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How Do Insurance Agents Get Paid? - YouTube
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hey this is Jeremy Goodrich owner of
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shine insurance and your host for the
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shine insurance youtube channel we're
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gonna dig into a big question that
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actually doesn't get asked a lot because
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people are afraid to ask so I thought
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we'd answer it right here and that is
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how do insurance agents get paid there
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are different kinds of insurance agents
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and different ways that get paid I'm
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gonna address all of that in this video
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by the time the video is over you will
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understand clearly how lots of different
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types of insurance agents get paid but
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first let's talk about the four ways
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that this happens the first is salary
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the second is Commission the third is
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bonuses and the fourth is profit sharing
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there might be others but these are the
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four primary ways that insurance agents
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gets paid so let's look at kind of each
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of those a salary most of us know what a
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salary is a set amount paid by the
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agents employer which is a you know
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specifically not specifically tied to
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sales so okay we're gonna pay you forty
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five thousand dollars to be an employee
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of the business and hopefully you'll do
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amazing work and obviously we'll have
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things set up around that but it's
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really a salary that is not tied to any
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kind of sales
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then there's Commission which is money
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that is tied to sales so when you sell
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something you'll get some percentage of
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the sale amount that's Commission
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bonuses are extra money on top of the
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salary or the Commission's if you sell
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this much or if you hit this goal or
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whatever we're gonna give you X amount
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of money something like that that's a
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bonus and finally one of the least known
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ways that insurance agents get paid is
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profit sharing and this simply means if
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the company profits from the insurance
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policies that were sold by you then they
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share some of that profit with the agent
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so insurance you have money coming in
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and then claims going out if there were
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fewer claims and there was money coming
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in that means the insurance company
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profits and sometimes the insurance
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company will share that with the agents
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so those are the four ways that
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insurance agents make money let's talk
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about the three ways you can get
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insurance which will frame the
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conversation about how each of those
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work as far as what they make and if you
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haven't watched this other video we have
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it on our Channel I'll link right above
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here the three ways to get insurance but
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basically there's going online going to
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a captive low
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agent or going to an independent agent
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those are the three ways you can get
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insurance so let's talk about how each
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of those get paid first let's talk about
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online so you went online to get
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insurance how did they get paid well
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those people on the other side of that
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phone line are the people that are
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behind the web app whatever it is are
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making mostly a salary probably 90% of
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the money made by insurance agents at
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those big companies that have online
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portals or 800 numbers is made simply by
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a salary you sometimes it's even hourly
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pay right there's not usually Commission
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associated with sales there may be some
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goals and bonuses associated but not a
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huge amount and there generally is not
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any profit sharing so if you're going
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online the people that are serving you
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are mostly hourly employees or people
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who are making some kind of salary
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that's pretty straightforward so I just
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get a little more complex when we talk
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about captive agents these are the state
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farms or the all states or the people
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that work for the company itself one of
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the nice things about being a captive
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agent is you make a salary that is
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usually more than when we get into the
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independence but you're making salary as
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a base of your money so you know you're
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gonna be able to pay the bills even if
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there isn't a lot of sales going on if
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you're not bringing in new business to
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the company then you're gonna make some
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salary and then there is Commission
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above that so there's a clear structure
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of if you sell X amount of insurance the
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company is going to pay you a commission
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a percentage Commission often times with
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captive agents the Commission is
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somewhere around 8 percent of the
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premium that varies between companies
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and between agreements and agencies but
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8 percent is pretty common so if you
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sell a thousand dollar policy then
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you're looking at about $80 of
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commission that you're paid so that can
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add up and the more you sell the more
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money you make that makes a lot of sense
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also with captive agents there are often
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bonuses so some kind of bonus for
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hitting a goal if you sell a whole bunch
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of stuff you're gonna get some
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additional amount of money and so that's
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how captive agents make their money
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independent is kind of all over the
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place a little bit more free in the way
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it's structured and that's because
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independent agencies are
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our businesses in and of themselves
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they're not part of the company and so
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the business the agency can structure
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arrangements really all over the map and
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so but let's talk about a little bit a
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lot of time with independent agents
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there is much less of a salary there's
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much less of that safe money that you
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know is coming in for some agents
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there's zero salary none of their money
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is made by salary more often than not
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though there's some salary some base
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amount of money that's set there
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underneath what you make for Commission
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but for independent agents Commission is
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a huge part of it and that is the money
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coming back from the insurance company
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interestingly you know I said that a
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captive agent makes about eight percent
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commission independent agencies make
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about twelve thirteen percent commission
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on average so when you're purchasing a
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policy from an independent agent you get
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that policy for whatever the price it is
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that says on the document so so it kind
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of feels like you're getting the agent
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for free and that's where some confusion
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can come in but the company gives them
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back around thirteen percent of the
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premium you're paying and that's where
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that Commission comes from so
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independent side much more based on
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Commission and the money coming back
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from the insurance company on how we get
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paid generally there aren't as many
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bonuses and in the independent side of
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course there are some fluctuation in
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that but then the independent side has
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something that really the other two
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don't and that's profit sharing and that
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means again if the company profits if
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there's more premium coming in than
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there were claims going out then there
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can be an agreement between the company
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and the agent that the company will
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share some of that profit so the agent
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will make some of that money a lot of
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times it's in January after the year
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before is figured out where you make an
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amount of money on top of that so if
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you're buying online well the company
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has lower cost per employee because it's
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very stable and they're just paying a
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salary the agent doesn't have as much
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salary movement there's not as much
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growth potential in a lot of these
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online companies and there isn't a ton
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of incentive to sell because you're not
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I mean you want to take good care of
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people right so there's definitely that
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but as far as money goes like there's
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not as much incentive to sell in the on
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world in the captive world the company
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gets to have a local workforce which is
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great and the agent they get a stable
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salary which is really nice and a lot of
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people like that a lot
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and there's some incentive for sales for
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actually making sales a little bit less
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than independent but a little bit more
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than online the independent the company
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has low cost before they sell right and
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until their agency force the independent
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agents sell anything the company really
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doesn't have to pay them anything
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company only has to pay the agents if
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they if they sell and bring in new
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business so that can be an advantage to
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the company the agent has huge growth
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potential on the independent side you
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can grow as much as you can attract
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people to your product right so it has
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absolutely huge growth potential and
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does have significant incentives based
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on your sales so those are the
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differences in the different kind of
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ways that you get insurance independent
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agents can probably make more than
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anybody else because there's no real
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ceiling they can you know as much as
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they can go after but captives can do
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very very well for themselves too and
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they have the stability and then
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obviously there's on line as well all
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right what's next well if you're looking
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for insurance from an independent agent
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now that you know how we get paid please
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feel free to reach out and contact us
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you can go to shine insurance com
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learning more about shine learn about
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what we do see if we're a fit for you
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and go forward from there and as always
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the last step there's three things you
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can do to make this channel bigger
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better happier and help more people that
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simply subscribe to our channel if you
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haven't done that already if you hit the
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you know bail no bail fine but give us a
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shoot that little like button on the
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letting people know that this was great
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for you and then obviously you know put
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a comment underneath did you agree with
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what I said here did you totally
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disagree are you an agent that is maybe
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a captive or an online you just totally
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disagreed with the perspective that I
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came in here from we'll put that in the
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comments let's talk about it we respond
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to every single comment on our channel
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and if you look at our other
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you can see that there's healthy
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conversations going on under lots of
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them about the topic that they talk
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about all right well we hope this video
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was awesome for you and helped you to
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understand how insurance agents get paid
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and until the next time have a wonderful
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day
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