Whenever you thought to invest then first thing you notice is, insurance agents luring you to invest in some insurance plans. One of reason from that may be his high paid commission structure. So it is best you understand it fully before proceeding further.
Note-The commission structure will change from 1st April, 2017. I have written a post on this. Refer this new updated post at “Life, Health and Vehicle Insurance Agents Commission in India”
First let us see the commission structure of agents. This I am updating after the recent IRDA’s (Non-Linked Insurance Products) Regulations 2013. Below is the chart which will explain you the maximum commission structure in detail.
By looking at above table you noticed that if term is more then your agents commission is also more. So now ask yourself why your agent lure you to opt for longer period insurance product rather than shorter. I too believe that insurance is the long term product. But main motive is different than what you think. Even term plan which you take from offline mode also give the same commission structure to your agent. Their may be some minor changes based on product. For example in money back plans agents will receive less commission than normal endowment plans. But overall this is the structure you find for most of the traditional plans.
Here by publishing these rates I am neither against the commission structure nor I am supporting this. But it is your right to know the commission what your agent earn from your investment. I am expecting some agents comment who justifies this commission structure putting reason as the expenses they need to bear. Also I am expecting some comments who are totally against to such a high commission structure.
But I strongly believe that, hiding our main motive to sell (commission) and sharing the commission with clients are two major wrong things. When online term plans started by few insurance companies then few so called IFAs talked too much about the cost advantage of buying directly instead of offline. But I saw the same IFAs not opening their mouth regarding the direct plans of mutual funds. Each product has it’s own positive and negative points. So neglecting them outright from our point is not true. For example, Bank FD may be must not product for the young who is ready to take risk. But same FD may be the major investment product of the same age group guy who is totally risk averse.
Let us now take one example to understand how much an agent can earn.
Term of the plan-20 yrs, Product-Endowment Plan and Yearly Premium-Rs.1,00,000.
Looking at earning you may feel it a lucrative profession. But it is not that much easy as it looks. As I told above, few are also of opinion that commission need to be barred as is with mutual funds. Let me see what will unfold in future 🙂
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My brother purchased LIC Endowment plan of 25 lakhs for 20+ years. Sir, is it better than other endowment policy of banks and private insurers. Please suggest how much would he get upon maturity with S.A+bonus+final addl bonus=?
Dear Samarth,
If your brother is comfortable with 4% to 6% returns, then let him continue. Regarding maturity amount, contact your insurer.
Sir, I read all of your posts. All are interesting with apt advice. Please advice me, ...can I switchover to POSTAL LIFE INSURANCE for longer period, our agents are not recommending me.... rather asking me to go for other LIC policies. My age is 59 years and I am an Exserviceman. Being survived on pension. Solicit your advice please.
Dear Ramakumar,
You can't switch from one insurer to another insurer.
Sir my monthly policy is 2274 but lic is taking from my bank is 2800 I didn't get that.
Dear Yanki,
Check with LIC in this regard.
Hello, sir my mom paid 30000 lic plan for 15 years scheme and after maturity it wil be 50000 so how much commission does agent get from in it.please reply me...sir
Dear Ruchitha,
Please calculate as above and why NOW you need this calculation?
i have 4 SBI life policies foe which i pay yearly premiums. my agent will be getting a huge commission out of it, Is it possible for me to pay the premiums now without agent commission?
Dear Babu,
Sadly No. But do you think by avoiding the agent commission, still feel such products are best suitable for you?
i sell a policy for child money back plan for 19 years and premium is 18000 so what will be the commission?
Dear Deepak,
Refer above post or contact your Life Insurance Company.
How much commission does Sbi agent earn on investing
5lakh per year for 5 years
Dear Ramesh,
It is same as I mentioned in above chart.
Can agent's license be transferred to other ?
Dear Sourav,
Sadly NO.
Sir, iam joing as adviser in sbi life insurance... what is the target I have reach within 6 months..? Or how many policy I have to give..?
Aru-Discuss the same with SBI LIfe.
Now I see why LIC agents mis-sell policies and showcase 8% Rate of return. Is there a way we can have such crooks penalized. Is there any formal process to bring this to open
Sachin-The rule of IRDA clearly defined to show INDICATIVE RETURNS only but not the expected returns. If few agents breaking this rule, then you can immediately complain against such agents with a concerned insurance company or IRDA Ombudsman.