All You Need To Know About
Insurance Agent Salary

TLDR: Learn what affects an insurance agent’s salary and how they make money. Find out what factors influence commissions and what considerations you have to make to get a good insurance sales salary.

Good experience in any field is a must if you wish to excel in your career and make a decent living. While relevant knowledge is vital in every industry, only a handful of sectors besides the insurance sector offers inexperienced individuals the potential to earn a significant income.

This is especially great for aspiring individuals who are exploring insurance as a career. The insurance industry offers novice agents the chance to earn as much as an experienced insurance agent does right from the beginning.

But just because the industry gives inexperienced newcomers a chance does not mean it is easy. Finding success in your insurance career and making good money comes with sacrifice. It is a challenging job, and people who do not give it their all tend to fail eventually.

In this blog

How Do Insurance Agents Make Money?

A majority of agents sell home, auto, life, and health insurance. Insurance carriers provide agents a percentage of the premium and renewals for selling home and auto insurance. Life and health insurance policies, on the other hand, gives agents a larger percentage of the sale when a client first signs up. Also, agents can receive some form of income from renewals, but not as much as a commission.

Generally, an insurance agent makes money via commissions. It is the most common form of compensation for insurance agents. The commission amount depends on the type and quantity of insurance sold. Whether it’s a new policy or a renewal also plays a part in determining the commission.

However, there are specific models of earning depending on which insurance company an agent works for. The models are:

  • Salary-only model
  • Salary and commission model
  • Commission only model
  • Salary-plus-bonus model

Sometimes when an agency meets their target profit, they get bonuses. This is also another incentive to make more sales for agents.

For instance, we have Clint, an insurance agent, who sells a health insurance policy to a client named Jeremy. The policy covers the client for most health-related events. The insurance company Clint works for pays a 90%/5% commission on health insurance policies. This means that the agent selling the policy receives 90% of first year’s premium and 5% of future renewals.

The policy costs Jeremy $150 per month, which is $1,800 per year. So, in the first year, Clint makes a commission of $1,620 ($1,800 x 90%). And in the following years, provided Jeremy makes his payments, Clint will earn $90 in renewals ($1800 x 5%).

NOTE: Majority of insurance agents work full time and sometimes even more than 40 hours a week.


How Much Does An Insurance Agent Make A Year?

According to the Bureau of Labor Statistics (BLS), an insurance agent can earn more than $100,000 in their first year. The median annual wage for insurance sales agents was $52,180 as of May 2020. The lowest 10% of people in the industry earned less than $29,000, and the highest 10% earned more than $127,840.

Also, you’re not limited to just being an insurance agent forever. There are other insurance career opportunities with jobs as an insurance broker and insurance underwriter whose salary range in higher percentages. You explore these opportunities as you gain more experience in the field.

One of the core reasons why insurance agent’s salaries differ is commissions. These play a significant factor in driving agents to do what they do and earn what they earn.

However, there are additional factors that play a role in determining an insurance agent’s income.

    What Determines an Insurance Agent’s Salary?

    Deciding what type of insurance agent you want to become and what lines of insurance you want to sell, directly affects how much you earn. But there are additional factors that play an essential role in your earnings.

    Type of Insurance Agent

    There are two types of insurance agents, captive and independent. Captive agents only sell insurance for one company. In contrast, independent agents represent multiple carriers and sell policies from various carriers. Regardless of which agent it is and what commissions they get, they are typically spending most of their time marketing their products and services to individuals who need them.

    Type of Insurance Policy

    There are many kinds of insurance policies ranging from car insurance to commercial property insurance. As an insurance agent, you would be focusing on selling such policies to people, families, and businesses to protect themselves against a financial loss during a crisis.

    Each type of insurance has its own set of opportunities for new customers and upselling to existing customers for you to increase your earnings. There are always people and businesses looking for reliable insurance coverage options to safeguard their assets. Knowing what the customers of each line of insurance need and providing them precisely what they want is something to consider if you’re trying to drive your sales up.

