How Do Insurance Agents Make Money

Insurance agents make money through commissions on the policies they sell. When an agent sells an insurance policy, they earn a commission based on a percentage of the policy’s premium. The commission rate can vary depending on the type of policy and the insurance company.

How Do Insurance Agents Make Money?

As an insurance agent, I know how rewarding being an insurance agent can be. I love my job, and every day I get to help people protect themselves, their families, and their assets from financial losses. But how do I make money? How do any insurance agents make money?

In this article, we’ll discuss the role of insurance agents, the different compensation models, how commissions and bonuses affect your income, the impact of sales performance, how to build and maintain a client base, the importance of continuing education, and discuss the potential for career advancement. Let’s get started! 

Do I Have To Pay The Insurance Agent A Fee?

You don’t have to pay insurance agents a fee because they get paid a commission by the insurance company. The commission is a percentage of the premium you pay for your insurance policy, and it’s paid by the insurance company, not by you. So, every time you make a premium payment, the insurance company pays the agent or agency their commission.

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How Much Do Insurance Agents Get Paid?

The amount that insurance agents get paid can vary a lot. There’s no average salary for an agent because it depends on many factors, like which company they work for and which state they’re in. In Maryland, the commission rate for car and home insurance can range from 5% to 20%, with an average of about 12%.

Life insurance commissions vary even more! Term life insurance usually pays between 80%-125% of the first-year annual premiums while whole life and universal life insurance policies pay even more.

So, let’s say you pay $1000 a month for your car insurance policy. The agency that sold you the policy might get about $100 per month as their commission. But that’s just their gross pay. They still have to pay their own expenses, like agent commissions and rent. So, your agent isn’t making a lot of money off your policy. They need to have many clients to make a living.

There are ALOT of questions that come with how insurance agents make money so we figured to include a list of frequently asked questions:

Is it better to get insurance through a broker?

Getting insurance through a broker can be a good option for some people. A broker can offer you options from different insurance companies, so you can compare prices and coverage. But it’s important to choose a broker who is trustworthy and has your best interests in mind.

What is the difference between an insurance broker and an insurance company?

An insurance company sells insurance policies to consumers, while an insurance broker helps consumers find and choose the right policy from different insurance companies.

Is it cheaper to get insurance through a broker?

It’s hard to say whether it’s always cheaper to get insurance through a broker. Brokers can help you compare prices and coverage options from different companies, but they may charge a fee for their services. It’s important to shop around and compare prices from different sources to find the best deal.

What is the difference between an insurance agent and an insurance broker?

An insurance agent works for one insurance company and sells policies for that company. An insurance broker works independently and can offer policies from different insurance companies.

How do insurance agents make so much money?

Insurance agents earn commissions on the policies they sell. The more policies they sell, the more money they can earn. Some agents also receive bonuses or other incentives for selling certain policies or reaching sales targets.

What does an insurance agent earn?

An insurance agent’s earnings can vary widely depending on many factors, such as the types of policies they sell, the commission rates, and the size of their customer base.

Which type of insurance agent earns the highest income?

It’s hard to say which type of insurance agent earns the most, as it can depend on many factors. However, some types of insurance, such as life insurance or health insurance, may offer higher commissions than other types but at the expense of hardly any renewal commissions.

Is it difficult to earn money as an insurance agent?

Earning money as an insurance agent can be challenging, especially at first. It can take time to build up a customer base and start earning commissions. But with hard work and persistence, it’s possible to make a good income as an insurance agent.

Can selling insurance be a part-time job?

Selling insurance can be a part-time job. Some agents work part-time while holding another job, while others choose to work as independent contractors on a part-time basis.

What makes selling life insurance challenging?

Selling life insurance can be challenging because it requires a lot of trust between the agent and the customer. Life insurance policies are usually sold to help families in case of unexpected events, like a death. This can make the conversation difficult or uncomfortable for some people.

The Compensation Models For Insurance Agents

Insurance agents earn money through a variety of compensation models. Depending on the type of insurance policy they sell, insurance agents make money through the following commissions models:

  • Commission-Based: Insurance agents earn a percentage of the premium paid by clients for their policies. This is the most common compensation model for insurance agents.
  • Salary-Based: Some insurance agents are salaried employees of an insurance company, and do not earn commission. This is more common in large insurance companies or captive agents, who can only sell insurance from one company.
  • Fee-Based: Some insurance agents may charge a fee for their services, rather than earning commission. This is more common for independent agents, who can sell insurance from multiple companies.

Does Having An Insurance Agent Make You Pay More For An Insurance Policy?

Having an insurance agent doesn’t make your insurance premium higher. Some people think that if they don’t have an agent, they might be able to save money on their premium. But that’s not true.

When you buy insurance directly from an online company, they don’t have to pay a commission to an agent. Instead, they spend that money on advertising. So, even if you don’t have an agent, you won’t necessarily save money on your premium. The only difference is where the money is going.

How Commission And Bonuses Factor Into An Insurance Agent’s Income?

As an insurance agent, I can tell you that you can probably expect to earn commission as an insurance agent–it is the most common way insurance agents earn money.  It’s important to note that the amount of commission earned can vary depending on factors such as the type of policy sold and the insurance company that provides the coverage. 

Some insurance companies also offer bonuses to agents who achieve sales targets or reach other performance milestones.

The Impact Of Sales Performance On An Insurance Agent’s Income

As an insurance broker, I am responsible for selling insurance policies. As a result, an insurance agent’s income is directly linked to their sales performance. The more policies you can sell, the more commission you will earn. 

Agents who consistently perform well may be eligible for bonuses or other incentives offered by insurance companies. 


As an insurance agent, I understand the appeal of a career as an insurance agent. As an insurance agent, you can receive composition for your sales in a variety of ways, but the most common is through commissions. It’s important to build and maintain your client base and continue your education to increase your success and open up career advancement opportunities.

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