30%7.5%
For 11 year policies33%7.5%
For 12 or more year policies35%7.5%
Individual Deferred Annuity/pension7.5%2.0%

Health Insurance agent commission structure

CategoryCommission
Health Individual15%
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 

CategoryCommission to agentsCommission to intermediary
Fire-retail15%16.5%
Fire-Corporate (Risk SI<=2,500 crore)10%11.5%
Fire-Corporate (Risk SI>2,500 crore)5%6.25%
Marine-Cargo15%16.5%
Marine-Hull10%11.5%
Miscellaneous-Retail15%16.5%
Miscellaneous- Corporate/Group10%12.5%

Vehicle Insurance Agent Commission structure 

CategoryCommission
MOTOR (Comprehensive)15%
MOTOR (Stand-alone TP)2.5%

LIC insurance agent commission structure details

1st commissionDepend on the term & the type of policy
1st-year commissionCommission payable on the 1st year premium
Bonus-commissionSubject to conditions
Renewal CommissionDepend on the term and type of policy

Types of agents commission in LIC

Year1st Type (Money-back)2nd Type (Endowment)
1st year15%25%
Bonus Commission40% commission40% commission
2 year10%7.5%
3 years10%7.5%
4th Year onward6%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 TypePremium paying termUpfront commission (1st year)Trail commission (2nd & 3rd year)Trail commission (from 4th year)
Endowment/term plans15+ years25-35%7.5%5%
Endowment/term plans10-14 years20-28%7.5%5%
Endowment/term plans5-9 years14%5%5%
Endowment/term plansSingle premium2%0%0%
Money back15+ years15-21%10%5%
ULIPsRegular premium20-40%2%2%
ULIPsSingle premium2%0%0%

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

Agent commission 

YearCommission (Rs.)Method
1st yearRs.35,0001*35%
2nd yearRs.15,0002*7.5%
4-20th yearRs.85,00017*5%
TotalRs.1.35 lakhs6.75%

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.

About WealthBucket

We at WealthBucket ensure your easy process of acquiring mutual funds. By using our professional services and expert guidance, we ensure that you get the maximum out of your investments. For this, we invest in a mix of many mutual fund schemes that include investing in Equity funds, Debt funds, Large-cap mutual funds, small-cap mutual funds, and the list goes on. So, what are you waiting for? The time is now to start investing small amounts and see this amount grow in millions in the years to come.

You can give us a call at +91 8750005655 or email us at contact@wealthbucket.in

Related articles:

Mutual fund agency rules: SEBI norms on commission paid to mutual fund agents

Mutual fund investment: Direct or with Mutual Fund Agent

Frequently Asked Questions

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