    Also, there also specific niche insurance policies such as food truck insurance, aircraft insurance, and personal trainer insurance, to name a few, which can provide good opportunities for earnings.



    The cost of living, transportation, accident rates, public wellbeing, and more local statistics change according to state. These statistics play a significant part in the insurance rates and the size of premiums as well. A small city with a relatively small population can only present you with so much in terms of opportunities. At the same time, a big city with more people will offer you more opportunities to find new customers.

    Do keep in mind that you need to make up your mind as an insurance agent for your desired salary before deciding where you want to work.

    Commission structure

    Insurance agents heavily rely on commissions as their bread and butter. The percentage and number of commissions you receive directly influence your earnings as an insurance agent. According to, a captive agent selling home and car insurance tend to receive a 5-10% commission in the first year’s premium. In contrast, an independent agent’s commission rates average around 15%.

    Fact: Did you know? According to the Department of Financial Services (DFS), the state of New York operates with one of the strictest insurance regulations, known as Insurance Regulation 194. This regulation states that it is mandatory for insurance brokers and agents operating in New York to offer written disclosures of any year-end bonuses from carriers along with the commission rates if a customer asks them.


    The vast majority of insurance companies do not have strict requirements for hiring an insurance agent. Many do not require previous experience in the insurance industry because most insurers have internal training programs for new agents. These programs teach them about the products they are going to sell.

    To become an insurance agent, you will require:

    • High school diploma (Some employers can also seek a bachelor’s degree)
    • State-issued insurance license
    • Product sales experience
    • Business management skills
    • Good communication skills
    • Patience and a positive attitude

    When working in the insurance industry, having formal training is more critical than a top-university level education. A bachelor’s degree in a related field can be helpful, but the position of an insurance agent only requires a high school diploma. There are more opportunities to learn on the job in the insurance industry and be exposed to knowledge that an average 4-year degree may not provide.

    Many insurance agents begin their careers by working together with other experienced agents. This way, they can connect with their fellow agents and learn on the job as well.

    why Insurance-agent-salary

    Outlook for the Insurance Industry

    Despite the current challenges brought on by the COVID-19 pandemic, the insurance industry still has room for future growth. According to Deloitte, the global insurance industry is projected to grow by 3% in 2021. Additionally, they also state that 61% of insurers in North America are focusing on increasing diversity in leadership, development, and hiring. This shows that becoming an insurance sales agent can be a viable career path for interested individuals.

    Insurance companies will always be on the lookout for new clients. And as the older workforce gradually nears retirement, a new generation of insurance agents can take the industry forward.

    Final Words

    Earning good money in an insurance sales job is entirely up to you. The better you do, the better rewards you get. Since the income for an agent relies on commissions and bonuses, your excellence in sales is reflected in the money you make. If you have good work ethic, willingness to learn, and actively put yourself out there, you could be earning sufficiently as an insurance agent.

    The insurance industry is constantly growing and will always need individuals with potential. And if you live up to your potential, adapt to the changing scenario, and market yourself well, your insurance agent salary will be what you want it to be.

    Did you find this insurance blog helpful? Let us know your thoughts in the comments below.

    Frequently Asked Questions (FAQs)

    Is sales experience required?

    While previous sales experience is advantageous, it isn’t mandatory to start in the insurance industry. However, a strong background in sales is helpful in any industry. Since something is better than nothing, any experience selling products to companies will come in handy.

    Most of the time, new agents learn on the job and receive relevant training to become better insurance sales agents. So, there are ample opportunities for learning about insurance sales.

    How much does it cost to become an insurance agent?

    According to AGA, the total estimated cost of becoming an insurance agent is $625. This includes relevant courses, licensing fees, exams, and background information. This amount can vary depending on your state of residence. Therefore, it is best to check with your state’s insurance regulatory bodies.


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