How Insurance Agents Make Money: The Ultimate Guide

If you’re thinking about becoming an insurance agent, you might be wondering how you’ll make money.

After all, it’s a commission-based industry, and there are no guarantees. But if you’re good at what you do, you can make a very good living as an insurance agent.

In this guide, we’ll take a closer look at how insurance agents make money. We’ll explore the different types of insurance agents, the commissions they earn, and how they generate leads.

We’ll also answer some frequently asked questions about insurance agents and their earnings.

Types of Insurance Agents

There are three main types of insurance agents: captive agents, independent agents, and brokers.

Captive Agents

Captive agents work for one specific insurance company. They can only sell policies from that company, which means they have limited options for their clients. However, they usually receive higher commission rates than independent agents.

Independent Agents

Independent agents work for themselves and represent multiple insurance companies. They can offer their clients a range of policies from different companies, which gives their clients more options. Independent agents usually receive lower commission rates than captive agents, but they have the potential to earn more because they have access to more policies.


Brokers are similar to independent agents, but they work for their clients rather than for insurance companies. They help their clients find the best policies for their needs and budget, and they earn a commission from the insurance company when their clients purchase a policy. Brokers usually receive lower commission rates than captive agents, but they have the potential to earn more because they can offer their clients policies from multiple companies.

How Insurance Agents Make Money

Now that we’ve covered the different types of insurance agents, let’s take a closer look at how they make money.

Commission Rates

Insurance agents earn a commission on each policy they sell. The commission rate varies depending on the type of policy and the insurance company.

For example, auto insurance policies usually have a commission rate of 10% to 15%, while life insurance policies have a commission rate of 50% to 100% of the first year’s premium.

Renewal Commissions

In addition to the initial commission on a policy, insurance agents also earn renewal commissions. Renewal commissions are paid each year that the policy is active, as long as the client continues to make their payments. The renewal commission rate is usually lower than the initial commission rate, but it can add up over time.


Some insurance companies offer bonuses to their agents for meeting certain sales goals. Bonuses can range from a few hundred dollars to thousands of dollars, depending on the company and the sales goal.


Insurance companies sometimes hold contests for their agents, with prizes ranging from cash to vacations. These contests can be a fun way for agents to compete with each other and earn rewards.

Referral Fees

Insurance agents can also earn referral fees by referring clients to other agents. Referral fees are usually a percentage of the commission the other agent earns on the policy.

How Insurance Agents Generate Leads

To make money as an insurance agent, you need to generate leads. Here are some common ways that insurance agents generate leads:


Referrals are one of the best ways for insurance agents to generate leads. When an agent provides excellent service to a client, that client is likely to refer their friends and family to the agent. Agents can also ask their clients for referrals directly.

Cold Calling

Some insurance agents generate leads by cold calling potential clients. This can be a challenging way to generate leads, but it can also be effective if the agent has a good script and a persuasive personality.

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