Wednesday, July 04, 2007

Commission paid on life insurance

Dear Mr Tan

In your blog, you said that an insurance agent earns an average of $1,000 for selling a life insurance policy? Is this cost charged to the policyholder in the premium? It is a lot of money. Why should the insurance be so costly?

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REPLY:

The actual commission depends on the size of the policy and the type and duration of the policy. It may also vary by insurance company. I have made an estimate of the average commission based on the policies sold in the market.

The agent needs to be paid this level of commission, as it takes a lot of time to look for a customer, to explain the product and to convince the customer to buy the insurance policy.

Some companies pay lower commission to the agent, and reduces the premium paid by the customer.

You can find out what is being charged from the sales illustration given to you at the point of sale.

Some insurance companies are reducing the commission for new products that are being introduced through new channels (such as the internet or directly from their office.
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3 comments:

Anonymous said...

Dear Mr. Tan

I am a recent graduate in local uni and thinking of a career in insurance and since you represented NTUC Income, may I ask your view on this job prospect?

1) Can you advise me on approximately how many Incomeshields and 20-25 yr reducing term insurances (two key products that you have been heavily promoting) that I have to sell a day to make a modest living of $2,000 a month?

Assumptions: Clients gain valuable insights from your advice that they invest their monies in low-costs, zero sales charge, funds (like ETFs, etc), that they don't need any funds or par products from Income.

2) Is earning a take-home pay of $2,000 a month in commission too much? After all, I don't have CPF only Medisave. How much do you think a hardworking, good agent should earn per year in his working lifetime (to age 65)?

July 04, 2007 2:06 PM
Tan Kin Lian said...
This comment has been removed by the author.
July 04, 2007 5:59 PM
Tan Kin Lian said...

I suggest that you work as a salaried marketing officer for an insurance company or a bank. You are likely to earn more than $2,000 a month, working in an office environment.

There are many products that you can sell, other than term and health insurance.

These include investment products that have a small load to cover their marketing expenses. They give good value to the customers.

July 04, 2007 6:41 PM

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