How Are Insurance Agents Paid?

Have you ever wondered how insurance agents are paid? The answer may surprise you. Most insurance agents are actually paid a commission by the insurance companies they represent. This commission is based on the premiums that are paid by policyholders. So, the more policies an agent sells, the more money they make. There are some insurance companies that pay their agents a salary, but this is not as common. In most cases, if an agent is paid a salary, it is in addition to a commission.

So, now that you know how insurance agents are typically paid, you may be wondering how this affects you as a consumer. The answer is, it really depends on the agent. Some agents may be more likely to sell you a policy that has a higher premium because they will make more money from it. However, there are also good agents out there who will only sell you a policy that is right for you and your needs, regardless of the commission. If you have any concerns about how your agent is being compensated, be sure to ask them directly. A good agent should be able to explain their compensation structure to you and put your mind at ease.

The Different Types of Insurance Agents

There are several different types of insurance agents, each with their own method of compensation. The most common type of agent is the captive agent, who represents only one insurance company. These agents are usually paid a salary plus commission on the policies they sell.

The second most common type of agent is the independent agent, who represents multiple insurance companies. Independent agents are typically paid solely on commission.

There are also a few other types of agents, such as exclusive agents and general agents. Exclusive agents represent only one insurance company but have special access to certain products that other types of agents may not have. General agents represent multiple insurance companies but focus on selling only one type of product, such as life insurance or disability insurance.

How Insurance Agents are Paid

Most insurance agents are paid through a commission structure. This means that they earn a portion of the premiums that their clients pay for their policies. The amount of commission an agent earns varies based on the type of policy, the company they work for, and other factors.

Some insurance companies also offer bonus programs or other incentives for their agents. These programs can be based on production goals, customer satisfaction, or other metrics.

Pros and Cons of Being an Insurance Agent

There are a few different ways that insurance agents can be paid, which include commission, salary, and a combination of the two. Let’s take a look at the pros and cons of each type of compensation:


Pro: You can control your own income. The harder you work, the more you sell, the more money you make.

Con: Your income is not guaranteed. If you have a slow month or two, your earnings will reflect that.


Pro: You know exactly how much money you’ll bring home each month, which can help with budgeting and planning for your future.

Con: Your earning potential is capped at your salary amount. If you could make more money working on commission, you may feel like you’re leaving money on the table.


Pro: This type of compensation gives you the best of both worlds – some stability with a base salary, plus the opportunity to earn more through commissions.

How to Become an Insurance Agent

If you’re interested in a career as an insurance agent, there are a few things you need to do. First, you’ll need to complete an insurance pre-licensing course approved by your state’s Department of Insurance. Once you’ve completed the course, you’ll then need to pass your state’s insurance licensing exam. 

After you’ve obtained your license, you can start working as an insurance agent. Most insurance agents are either captive agents or independent agents. Captive agents work for a specific insurance company and can only sell that company’s products. Independent agents, on the other hand, work for themselves and can sell products from multiple different companies.

As an insurance agent, you’ll be responsible for helping clients choose the right insurance coverage for their needs. This will involve assessing each client’s risk factors and providing them with options that fit their budget and needs. You’ll also be responsible for handling customer service issues and processing policy renewals.


There you have it — a run-down of how insurance agents are typically paid. Insurance agent commissions can vary widely, so it’s important to do your research before you purchase a policy. And remember, the best way to find an affordable policy is to compare rates from multiple insurers.