How Do Health Insurance Agent Commissions Work

If you’re an aspiring health insurance agent, other than learning how to be one, you must find out how they get paid. This can help you have more clear personal goals.

Health insurance agent commission is the commission that a health insurance agent gets from the health insurance company. The Commission is based on the term of the policy, so the higher the term, the higher the commission.

Health Insurance agents/brokers get commission from insurance companies for selling their products, or what we call their insurance plans/policy. An insurance broker makes money through commissions from selling insurance to businesses and individuals. They earn commission for every new client who signed a policy. Commissions mostly are between 2% and 8% of premiums, but it depends on state regulations. Even if it differs from state to state, the majority of insurance companies follow the 80/20 rule. This rule means 80% of the policy amount will go to your medical cover and the 20% is for their administrative cost, this includes paying the brokers and agents.

The 80/20 rule is a requirement under the Affordable Care Act. This ensures that the bigger part of your insurance premium goes straight to your health insurance. Meaning this limits the amount your insurance provider can use for overhead, marketing and broker commissions.

Health insurance agent commission is between 40% to 100% of the first-year premium and 1% to 2% for renewals. This includes base pay and commission. They average a total of $50,600 but can reach as high as $120,000, this is because of the earning potential through commission. Commissions can get higher, up to 40 or 50 percent of the premium, this is because of the supplemental plans that employers can buy to cover employees’ dental costs, cancer care, or long-term hospitalization. As clients pay more in their premiums, their agent’s commission increases as well.

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