An insurance broker is a professional who makes money from commissions from selling insurance to individuals or companies. Most fees represent between 2% and 8% of premiums, according to state regulations. Brokers sell all types of insurance, including health insurance, homeowners insurance, accident insurance, life insurance, and annuity. The first term to understand is the base commission. This is the standard fee that an insurance agent will earn for the policy sold and is expressed as a percentage of the premium. The commission rate varies depending on the type of coverage and line of business sold. For example, an auto insurance policy may have a 10% commission rate while a general liability policy may have a 15% commission rate. Life insurance commissions are integrated into the premium and are not added to the premium. To get the most value for your premium dollar, it is important to look carefully at the illustrations, ask for explanations about premiums and riders, and compare more than one company. Property and casualty insurance agents typically earn between 7% and 20% commission for each policy they sell. The amount varies depending on factors such as the type of insurance product, risk classification, whether the policy is new or renewed, and services provided to your business. Policy renewal fees are usually lower than the initial fee paid by new businesses. This renewal may include a persistence percentage based on all of the broker's different client policies that are current with a specific insurance company. Independent agents are paid primarily on a commission basis; the more customers they serve, the more money they make. As customers renew each year, independent agents continue to charge fees for those policies. Life insurance provides protection for your family when you die and can also be a means to increase the cash value of a policy. Accident insurance covers damages and liquidations that your company may have to pay due to an incident involving your business or property that has harmed a third party. General liability insurance compensates you for these types of claims and other legal defense costs if found liable. The advantages of being an independent agent include being your own boss, owning what you earn, and being able to control it with your level of effort and ability to sell insurance. Independent agents also have the ability to change their clients' policies to new companies if they find a better deal. Whoever sells life insurance must provide an illustration of the values and benefits during the life of the policy. When evaluating insurance brokers, be sure to explore online ratings and benchmarking studies that show who is in your market. Commissions, service charges, financing agreements, and bonuses are all possible ways to earn money as an insurance agent. Commercial accident insurance is a widely used category of insurance that mainly includes liability coverage. Agents and brokers who find such coverage for you earn commissions at the time a sale takes place or when your registered broker is assigned to them.
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