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Insurance agents sell insurance directly to clients. Usually they try to seek out new clients whenever possible, since the more policies they sell the more money they make. In general, there are two types of insurance agents: an independent agent, who is not hired by any particular agency and actively seeks clients, and a sales worker, who works for an agency and may offer a number of services in addition to insurance policies.
Commissions are still the most common way for insurance agents to be paid. The agent earns several percentage points of the policy itself every time a policy is sold. This method is always used by independent agents, and may also be used by sales workers as well. The more policies the agent sells, the more money they make. Commission rates change based on the type of policy that is being sold and whether it is a renewal or a new policy.
Insurance agents are also paid by a regular, monthly salary. This is much more common for agents who are part
of a larger insurance agency or organization. There are several salary variations. Some agents are paid only by salary, while others are paid with a combination of a salary and a commission. Some are also paid by salary and bonus. The more experienced the insurance agent, the more they will tend to be paid by commission than salary.
Insurance agents also help clients with financial planning. Some clients may need help choosing a policy or figuring out their payment options, while others might want a policy for very specific investment purposes and require the agent to act as a broker for this investment. These services typically come with a cost, and some agents make money with these fees as well as their commissions or salary.
The average annual salary and wages of an insurance agent is around $50,000. The highest 10 percent tend to earn more than $110,000 a year, while the lowest 10 percent earn $26,000 or less. One reason for this wide difference is the commission-based payment system, which allows the most successful agents to make the most money.