A career in insurance takes tenacity and a calling to help other people with their financial wellbeing. As an insurance agent, you are meant to help people find security for themselves and their loved ones through life, health, auto and home insurance in case of unfortunate or tragic events.
Aside from the altruistic value of this career, it requires you to have the ability to convince people of the benefits of insuring themselves and their loved ones. The willingness to serve is highly rewarded: according to the Bureau of Labor Statistics, the average income of an insurance agent was $50,600 in 2018. But a hard-working insurance agent has the potential to earn between 50 and 100% of the insurance policy’s annual premium (including renewals) in commissions which can definitely add up.
Commissions are one of the best ways to bolster your income. As an insurance agent, your commission will depend on the policy you sell and is typically calculated as a percentage of the insurance premium. Things like the type of plan, or whether it is renewable or non-renewable, amongst other factors will help determine your commission.
One important distinction to make is between auto & home insurance commissions and life & health insurance commissions. Auto & home insurance agents typically earn different commission than life & health insurance agents because they fall under different commission structures.
Life insurance agents can expect between 40-100% commission on the first year of the policy, but the commission rates for renewals are much lower, at around 1-2%. On the other hand, health insurance agents can expect between 3-6% commission of each premium, including renewals. Sometimes an exact amount is paid, per member, per month (e.g., $15/member/month).
Insurance Agent Career Options
Another important consideration is the distinction between captive and independent agents.
Captive agents – ones who work for insurance agencies, such as Farmers or State Farm – have the benefit of stability because they earn a salary, plus commission. Commissions for captive agents usually follow a structure that decreases the percentage of commission each year.
Independent agents, on the other hand, make their living on commission which involves less stability. However, independent agents typically make more commission, and the structure can be stable over time.
Talking about benefits, let’s take a look at the other benefits of being an insurance agent:
• Expanding Your Network – Being an insurance agent requires you to be a people person, willing to learn and adapt personal requirements of clients to the insurance products you are offering.
• Unlimited Earning Potential and Opportunities – Insurance has become a necessity to ensure people that their livelihood will be addressed, especially in times of personal crisis. And no matter what the economy is going through, whether it’s a recession or boom, people need insurance for their future stability.
• Flexibility in Time – You can make your own schedule and fit it into your lifestyle and your other responsibilities such as picking up kids from school or extracurricular activities, or a small online retail business.
A career in insurance is lucrative and rewarding as you build your network of clients. Help these clients meet their insurance needs and provide specific solutions to their problems. You also help in securing their families’ future. Your hard work is rewarded by the opportunity to earn a comfortable income and have enriching life experiences.