How Much Money An Insurance Agent Make in 2018

Life insurance is one of the most preferred investment option in everybody’s life. If I ask you how do you like to buy an insurance policy in India? I know most people will reply that via agent who might be your relative or neighbor or friend etc. Whether there is a need or not, most people are forced to buy an insurance policy by these agents. Do you know how much money an insurance agent make by selling a policy?

You might be thinking that I am trying to tell something negative about this profession. Actually it was a very good full-time or part-time job till the policies started launching online. I knew my uncle who used to make huge money as an LIC agent. But now a days things has been changed as one can easily buy a policy online even by paying lesser premium.

Does an insurance agent make good money?

In this article I will try to show you how to calculate the commission of an insurance agent in India.

As per Insurance Act, 1938, The insurance companies are allowed to pay a maximum commission of 40 per cent of the first year’s premium, 7.5 per cent of the second year’s premium and 5 per cent from there on. The commission paid is limited to 2 per cent in case of single premium policies. In case of pension plans, the commission is limited to 7.5 per cent of the first year’s premium and 2 per cent there on. 

But now a days the structure has changed a bit. Let’s find out what are figures approximately, as I have not found the accurate data in to refer. Based on some other sources I am sharing this.

Policy Type Premium Paying Term Upfront Commission (1st Year) Trail Commission (2nd & 3rd yr) Trail Commission (from 4th yr)
Endowment / Term Plans 15+ yrs 25% – 35%  * 7.5% 5%
Endowment / Term Plans 10-14 yrs 20% – 28%  *
7.5% 5%
Endowment / Term Plans 5-9 yrs 14% 5% 5%
Endowment / Term Plans Single Premium 2% 0% 0%
Money Back 15+ yrs 15% – 21%  *
10% 5%
ULIPs Regular Premium
20 – 40% 2% 2%
ULIPs Single premium 2% 0% 0%

Here the percentage also vary based on term of that plan. Only an overview of percentage of commission is considered. Besides that a bonus amount of 40% on commission is also payable. Let’s check with an example to find out how much an agent can earn.

Say You have subscribed to a Endowment policy with yearly premium of Rs 1 lacs for 20 year term. In such case your agent can earn an approx Rs 1,25,000/- in next 20 year from your investment. Check out the calculation below:

1st year
Rs 25,000
2nd & 3rd year
Rs 7500 X 2 = Rs 15,000
4th year onward till 20 year
Rs 5000 X 17 = Rs 85,000

So you can now understand the earning potential of this sector as well. In case any data is wrong or changed recently I would request you to update me by simply commenting on this post. The purpose of this article is to spread awareness about insurance agent’s commission structure and earning potential.

This is also a very good income source as one can work as a part-time and make money from the same. Try to become a good insurance adviser rather than just selling policies for the sake of making money.

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  1. Hi i am arup , i want to know lic e term proposal form(previous policies annexure) column How Accepted-OR/Extra……….plz reply me

  2. hi santanu,
    After my MBA (E&FB) in 2012 Im engaged in my family business of money lending and food processing but i feel dissatisfied here and want to try my chance to set up a insurance broker firm and financial advisory to help people in investing their money on various options as per their needs and suitability.I want to give dedicated and honest service to my clients. This is my long run plan. Right now im planning to start with the insurance agentship in the near by city Jabalpur(M.P).
    since your blog is very informative i would like to understand from your point of view the scope and feasibility of the above idea.


    1. This is a very good plan and the market of Insurance in India is very big. I think if you can educate yourself in Personal finance & investment, then definitely you can help people in investing. Definitely a good option, Good luck.

  3. Hello Santanu
    I would like to know the impact of these commissions on our maturity/principal amount:
    Will LIC deduct these amounts on full & final of our maturity amounts, as agents or calculation declared.
    The amount which they suggest us as full and final is with excluding there commissions or including commissions.
    I am afraid about the hidden rules and regulations.
    Why an agent is required to book a policy?
    Please reply asap.


    1. Hi Gaurav, LIC is paying these commissions to their agents. I don’t think they will deduct the money from your final amount directly. What I am trying to say here is, the return of any LIC policy is very less because they have to manage huge number of insurance agents.
      I think you can easily buy LIC insurance policy without taking help of LIC agent. But for that that policy has to be available online.

  4. I am a NRI at present but plan to come back and settle in Mumbai by January 2016. By profession i am a automobile sales person. I intend to become an Insurance agent. Can someone give me guidance ?

  5. Just for your information, the 25% or 15% or 5% is on the yearly premium. Not on the Sum Assured

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