Commission Earned by LIC Agents
LIC agents receive a commission from policyholder premiums. The commission percentage is influenced by the type of insurance, the year premiums are paid, and the plan sold.
The following is a breakdown of the LIC agent commission structure:
1. The Plan for Endowments:
An endowment plan is a type of life insurance policy that provides funds in addition to insurance coverage, according to LIC terminology. It offers protection as well as investment.
Premium Paying Term | Commission for the First Year | Commission for the Second & Third Year | Commission from the Fourth Year Onwards |
15 years and above | 25% | 7.50% | 5% |
10 years to 14 years | 20% | 7.50% | 5% |
5 years to 9 years | 10% | 5% | 5% |
2 years to 4 years | 5% | 2.25% | 2.25% |
2. Money-Banking Plans:
The Money Bank Plan is one type of insurance policy that provides both life insurance and a savings component.
Premium Paying Term | Commission for the First Year | Commission for the Second & Third Year | Commission from the Fourth Year Onwards |
As per plan | 15% | 10% | 6% |
12 years | 15% | 8% | 6% |
3. Children’s Plans
Child plans are specialized insurance policies designed to provide children with the future financial security they will require.
Premium Paying Term | Commission for the First Year | Commission from the Second Year Onwards |
9 years and above | 10% | 5% |
5 years to 9 years | 7.50% | 5% |
2 years to 4 years | 5% | 2% |
4. Pension Plans:
The purpose of pension plans, which are insurance products, is to provide people with financial security in retirement.
Premium Paying Term | Commission for the First Year | Commission from the Second Year Onwards |
More than 4 years | 7.50% | 2% |
2 years to 4 years | 5% | 2% |
Commission Calculator:
There is a formula for calculating the LIC agent commission. A percentage of the policyholder’s premium is used to calculate the commission. The formula varies according to the year of the policy because commission rates for the first year of the insurance are different from those for subsequent years.
Formula for the First-Year Commission:
First-Year Commission = Annual Premium (First Commission Rate / 100)
For example:
In the event that a LIC agent offers a policy with an annual premium of ₹50,000 and the commission schedule looks like this:
The first-year commission is 25%.
The calculations that follow will be performed:
50,000 (25/100) ₹12,500
Formula for Second and Third-Year Commissions
The second or third year commission is calculated by dividing the Annual Premium (second or third commission rate) by 100.
For example:
In the event that a LIC agent offers a policy with an annual premium of ₹50,000 and the commission schedule looks like this:
Second or third year: 7.5%
The calculations that follow will be performed:
50,000 (7.5 / 100) = ₹3,750 (P.A.)
The equation for years four and up
Fourth Year Onward Commission = Annual Premium (Fourth Commission Rate/100).
For example:
In the event that a LIC agent offers a policy with an annual premium of ₹50,000 and the commission schedule looks like this:
Starting in the fourth year: 5%
The calculations that follow will be performed:
50,000 (5/100) = ₹ 2,500 (P.A.)
This formula can be used to calculate your earnings as a LIC agent based on commission percentages and premium amounts.
Conclusion:
Working as a LIC agent offers a rewarding career with flexibility, substantial earning potential, and the satisfaction of helping others secure their futures. LIC is a great choice for people who want to start a career in insurance because of its reputation, comprehensive training, and enticing commission plans. If you’re interested in becoming an agent, follow the above steps to take advantage of the benefits and incentives that LIC offers.
Prospective agents can make wise decisions about this field of business by having a solid understanding of the commission system. Regardless of your career or side gig ambitions, working as a LIC agent can result in both financial gain and personal joy.
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