Commission

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Definition

The commission is the incentive that the insurance agents or the sales representative receive after selling the insurance policy, be it life or non-life.

Description

The commission is paid as a percentage of the premium under the insurance policies. Paying commission is like paying rewards to the agents who made efforts to convert the sales.

The commission is paid only once a year, when the premium is paid annually.

The commission under the policy depends on two factors that include: Type of the policy Term of the policy

The commission is also computed based on these terms:

15. For 15 years, the maximum commission an agent gets is approximately 25%.
16. After the 4th year, the commission is cut down to 5% approximately.

Commission distribution is based on these type of the policies:

Example:

Puneet is a life insurance agent who sold a regular premium term plan to Rahul. The premium under the term plan paid by Rahul was Rs.10,000/- excluding GST. The commission for the first year earned by Puneet will be 40% of Rs.10,000/- which will be Rs.4,000/-. The renewal commission will be 10% issued until the policy is renewed.

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