Understanding Insurance Agent Pay

An insurance agent meets with a young couple in their home.

Working as an insurance agent can be a lucrative career, however, it’s important to know how agents make money so you can determine what paths will work best for you. Photo provided by Adobe Stock.

If you do a quick Google search asking what insurance agents make in a year, the answers you get will look a lot like this:

$35,000 – $1,000,000

I mean… what a range! If you’re looking for a career change and feeling a pull to insurance, it is difficult to make plans with a figure spread like that. Why is the salary range so wide? And how can you narrow that range and guarantee you make the money you want as an agent each year?

The answer is… complicated. Here are a few reasons for the figure spread…


Breaking It Down


Normally, a significant fraction of what an agent makes comes from commissions. A commission is a fee owed by an insurance entity to the agent for successfully signing up a client for a plan. It’s “their cut” for doing a good job, if you will.

As with all commission-based work, the more policies you sell, the more money you’ll be owed. The amount you make in commissions is directly related to the lifestyle you want and the energy you have. For example, some agents make insurance their primary career, putting in many hours every single day to hone their craft, gain new business, and keep clients happy. Others get an insurance license to provide them with a lucrative side hustle. They work here and there, approaching the commitment with more leisure. Both directions are valid, but what they earn will be vastly different. Everything depends on how hard you want to work and how much you want to make.


Business Partnerships/Models

At its core, being an insurance agent means running your own business. Your specific blend of services is what you’re offering to the world, and in that offering, you can decide to forge forward alone or partner with an organization.

Going Solo. Choosing to run your business completely on your own means that you won’t receive any base pay, bonuses, free leads, marketing, etc. You’ll be paying the costs of keeping your business alive and relevant all on your own, however, 100% of the commissions you make will go to you, and you’ll get to sell whatever you want. It’s a high-risk, high-reward game.

Partnering With a GA/MGA/FMO. Running your business with the support of a GA (General Agent), MGA (Managing General Agent), or FMO (Field Marketing Organization) generally means that you’ll make the same commissions as if you were on your own and have the ability to receive compensation for recruiting (bringing people into the organization) plus overrides (compensation for assisting your downline agents) if you decide to become a GA or MGA. The benefit of doing business under institutions like these is that you’ll get lots of support on the backend— things like custom marketing materials, free leads, training sessions, social media consultations, call center support, etc.— and you’ll get to specialize in a wide array of products and carriers. The great thing about diversifying like this is that you’ll be able to retain your clients better because you’ll be offering them the plans that best fit their situation rather than the plans that you’re under obligation to sell (they’ll be more on this later). However, you may need a release if you realize the organization is not all you thought it would be.

*Note: There are GA/MGA/FMO organizations that run their businesses like multilevel marketing (MLMs). These entities push their agents to recruit and make money off the sales of their hires, mostly emphasizing recruiting over personal sales. Empower Brokerage does not practice or condone MLM-leaning operations.

Partnering With an Insurance Carrier. If there’s a particular company you feel your interests and talents align with, you can run your business through a single insurance carrier (Aetna, Humana, Blue Cross Blue Shield, etc.). The carrier provides you with free leads, bonuses, commissions, extra training and support, and maybe base pay, depending on your contract. Of all the options, going in with an insurance carrier is considered the most stable in terms of pay. The downside is that you’ll only be able to sell their products, not necessarily the best product for the client, making ever-important customer retention harder.

Because these models are so varied, you may end up in a commissions-only or a salary-only position or make a unique mixture of commissions, salary, overrides, and bonuses each year. For example, if you decide to become a career agent with a specific insurance carrier, 30% of your salary could be the base pay the carrier gives for joining their ranks, and the next 70% of your salary could be what you make in commissions to supplement that base pay. Or if you partner with an FMO, 50% of your salary could be commissions, and the other 50% could be what you earn from recruiting and overrides.

Bottom line: What one option offers an agent differs wildly from the offerings of another and will greatly impact what you make each year.


Years Spent in the Business

One of the most prevalent draw factors of an insurance agent’s career is the possibility of renewals. There are exceptions to every rule, but generally, when you sell a policy, there isn’t just a one-time payout. Say you sell someone a health insurance policy, and they’re happy with your services year-over-year. When that person renews their policy or extends it for another year of use, you will earn money. You could have signed them up 5, 10, 15 years ago, whatever! As long as they’re happy with their plan, you get paid continuously.

