Insurance Commission Calculator
calculator
Calculate first-year and renewal commissions across all insurance products with carrier-specific rates
- First-year vs. renewal commission rates
- Policy term-based calculations
- Carrier split configurations
- Premium-based commission calculations
- Chargeback and lapse tracking
- Lifetime value projections
- →Calculate commissions for new policy sales
- →Project renewal income streams
- →Compare carrier commission schedules
- →Model portfolio value over time
- →Track persistency impact on earnings
- ✓Industry-specific commission structures
- ✓Renewal income projections
- ✓Multi-carrier comparison
- ✓Chargeback impact modeling
- ✓Portfolio value calculations
Select Insurance Product Type
Choose the type of insurance policy (Life, Health, Property & Casualty, Disability, Annuities). Commission structures vary significantly by product type.
Example: Life insurance term policy with R500,000 annual premium
Enter Policy Premium and Term
Input the annual premium amount and policy term length. Many policies pay higher first-year commissions with lower renewal rates in subsequent years.
Example: Annual premium: R12,000, Policy term: 20 years, First-year rate: 80%, Renewal rate: 5%
Set Commission Rates by Year
Configure first-year and renewal commission percentages based on your carrier contract. Life products often pay 50-100% first year, health pays 10-20% ongoing.
Example: Year 1: R9,600 (80% of R12,000), Years 2-20: R600/year (5% of R12,000)
Account for Chargebacks and Lapses
Include potential chargeback periods (typically 6-12 months). If policy lapses early, you may need to repay advance commissions.
Example: Chargeback period: 12 months. If policy cancels in month 8, you repay 33% of first-year commission
Calculate Lifetime Value
The calculator projects total commission over the policy lifetime, accounting for typical lapse rates and persistency assumptions.
Example: Total lifetime commission: R21,000 (R9,600 year 1 + R11,400 renewals over 19 years, assuming 90% persistency)
Scenario: Life Insurance Agent - Term Policy Sale
Inputs:
- Product Type: 20-year level term life insurance
- Annual Premium: R12,000
- Policy Term: 20 years
- First-Year Commission: 80% of annual premium
- Renewal Commission: 5% of annual premium
- Expected Persistency: 90% (typical lapse rate)
- Chargeback Period: 12 months
Result:
Total Projected Commission: R21,000. Breakdown: Year 1: R9,600 (80% × R12,000). Years 2-20: R600/year (5% × R12,000) = R11,400 over 19 years assuming 90% persistency. Risk: If policy cancels within 12 months, partial chargeback applies.
What's the difference between first-year and renewal commissions in insurance?
First-year commissions (also called advance commissions) pay a higher percentage of the annual premium when you sell a new policy - typically 50-100% for life insurance, 10-20% for health. Renewal commissions pay a lower percentage (2-15%) on each subsequent year's premium as long as the policy remains in force. This structure incentivizes new sales while providing ongoing passive income from your book of business.
How do chargebacks work in insurance commissions?
Chargebacks occur when a policy lapses (cancels) within a specified period after sale - typically 6-12 months. You must repay a prorated portion of the advance commission. For example, if you earned R10,000 first-year commission with a 12-month chargeback period, and the policy cancels after 8 months, you'd repay 33% (4 months / 12 months = R3,333). This protects carriers from paying full commissions on short-lived policies.
What commission rates are typical for different insurance products?
Commission rates vary widely by product: Life insurance (50-100% first year, 2-5% renewals), Health insurance (10-20% ongoing), Disability (30-50% first year, 3-7% renewals), Annuities (3-7% upfront), Property & Casualty (10-15% per year). Independent agents typically earn higher rates than captive agents but have more overhead costs.
How does policy persistency affect my long-term income?
Persistency (the percentage of policies that remain in force) directly impacts renewal income. If you sell 100 policies earning R500/year in renewals, but only 70% persist to year 5, your renewal income drops from R50,000 to R35,000. Industry average persistency is 85-90% for quality business. Focus on proper client fit and ongoing service to maximize persistency and long-term income.
Can I live on renewals alone as an insurance agent?
Many experienced agents build a 'book of business' generating substantial renewal income. A well-established agent with 1,000 active life policies averaging R400/year in renewals earns R400,000 annually in passive income before selling any new policies. Building this takes 5-10 years of consistent new sales. Most agents need ongoing new business for 3-5 years before renewal income becomes significant.
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