The commission paid is limited to 2 per cent in case of single premium policies. Insurance regulatory and development authority of india irdai has issued a notification.
From april insurance agents will get higher commission for selling life and non life insurance policies.
Insurance agent commission rates india. Irdai allows insurers to pay rewards of up to 20 of first year commissions to distributors whose revenue from non insurance intermediary businesses does not exceed 50 of their total revenue in a year. The maximal commission the insurance agent gets in the first year is approx 25 for 15 years and above and the commission is cut down to approx 5 after the 4th year. For endowment natured policies with 15 years or more term the first year commission of 25 and a bonus commission on the same to the extent of 10 on the first yr premium.
And the commission is cut down to approx 5 after the 4th year. 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. Currently most of the policies are very much paying these kind of commissions.
Let us assume an annual investment of rs 1 lakh for 20 years where the insurance commission is taken at 8 in the first year and 2 in subsequent years and the mutual fund. Every company is different but life insurance agents may make 40 to 90 percent in commission of the first year premium on term life insurance. The commission of the insurance agent is also based on the type of policy which is available on the insurer s website.
35 is payable if the agent is eligible for bonus. A agent gets 25 commission on lic jeevan labh policy. The commission is adjusted according to these terms.
However in some cases the lic agents offer to give the 1st month premium to inspire their clients to purchase the insurance plan. Top ranking producers may even get 100 of the full premium in the first year as commission and often 2 to 5 commission from the second to the fourth year. For 15 years the maximum commission an agent gets is approx 25.
This is because insurance companies pay commission only on new premiums while mutual funds pay commission for the accumulated corpus the trail commission see chart. Lic jeevan labh agent comission. Source plan money tax.
The maximum commission that a lic agent earns in the very first year is at least 25 percent for 15 yrs and or more and commission gets reduced up to 5 after the fourth year. The idea is to reward agents who primarily rely on their agency business for their livelihood and not institutional distributors like banks. This commission is for the first premium and then 2nd and 3rd year the commission is 7 5 and for 4th year onward till whenever the policy is in force the agents gets 5 commissions on premiums.