Commission Structure of Insurance Agents REVEALED

Source: http://onemilliondiary.blogspot.sg/2012/...rance.html

I managed to get a copy of the Agency Schedule Of Commissions from my insurance agent friend working at one of the insurance companies in Singapore. This schedule of commissions describes the commission structure and rates for the different types of insurance policy plans. I summarized and inputted the information onto a spreadsheet(as attached below). The names of the products are intentionally left out in order to conceal the identity of the insurance company.

[Image: insurance.png]

As we can see from the table above, whole life and investment link insurance policies have the highest commission rates. In addition, an insurance agent would receive renewal commission for the next 5 years after he closes a sale. This means that as long as the policy is being renewed, the insurance agent will be able to get additional commissions for the next 5 years (albeit at a lower rate). For accident products, the commission rate is a flat rate of up to 30% and is payable throughout the premium-paying term. If I were an insurance agent, I will definitely put my focus on accident products.

Assuming a person buys an accident insurance policy with annual premium of $300. The insurance agent will receive $90 (30% of annual premium) as commission. As long as his client renews the policy every year, the insurance agent will get $90 yearly without even doing anything. This is their form of 'passive income' in the insurance world.

Let's now assume the insurance agent sells 2 accident policies with annual premium of $300 every week. After 3 years, he would have sold 312 accident policies. The renewal commissions from these 312 accident policies he sold in the past 3 years would amount to $28,080 per year or $2,340 per month. This means that the monthly 'passive income' for the insurance agent is $2,340 after 3 years and this is based on the assumption of selling just 2 accident products per week.

Despite the high commission rates of insurance policies, I will still need insurance to protect the financial well-being of my family and myself. In my opinion, a person should have at least an upgraded Medishield plan which covers 100% of the medical bills(including co-insurance and deductible) and an income replacement insurance which provides a regular stream of income during the period of disability. Having said that, the type of insurance a person needs really depends on his/her preference and family situation.

I dun think we should judge if the commission rate is high for a product.

fyi agents do not get the full commission, cos part of it goes to their boss and agency

can we judge if lawyers and doctors are overpaid as well as compared to agent?

what about the chicken rice seller who sells a plate of chicken rice for $3 when the cost of ingredient and overheads may work out to be only $1.50? thats a 50% comm product!

property agents are being paid 1-2% of the property price as well but is it overly high?

if a jobs pays that well and pays too much, we should all jump in isnt it.

forget where i see the report that say insurance agent can earn as much as XXX,XXX vs property agent XX,XXX

(22-10-2012, 10:14 AM)steven Wrote: forget where i see the report that say insurance agent can earn as much as XXX,XXX vs property agent XX,XXX

erm whats wrong with any occupation earning more than another occupation?

(22-10-2012, 10:06 AM)Kelvin Wrote: can we judge if lawyers and doctors are overpaid as well as compared to agent?

I always laughed when agents start comparing themselves to lawyers and doctors.
Lawyers and doctors are trained for years for their specialised skills that are almost impossible for any commoner to master in decent amount of time.
It's hard for anyone to diagnose their own sickness with high confidence, especially those uncommon diseases.
Neither is it easy for anyone that is not trained in law to go to court to defend himself without making a mockery of himself.

But, buying the right insurance is easy and no one knows better than yourself which insurance is more suitable for yourself.
This is especially the case where most agents(99%??) act in their own interest more than their clients' interest.

For those diligent investors, insurance agents are pretty useless to them.

they need to fill their pocket first before fill yours

(22-10-2012, 11:58 AM)steven Wrote: they need to fill their pocket first before fill yours

I am ok with insurance agent as a job but there is no need to over glamourise the job. All legal jobs are respectable but naturally, I respect more of those jobs that bring benefits to the society or customers while in the process, make a living from it.

I also think that I can do things that are as difficult as a doctor's job or lawyer's job. But, due to the society's demands and salary scalability, I will not be able to draw as high a pay as them.

(22-10-2012, 11:00 AM)yeokiwi Wrote:

(22-10-2012, 10:06 AM)Kelvin Wrote: can we judge if lawyers and doctors are overpaid as well as compared to agent?

I always laughed when agents start comparing themselves to lawyers and doctors.
Lawyers and doctors are trained for years for their specialised skills that are almost impossible for any commoner to master in decent amount of time.
It's hard for anyone to diagnose their own sickness with high confidence, especially those uncommon diseases.
Neither is it easy for anyone that is not trained in law to go to court to defend himself without making a mockery of himself.

But, buying the right insurance is easy and no one knows better than yourself which insurance is more suitable for yourself.
This is especially the case where most agents(99%??) act in their own interest more than their clients' interest.

For those diligent investors, insurance agents are pretty useless to them.

IMO, the concern is not on the absolute amount of insurance agent commission vs other professions. The ultimate concern is the fairness of the commission to policy owners.

(22-10-2012, 09:58 AM)steven Wrote: Source: http://onemilliondiary.blogspot.sg/2012/...rance.html

I managed to get a copy of the Agency Schedule Of Commissions from my insurance agent friend working at one of the insurance companies in Singapore. This schedule of commissions describes the commission structure and rates for the different types of insurance policy plans. I summarized and inputted the information onto a spreadsheet(as attached below). The names of the products are intentionally left out in order to conceal the identity of the insurance company.

[Image: insurance.png]

As we can see from the table above, whole life and investment link insurance policies have the highest commission rates. In addition, an insurance agent would receive renewal commission for the next 5 years after he closes a sale. This means that as long as the policy is being renewed, the insurance agent will be able to get additional commissions for the next 5 years (albeit at a lower rate). For accident products, the commission rate is a flat rate of up to 30% and is payable throughout the premium-paying term. If I were an insurance agent, I will definitely put my focus on accident products.

Assuming a person buys an accident insurance policy with annual premium of $300. The insurance agent will receive $90 (30% of annual premium) as commission. As long as his client renews the policy every year, the insurance agent will get $90 yearly without even doing anything. This is their form of 'passive income' in the insurance world.

Let's now assume the insurance agent sells 2 accident policies with annual premium of $300 every week. After 3 years, he would have sold 312 accident policies. The renewal commissions from these 312 accident policies he sold in the past 3 years would amount to $28,080 per year or $2,340 per month. This means that the monthly 'passive income' for the insurance agent is $2,340 after 3 years and this is based on the assumption of selling just 2 accident products per week.

Despite the high commission rates of insurance policies, I will still need insurance to protect the financial well-being of my family and myself. In my opinion, a person should have at least an upgraded Medishield plan which covers 100% of the medical bills(including co-insurance and deductible) and an income replacement insurance which provides a regular stream of income during the period of disability. Having said that, the type of insurance a person needs really depends on his/her preference and family situation.

I am thinking about this too, and this is what I think...

If we look at the commission vs total premium paid for each product, a 25yr whole life policy's commission is 3.8% (total of 0.95 annual premium/ 25yrs of premiums), an accident plan commission is 30%, a Shield plan is 5%. So the agent will actually get the least from a whole life policy?

should know that those policy their yearly premiums are much lower than high cash value policies.