Because renewals exist, insurance agents can expect to make more money the longer they stay in the business. They’ll be earning money “passively” from happy clients renewing on top of the clients they’re helping hot off the press. Years down the line, you could be making six figures a year just from people clicking ‘renew.’

PS. Agents with a lot of years under their belts also typically make more because they have learned enough about the industry to conduct their business with confidence and finesse. Expertise is worth a lot!


State(s) In Which You Sell

Agents must abide by a state’s regulations and insurance industry norms, whether they become contracted to sell in their state or others. What’s easy to sell in one state may be impossible to sell in others, and that can be because of state laws, demographics, the cost of living, market oversaturation, etcetera! Also, there is a cost to maintain your individual state certifications, and you must factor that number into total earnings per year.

Additionally, the gas and car maintenance and transport fare you use going to and from appointments in your state also add up. For example, places like Texas, where there could be greater distances between clients, or Alaska, where the terrain and weather pose more challenges getting to clients, should be considered.

The traits of your local market make a huge difference too! Let’s pretend you live in the middle of nowhere somewhere in the central US. If you’re the only insurance agent in your area, you could make a killing to help the entire town find plans that suit their needs. OR, if your area’s meager population isn’t interested in what you’re selling (say your town is primarily Medicare-age and you’re trying to sell ACA plans), then you would either need to move elsewhere, become certified to sell different products or focus on selling remotely (over the phone/online).


What Products You Sell

As mentioned above, being an insurance agent is primarily about commissions. Naturally, you will earn a larger commission on policies with higher commission rates. You will also make more money selling policies with higher market value. For instance, experts believe life insurance is the most lucrative type of insurance you can sell, but that doesn’t mean you should throw all your eggs in one basket. You must learn everything you can about each product so you may better navigate the industry and, eventually, find your niche.

There are insurance plans covering just about anything these days— auto insurance, disaster insurance, identity insurance, health insurance, and countless others. If you lock down on your favorites and are passionate about selling them, you’ll make money. Keep in mind that not all insurance types are equal in terms of payout.


What Type of Agent You Are (Captive or Independent)

Your sales approach matters. This subject is touched on above, but to dive a little deeper, you may choose to be captive to a specific company or agency or decide to be an independent insurance agent. Both present their own benefits.

captive agent will sell the preferred plans of their agency, meaning they will not be allowed to offer more products than those selected by their overseers. Working as a captive agent comes with bonuses, back-room support, higher-level commissions, free leads, and a whole host of other benefits. However, you can lose sales over time because you will be limited to your agency offerings.

For example, say you work for Big Brand Insurance. You have a client reach out to you saying they’d like to buy a health plan that allows them to see a therapist for free. After scouring through your product offerings, you can’t find a single policy that covers therapy, so you offer them the next best thing— a plan that will pay for a fraction of their therapy sessions. At first, they are happy with the plan, but after a year, an agent from The Best Insurance (your competition) contacts them and offers them a plan that covers therapy 100%. That client will change plans, and you’ll have lost a valuable opportunity.

On the other hand, an independent agent will sell everything. It’s their job to be experts in the American insurance industry, familiar with all carriers, products, and needs. Because they can sell whatever they want from the pickings pool, they can search the market for the plans that will satisfy their customer’s every need outright and more easily retain a client base. However, independent agents can miss out on bonuses, support, and other benefits of captivity.

An independent agent who wants support can partner with a GA/MGA/FMO to fill those gaps and still maintain their independent status. The agent will merely need to write their contracts through their FMO so that both entities profit from sales.


In Summary

Because of commissions, business models, and partnerships, the different benefits organizations offer outright, renewals, experience, selling states, product types, and differing sales approaches, some agents make $10 an hour, and others earn $15,000 a week. Insurance is a bedrock industry— people will always need it— so how much an agent makes is determined by how much of that need they want to fill. If this article proves anything, it is that there are so many ways to be a successful insurance agent. All that’s left is variable YOU.



We hope that this breakdown of insurance agent pay has been useful to you.

Empower Brokerage is dedicated to helping you make informed decisions about your health and finances. Whether it’s through webinar training, one-on-one calls, seminars, or marketing plans, we want you to be successful!

Give us a call at 888-539-1633 or leave a comment below if you have any questions.

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