Hello everyone! Today we are going to quickly examine how insurance agents make money. It’s a question that I get often from people exploring a career in insurance. 

So let’s get right to it. 

New Business Commissions

There are several ways that insurance agents make money. The most common way is through new business commissions. These are dollars that you make for selling a policy. In the insurance industry, they are referred to as “sales fees,” fees you make for selling a policy. It’s typically a percentage of the customer premium. 

Renewal Commissions

Another way, which is extraordinary and unique from most sales professions, is that insurance agents make money through renewal commissions, or “service fees,” fees you make for servicing an insurance policy. These are usually paid to an agent when the insurance policy renews. Typically, renewals happen every 6 months for auto insurance and annually for home, commercial, and life insurance. 


Another way insurance agents make money is through performance bonuses. These are dollars gained for strong results. American Family Insurance provides bonus opportunities for agents for customer satisfaction, profitability, retention, production, and more. 

An Example

Let me give you an example of how this all works.

Suzie is an insurance agent.  She sells an auto insurance policy that costs $500 every 6 months and a home insurance policy that costs $1,000 per year. Once sold, Suzie makes a new business commission for both the auto and home insurance policies. When the auto insurance policy renews 6 months later, Suzie receives a renewal commission for that policy. When the home and auto renew 6 months after that, Suzie makes a renewal commission for the home and another renewal commission for the auto insurance policies. These renewal commissions continue for as long as Suzie keeps the customer satisfied and retains them as a customer. In addition, Suzie is a strong performer that gets results and earns additional bonus dollars above and beyond her new business and renewal commissions.

It’s a BIG Opportunity

In summary, insurance agents make money from various methods. They can make tremendous amounts of money by selling a lot of insurance policies and by offering exceptional levels of customer service. As they grow their book of business, it becomes one of the best money-making opportunities available.

I hope this information helps answer the question of how insurance agents make money. If you have other questions or are considering a career as an insurance agent, send me a message. Even if you’re not located in my area in the Pacific Northwest, I have connections across the US and can help you find the best opportunity for you.