Written by Matthew King, time it takes to read this article is  minute(s).


Are you looking to build a lucrative career for yourself, where you can be free from a boss and even build out streams of passive income?

Here’s something that successful life insurance agents don’t want you to know. You can achieve all of this, in a relatively short space of time by selling insurance products.

Life insurance has a high salary potential. In fact, it is one of the best-paying careers for which you don’t need a degree. 

Want to know exactly how much life insurance agents can make? Keep reading to find out everything you need to know about the potential earnings you can enjoy from selling life insurance. 

How Life Insurance Agents Earn

Life insurance agents make the majority of their money from commissions on the products they sell. 

If you opt to become an independent agent, your earnings will come almost solely from commissions. Independent agents work for themselves. Instead of working for a carrier, they can contract with multiple carriers and sell a variety of insurance products.

Independent agents are responsible for all their own marketing and lead generation and any associated expenses. However, even with these costs, independent agents typically earn more than captive agents.

Why? Because captive agents receive far lower commissions.

Captive agents work directly for insurance carriers. They can only sell the carrier’s products, and cannot contract with other carriers.

Captive agents sometimes receive a small salary and certain benefits in addition to the commission they earn on selling insurance products.

What Kind of Commissions Can Life Insurance Agents Earn?

Before we get into what life insurance agents can earn, let’s break down what type of commissions you can expect when selling life insurance products.

Unlike other types of insurance, life insurance products often pay out close to (or above) 100% commissions in the first year. In other words, if your client is paying $200 in monthly premiums for a life insurance policy, you can receive close to $2,400 for the first year from that sale. 

After the first year, commission rates drop to levels closer to that of auto and Medicare insurance. If the client renews their policy, you will continue earning a commission. This is what’s known as renewal commissions.

Over time, renewal commissions can build up into a strong stream of passive income. 

Life insurance commissions vary mostly depending on what type of product you are selling. The three main types of life insurance products are as follows.

Whole Life Insurance

Whole life insurance products provide a permanent death benefit. In other words, they are valid for the entire lifetime of the insured and do not expire. Some whole life products also come with a cash value.

Because of this, whole life insurance is one of the most costly types of life insurance.

Whole life products usually pay agents more than 100% of the first-year premium value. Exact commission percentages can vary based on the age of the insured. 

Holders can also choose to add on certain riders to whole life insurance, such as a term insurance rider, or a cash value rider. Riders like these usually have far lower commissions compared to the whole life policy.

Universal Life Insurance

Universal life insurance is also a form of permanent life insurance. It has a cash value benefit, and commission levels for the first year are typically above 100%.

If the holder pays any premiums above the target level, this will decrease your commission rate in the first year. 

Term Life Insurance

Term life insurance is far more affordable for the average consumer, which is why it’s currently the most popular type of life insurance.

Term life insurance commission rates tend to be a lot lower than for whole and universal life insurance, but they can range anywhere between 30% and 90%. 

What Life Insurance Agents Earn on Average

According to earnings data, the average income for an independent insurance agent is $91,500 a year. This works out to around $44 per hour. 

On the higher end, top-earning agents can bring in up to $150K a year. 

Take note, these earning figures are for independent agents, not captive agents.

How Quickly Can You Increase Your Earnings as a Life Insurance Agent?

If you’re thinking of switching career paths and becoming a self-employed insurance agent, you might also be wondering how long it takes to start earning decent money as a new agent.

Just like any other industry, it can take time to learn the ropes, build up a book of business, and hone your techniques. Agents who are just starting out won’t have the same closing rate as a seasoned agent.

If you’re completely new to selling insurance products, you might find yourself only earning between $23,500-$36,000 in the beginning. This is what 20% of independent agents earn. 

However, if you apply yourself, you don’t have to be stuck at this earnings level for all that long. The beauty of selling insurance is that the more you put in, the more you get out. 

There Isn’t a Hard Limit on How Much You Can Earn as a Life Insurance Agent

Unlike other industries where it can take decades to raise your earning potential, you can start earning good money relatively quickly by selling insurance products.

What’s more, there isn’t a hard cap on what you can earn. Most jobs and professions have a semi-solid earnings ceiling that’s hard to break through. 

With insurance sales, you’re only limited by your ability to sell and to scale your business. The more you hone your lead generation and sales techniques, the higher your closing rate will become. 

At some point, you can even grow your business into a large agency and take other agents under your wing.

Selling Insurance Products Can Provide You With a Decent Source of Passive Income

If you’re looking to branch out on your own and enjoy freedom and financial security at the same time—listen up.

As we mentioned above, selling life insurance won’t just earn you commissions from the initial sale. You will also earn renewal or residual commissions from policy renewals.

Renewal commissions on life insurance products are lower than the original commission rate, but they still form a valuable stream of income. Renewal commissions are truly passive, meaning you don’t have to invest time, energy, or resources into incurring them.

What’s more, life insurance products aren’t something that consumers tend to switch very often. When it comes to something like car insurance, consumers are much more likely to shop around and change their coverage if they feel like they’re not getting a good deal.

