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Structure of commissions for insurance agents

The commission obtained by an insurance agent varies depending on the norms and regulations of insurance companies.

However, there is a specific commission structure followed in India that helps insurance agents avail remunerations effectively without any confusion. Let us now dive into the subject, commissions for insurance agents to understand the concept in a better way.

Understanding the concept of insurance commission

Insurance agents depend on commissions and fees that are paid to them by the insurance company. These commissions and fees depend upon the kind of policies sold to the people. The commissions vary from policy to policy.

Another factor affecting the commissions paid to the insurance agent is the insurance premium. For policies sold with higher premium value, the commission paid is more. The insurance premium amount is an annual sum that is paid by the insured [be it an individual or business firm] for availing the benefits of the insurance policy. These policies can be in the form of automobiles, life, dental, medical insurance, etc.

The premium acts as a direct income for the insurance company out of which a specific percentage is awarded to the insurance agent for securing the plan. Let us now go through the various insurance commission structures present in the domestic Indian market.

The commission structure

General insurance commission structure

This is the category of insurance that safeguards individuals and organizations from some loss-triggering event like fire etc. The below-mentioned commission doesn’t include auto-insurances.

  • For the fire retail insurance, the agent gets a 15% commission on the policy.
  • For fire corporate risk the agent can receive a 10% commission.
  • For marine cargo, the fixed commission is 15%.
  • Marine hull insurance will help the agent get a commission of 10%.
  • For other different and corporate general insurance, the agent can get a commission ranging from 10%-15%

Health insurance commission structure

Insurance agents also avail commissions for selling health insurance policies. Following is a breakdown of commissions received by insurance agents through health insurance plans:

  • For individual health insurance, the agent’s commission can be up to 15%.
  • For the group health insurance provided by corporate agencies, the agent gets a commission of 7.5% of the total amount of insurance.
  • For family health insurance the agent gets a 15% commission.

The health policies vary a lot from company to company. Plus, the IRDA guidelines regarding the commission are a bit flexible as well. So, the amount may vary a bit depending on the company offering the insurance.

Life insurance (single payment) commission structure

This is probably one of the most purchased categories of insurance in the market. The commission received by an insurance agent on Life Insurances are:

  • All life insurance except terms plans fetches a commission of 2% for the agent.
  • The term plans get a 7.5% commission for the agents.
  • Renewable terms group plan will attract a 5% commission to the agent or ₹10 lakh whichever is less.
  • A group term plan in a single payment will include a 5% agent commission.

Life insurance for regular premium products commission structure

The below-mentioned commissions for insurance agents are the percentages of commissions that agents get for a life insurance policy that includes the payments of premium for regular products. The insurance premium can be paid monthly or yearly.

  • Individual term insurance will attract a hefty 40% commission in the first year of the plan. And with the subsequent renewals, the commission will be 10%.

The following table highlights the entire commission standard:

Insurance Plan Tenure

Commission Percentage

5 years


6 years


7 years


8 years


9 years


10 years


11 years


12 years [or more]


As already highlighted in the table above, insurance agents can avail of a commission of 15% with a renewal commission depending upon the kind of life insurance policy is sold to an individual. The renewal rate of commission at 40% for a 5-year policy is the highest return an insurance agent can receive.

The highest commission rate obtained stands at a life insurance policy that has a tenure of more than 12 calendar years. However, the subsequent renewal commission rate stands at 10% which is standard for most life insurance plans. On the other hand, the commission percentage on selling Individual Term Insurance stands at 35% which, by far, is the highest commission rate established.

Factors affecting commissions

There are specific guidelines laid down by the Insurance Regulatory and Development Authority (IRDA) about the commission payments to the agents. The companies seeking an insurance license are informed about these guidelines beforehand.

It is the amount that the company pays to the agent to get customers. The agents are given a commission as per the time of the policy. The longer the policy term is, the higher will be the agents’ commission. The agent receives a commission on a policy-to-policy basis.

Another aspect that affects the commission is the type of policy being sold. There are specific percentages fixed for each type of policy being sold by the agents. The insurance companies have to give commission as per these guidelines. Although the companies sometimes give bonuses as well to provide external motivation to their agents.

Companies might even offer other benefits like international tours, to their agents as an appreciation for their work.

There is a certain bit of flexibility in giving the commissions for insurance agents. The IRDA has relaxed certain guidelines about the minimum and the maximum number of commissions that can be paid. You can know all about it from their website.


There are several categories of commissions for insurance agents that seem like they are too much of an amount to be paid to a mediator. However, it is important to understand that the commission offers a significant opportunity as an incentive in the life of an agent. In addition to the above-given information, if you wish to dive deeper then it is advisable to get in touch with an expert or an experienced insurance agent to gather more information about the commission standards.

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