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How Do Life Insurance Agents Get Paid?

Licensed Life Insurance Agent/Marketing Manager
April 02, 2014

Do you find yourself wondering what is in it for your life insurance agent? How do they make money?

There are no fees or hidden costs associated with working with an agent. 

The reality is, agents are paid from directly the life insurance company.

How life insurance agents get paid

Generally, there are two different types of life insurance agents, there are independent agents and captive agents.  What’s the difference?

Independent life insurance agents

These are life insurance agents who are contracted with multiple different life insurance companies. 

They will have their own contracts with multiple companies regarding how they will get paid directly by those companies.

These types of agents will be paid by their brokerage either with a combination of salary and or commissions or with just commissions. 

Captive life Insurance agents

Captive life insurance agents, on the other hand, are agents who only work for one specific life insurance company.  A captive agent is paid by that one insurance company either with a combination of salary and or commissions or with just commissions. These agents may also be full-time employees or an independent contractor with both office space and benefits.

Captive agents will also have considerable in-depth knowledge of their particular company’s insurance products. But they cannot help a client who does not need or does not qualify for that one particular company’s life insurance product.

As a result, captive agents are often put into a situation where one size must fit all. 

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Conclusion

While there are differences between independent and captive agents, the general process for them to get paid is the same. 

The main difference is that the independent agent will have multiple contracts and may make more money with one company over another, where the captive agent doesn't is only contracted with one company and will likely make the same commission per policy. 

Written by
Chelsie Ball
Chelsie is fixated on developing innovative ways to present complex ideas and maneuvering people to the information they need. She has worked in digital marketing for the past seven years and has been a licensed life insurance agent since 2010. When she isn’t looking out for the user, you can find her watching Netflix or desperately trying to find a real hobby.