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InsuranceHow much commission does a life insurance agent make?

How much commission does a life insurance agent make?

Any commission-based job mainly depends on the sale. A life insurance agent’s commission rate is no exception. To give a glimpse, average pay was $49840 annually (in May 2021) as per the U.S. Bureau of Labour Statistics.

However, just like any structured job sector, the life insurance sector has its own regulations on setting up the commission rate. Agent type, policy type, location, and even the company impact commission rate.

You might ask the question: how much commission does a life agent make? out of curiosity. Or, you might be thinking about entering this promising job sector.

To give a complete answer to that question, let’s take a deep dive into how that works.

A quick look at the job of a life insurance agent

On a surface level, you can think of a life insurance agent as a salesperson. Their main job is to deal with the potential clients who would buy policies.

A person who is skilled at convincing people to buy his product is an ideal fit. Though many agents have bachelor’s degrees, educational qualifications don’t play a vital role here. But a license issued by the state he wants to work in.

Skill in dealing with people is the key here. A trustable relationship between an agent and the insured can bring more customers to the company. The more sales an agent can crack, the more the commission rate will increase.

Several factors matter

There is more than one reason why the commission rate goes up and down. An agent’s commission rate changes based on life insurance policy types, like permanent or term.

In addition, in which position an agent works, captive or brokerage plays a vital role.

Location and the company residing there also play a role in changing the numbers in commission paychecks. An elaboration would help you to grasp the matter.

Policy type-wise commission differs

There are permanent and term life insurance policies. As the premium of permanent life insurance is considerably high, the commission on that is also high.

When it’s a regulatory set by the state government itself, then a company cannot pay less to its agents. Generally, agents get around 30% to 90% commission on the annual premium paid by the insured on their first sale.

Therefore, if the premium is $3000 per annum, the commission would be ($3000*30%)= $900 to ($300090%)= $2700. For some policies, it can rise to 100% or even more for the first year.

The rate gets 3 to 10 percent in the later years till the insured keeps on paying his due premium. It is clear that the commission in the first year of the agent’s sale of a policy is the highest one.

However, the percentage differs from policy to policy and company to company. Whole and universal insurance pay a high commission rate, whereas term insurance pays less.

In case someone asks, how much commission does a life insurance agent make? You can give him the above estimate. Nonetheless, some other factors have a role in that.

Agent position-wise, commission varies

Generally, agents work in two main positions. One is captive, and the other is brokerage.

Captive agents are bound to work for a single company, whereas brokers are free to sell policies from different companies. You can get a hint that the commission payment of brokers ought to be higher.

However, captive agents can get a base salary from their company. But for the agents who solely get paid on commission, how many sales they make is more important. In that case, the question: how much commission does a life insurance agent make?-solely depends on their sales.

Location and company also impact

Let’s take a look at the average pay in May 2021 as per the U.S. Bureau of Labour Statistics database.

California’s insurance agents had the highest employment of 41,290. They had a mean wage of $79,280. Florida and Texas had employment of 36,230 and 33,010. And the agent’s mean wage in these areas was $58,620 and $62,630. New York, with its 20,500 employees, had a mean pay of $93,610 for its insurance agents.

On the other hand, the employment of 410 District of Columbia insurance agents got $100,050 in mean pay.

Metropolitan cities like San Jose, Sunnyvale, and Santa Clara, CA, had higher average pay for insurance agents.

As you can see, state-wise commissions also differ. Not to mention, deep inside, there are more things to consider. The companies maintain similar regulations on wage and commission

payments implied by the state. However, their internal methodology can change how often and on which basis an agent can get a wage rise.

So, now you know the question: how much commission does a life agent make?is not that simple. It requires a lot more research to know it all.

A thing to note

After all these explanations we would like to throw some light on the promising job of an insurance agent. This job is promising also because of its need in the market. Tech may astonish the world, but people need people at the end of the day.

Though an insurance agent’s wage seems to lurk, it comes at a price. He/She may get hundreds of rejections, or even more, before getting his/her first sale. An agent’s daily work routine may start with making phone calls and giving away business cards.

For this moving mountain-like job, many agents don’t stay at this job for quite long. But a person who has in himself the quality of a salesperson gets the upper hand. The agent who can take the rejections and hang in there is a shining star in this sector.

If you are an aspiring life insurance agent, you may take a look at becoming a life insurance agent.


The number of insurance agents employed is about 507,200 as of 2020. Data shows that insurance agents’ average employment can rise to 7% in the following decade. That can lead to 35,500 more adding up. Agents keep on moving to different job sectors, which also creates vacancies.

In May 2021 the lowest wage was down from $29,970 and the highest was $126,510 upwards. In both, these cases report shows about 10% agents. We tried our best to elaborate on the question: how much commission does a life agent make? We hope you got the idea behind it.


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