Switching life insurance providers usually triggers upfront fees and a two-year contestability period. Therefore, you’re likely to see ongoing residual commissions on every sale you make with life insurance.

Captive vs Independent Agents and Renewal Commissions

As we mentioned above, captive agents tend to earn substantially less than independent agents. Additionally, captive agents also don’t own their residuals.

Captive agents earn residual commissions, but, if they leave the carrier, they forfeit these. This non-ownership over residuals can keep agents locked into captive placements to avoid losing all the renewal commission streams they’ve built up over the years. 

The Job Outlook for Life Insurance Agents

Any time you’re considering branching out into a new career, it’s always a good idea to evaluate the job market and future demand.

According to the BLS, the job market for life insurance agents is predicted to grow at a rate of 6% until 2031, which is as fast as average across all industries.

The Looming Talent Shortage

It’s also worth noting that insurance as a whole is facing a widescale talent shortage. Insurance is notorious for being an “aged” industry.

Currently, roughly one-quarter of insurance agents are 55 and older. As agents retire out of the industry, this is set to create a large talent gap. What’s more, there is already a shortage of young agents, which is leaving younger demographics underserved. 

Agents typically sell the most within 5 years of their own age.

Why is this? Because people tend to trust and connect with agents that are close to their own age.

For instance, let’s say you’re selling annuity insurance. You’re 41 years old, and most of your clients are in their 30s. They are likely to trust your advice and recommendations more than someone who is in their 60s.

If you’re middle-aged or younger, this means there’s a whole market out there that you’re uniquely poised to serve.

The Market for Life Insurance

Another thing to think about if you’re looking to open any type of business is the overall market and level of demand. Is life insurance a saturated market? No, it’s not.

According to the Insurance Information Institute, there are 106 million adults who lack life insurance coverage in the US. Less than half of households that don’t have life insurance would be financially secure if the primary breadwinner passed away. 

These stats show what a need there is for life insurance products.

How to Earn More Selling Insurance Products

As you can see, it is more than possible to earn a good income from selling life insurance. But, it’s not guaranteed. Many insurance agents quit after less than a year because they’re not seeing the sales numbers they hoped for.

But, the reality is that anyone can join the ranks of the top-earning life insurance sales agents. You just have to know where to start. Here are a few tips for maximizing your earnings as a life insurance agent. 

Invest in the Right Training

If you want to become a top-performing agent, you need to know how to sell. Unfortunately, many agents enter the field without the skills they need to close sales and successfully run their own insurance business.

This is the main reason why new agents don’t see results and end up quitting the industry and giving up on their dream of being self-employed.

What’s even more unfortunate is that comprehensive, accessible training can be hard to find. If you’ve been looking into insurance agent training, you may have noticed that a lot of programs have very restrictive formats.

Some providers only offer training to agents who contract through them. Training might also be restricted by production numbers. In other words, instead of receiving the strategies and skills you need from the get-go, you have to claw your way to a certain level of sales numbers first.

It doesn’t take a genius to see how detrimental this can be for new agents.

Some providers also try to lock agents into ongoing fees, or worse, commission cuts.

Here at InsuranceSales101, we believe that all agents should be able to access thorough training at any stage of their career. We also know that agents need transparent, affordable pricing for training. 

Our programs are formulated to equip you with all the tools, techniques, and strategies you need to become a top-performing agent. For a once-off price, you get access to the best training in an on-demand format. 

Instead of being forced to travel to inconvenient, in-person training events, you can access all of your training material from the comfort of your own home.

You also get access to mentoring and one-on-one coaching to supercharge your results. 

Widen Your Offerings

with its high commissions, life insurance is a lucrative insurance type to sell. But, this doesn’t mean you should ignore other insurance products.

Once you’re comfortable with the products you’re selling, there’s no reason why you shouldn’t branch out and start selling final expense insurance, Medicare insurance, annuities, etc. 

The more types of insurance you sell, the better you will be able to serve your clients.

Develop an Online Sales Funnel

If you want to increase your sales numbers, you need a reliable pipeline of high-quality leads. As an independent insurance agent, it’s vital that you spend time building out an online sales funnel.

Start by optimizing your website and creating high-converting sales pages. Then guide leads toward these through paid ads, content marketing, and social media marketing.

Put Your Clients’ Needs First

If you can truly serve your client’s needs, they’ll pick up on this. Not only will they come back when their insurance needs change, but they’ll also be more likely to refer their friends and family to you.

Are You in Need of Comprehensive Life Insurance Agent Training

If you were wondering whether you can make a decent income selling life insurance products, the answer is yes. Independent life insurance agents can earn well above the national average. If you become a top-performing agent, you can earn over 100K annually.

But, to reach this tier you need to be able to generate high sales numbers. And for that, you need the right training.

Are you looking for convenient, affordable, and comprehensive insurance agent training? Here at InsuranceSales101, our training programs are designed to equip you with all the strategies and tools that go into becoming a successful agent. 

We offer specialized courses for life insurance, annuities, Medicare, and final expense insurance. If you want to enjoy big savings, check out our Advisor Elite Training Program to enjoy a bundle discount. 

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