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Insurance Commission Advanced Versus As Earned

As Earned or Advancing Insurance Commissions (Which One Is Best)

The prospect of starting your new insurance career is an exciting one and there’s no doubt that you’ve spent some time considering the income that you might make as an insurance agent. Whether you’re selling a Medicare supplement, life insurance or other kinds of insurance policies to your clients, you ultimately do need to get paid.

Life, disability, health, or med sup insurance sales is not like a traditional career where you may collect a paycheck every other week. Instead, many insurance agents are in charge of creating their own paycheck in the form of commissions based on the policies they have sold. When you initiate a new career in the insurance industry, one of the primary things to keep in mind is whether or not you will take advanced or earned commissions.


Advanced Commissions

Starting a new insurance career can be overwhelming particularly as you will not have a book of business built up that can financially support you. For this reason, you may choose to go the route of advanced commissions. This can help you to stabilize your career initially but it’s important to remember that advanced commissions are more like a loan as opposed to income.

You need to be clear about this starting out because in the event that a customer cancels a contract you may be charged back the amount that the insurance company advanced you in the form of commissions. Many insurance agents choose to focus on policies that have an annual premium that is paid upfront to help avoid this so that they can begin earning their commissions. However, not every client will want to use an annual premium so keep in mind that this is a major downside of advanced commissions.

As Earned Commissions

If you are just starting your insurance career, it can take some time to build up enough business to actually be bringing in income that supports you in the form of earned commissions, that is commissions made as you close out on policies. It can also take several weeks or even months to be paid out on a policy and it can be very difficult to keep track of what policies are in your open book of business. Unless you use a CRM to assist you!

Having a good software program and partnering with the right insurance field marketing organization can help you keep an eye on all of the policies that you have open. It can be a little bit overwhelming at first as you may have to work for several weeks without ever receiving a paycheck from your insurance career.

However, it may also be better than counting on income that you have already received from the carrier in the form of an advance commission, that is later charged back because a customer fails to keep their policy active.

To learn more about the pros and cons and to determine if your agency has specific rules about your commissions, consult with an experienced agency to help you with your insurance business and insurance commission advanced versus as earned and which you should choose.

Key Takeaways In This Article

  • The choice of going as earned or using advanced money is a big decision, make sure to consult with an experienced professional in this area to help decide.
  • Use software to help keep track of policies and business revenue. 
  • As Earned = The customer pays, you get paid. Stable income to grow your business with.
  • Advancing = You receive several months of payment up front. If the customer lapses, then you could have a devastating chargeback to pay the insurance carrier. Furthermore, failure to pay back in a reasonable time could end your career.

Over to You

We'd love to hear your thoughts in the comments below on:

  1. What did you choose, advancing or as earned, Why?
  2. Have you had bad experiences with Chargebacks?
  3. Do you understand how advances are like loans?

If you have any questions, please leave a comment below. We will carefully read each one of them. Happy Selling!

About the Author Matthew King

Matthew King is a co-owner of TR King Insurance Marketing and partner at Independent Life Insurance Agent Association. When he's not creating processes, content, and developing SEO strategies, he likes to immerse in gaming with his wife and friends.