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.


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:

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

Commission distribution is based on these type of the policies:

Type of Premium Payment


Single Premium Payment Policy

2%of individual life product

7.5% for individual pure risk products.

2% for immediate annuity and deferred annuity products

5% for group-pure risk products.

Pure Risk Regular Premium

40% for the first year

10% for every renewal premium

Investment Based Regular Premium Product

15% for the first 5 years. Over 12 years the commission will be 35%.

7.5% renewal premium per annum.

42.5% for the 12th year onwards.


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.