How to calculate Commissions??

Dec 26, 2018

  1. StarterAgentKG
    Offline

    StarterAgentKG Expert

    Posts:
    57
    Likes Received:
    19
    State:
    Connecticut
    Really dumb question, but just curious how exactly commissions get calculated. I was explained it like this k for example if you are on a 90% contract it's 90% of the premium, but what if you are at 120% are you actually getting paid more then what you sold.
     
  2. DHK
    Offline

    DHK "YOU CAN'T HANDLE THE TRUTH!"

    Posts:
    7,948
    Likes Received:
    1,805
    State:
    California
    Yes.

    Insurance companies pay out more than 100% in total FYC through various levels of management or IMO contract levels.

    Remember that life insurance is a multi-year product, so they are counting on multiple years of premiums, not just the first year.
     
    DHK, Dec 26, 2018
    #2
  3. StarterAgentKG
    Offline

    StarterAgentKG Expert

    Posts:
    57
    Likes Received:
    19
    State:
    Connecticut
    Ok I see, so there hoping they don’t lose money on the deal.
     
  4. goillini52
    Offline

    goillini52 MAGA...Eat More Bacon & BUILD THAT WALL!!!

    Posts:
    18,451
    Likes Received:
    4,720
    State:
    Illinois
    They're hoping really hard. Really REALLY hard!!! :yes:
     
  5. Newby
    Offline

    Newby Guru

    Posts:
    14,124
    Likes Received:
    1,004
    State:
    Indiana
    Life insurance companies allocate the first two years of premiums to total cost of selling the product. So 200% is the total they have to work with not 100%.

    There are other costs besides commissions. But commissions is the majority of it.
     
    Newby, Dec 26, 2018
    #5
  6. StarterAgentKG
    Offline

    StarterAgentKG Expert

    Posts:
    57
    Likes Received:
    19
    State:
    Connecticut
    I feel like this is the red pill right here.

    Now I understand why People talk trash about IMOs that put agents in low contracts. All it really is that the lower an agents contract is the More commissions the upline is making.

    So a cancellation in a policy can be a big deal, but this why the agents need to keep producing.
     
  7. pfg1
    Offline

    pfg1 Guru

    Posts:
    1,382
    Likes Received:
    201
    State:
    Virginia
    Depending on what the product is, it may not be on the total premium. Like for IUL or WL, you get paid higher on the target/base, and a small amount on the overfunding. So its not a clear cut % of across the board. Also, many traditional carriers do not go way up high on commissions, some don't even go to 100%, so its not apples to apples. The FE carriers typically go above 100%, so when you hear someone is paying an agent 120...most often that is the situation.
     
    pfg1, Dec 26, 2018
    #7
  8. StarterAgentKG
    Offline

    StarterAgentKG Expert

    Posts:
    57
    Likes Received:
    19
    State:
    Connecticut
    Ok just so I know the terminology when I speak to the IMO’s. What is target/ base and what is overfunding.
     
  9. Newby
    Offline

    Newby Guru

    Posts:
    14,124
    Likes Received:
    1,004
    State:
    Indiana
    It’s fine if an IMO offers lower commission contracts if there is a reason that the agent chooses. Like the if you are getting 90% on a contract that agents normally get 120% you did one of two things.

    You either chose to take 30 points less because you are getting something valuable in return (office space, free leads, an existing customer base, etc) OR more commonly you contracted through an agency that discovered that you didn’t know what commission level you were supposed to get so they gave you lower. You probably got proactively recruited if that was the case. You aren’t the first or the last that has happened to.
     
    Newby, Dec 26, 2018
    #9
  10. myinsurebiz
    Offline

    myinsurebiz Guru

    Posts:
    4,448
    Likes Received:
    598
    State:
    Hawaii
    Target / Base is what we blow the chit out of with Drones . . .

    Overfunding is what Trump wants to do with the Wall . . .
     
Loading...