LIC Agent Commission- How Much A LIC Agnet Makes On Selling A Policy

Last Update – 28 March 2019

I am your well-wisher and I will never give you the wrong advice. This is the best policy to protect your family’s future. Trust me.

These are some flattery lines used by insurance agents to show their concern towards you. But your welfare is not their sole purpose. The commission they get in returns is the primary purpose.

My experience with LIC agent, Once I went to LIC office to know about the LIC policies. The agent tried his best to convince me to take an endowment plan. Because the commission on the endowment plan is the highest.

The agent uses every marketing technique to sell a policy. But I Came back without buying the policy. The agent called me many times within one month for convincing me.

Let see, why did he try to be so much nice to me

Endowment Plan LIC Agent Commission

Premium Paying Term Commission 1st Year Commission From 2nd & 3rd year Onward 4th year
2 to 4 yr 5% 2.25% 2.25%
5  to 9 yr 10% 5% 5%
10 to 14 yr 20% 7.5% 5%
15 yr & above 25% 7.5% 5%

I think you get the clear reason. Have a look at commission on other plans also

Read – LIC Jeevan Shikar Plan 837 Review

Children Plan LIC Agent Commission

Premium Paying Term Commission 1st Year Commission From 2nd year onwards
2 to 4 yr 5% 2%
5 to 9 yr 7.5% 5%
More than 9 yr 10% 5%

Money Back Plan LIC Agent Commission

Premium Paying Term Commission 1st Year Commission From 2nd & 3rd year Onward 4th year
As per plan 15% 10% 6%
12 year 15% 8% 6%

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Pension Plans Agent Commission

Single Premium Plan – 2% of single premium

Other Than single Premium

Premium Paying Term Commission 1st Year Commission From 2nd Year
2 to 4 yr 5% 2%
More than 4 yr 7.5% 2%

Let’s take an example. Suppose you buy an endowment plan having a term 20 year with an annual premium of Rs 20000.

Year No. of years Premium p.a Commission Rate Amount
1st year 1 20,000 25% 5,000
2nd & 3rd year 2 20,000 7.5% 3,000
From 4 year 17 20,000 5% 17,000
Total 25,000

I am neither against nor in favor of this. My only motive for writing this article is to make known the policy buyer about the commission which the agent earns.

While buying the policy you should consider some facts. Firstly decide whether the purpose is only insurance or insurance cum investment. For sole insurance, I prefer you the term insurance plan.

The agent will try to convince you to buy the plan which would be more beneficial to him. Don’t trust him blindly. Consider all the facts about the plans and match with your requirements, then decide which plan you should buy.

You may also like to read Power of Compounding

Factors you should consider while buying life insurance

1. Do You Really Need Life Insurance

Life insurance is a way to protect the future, who are financially dependent on you. If this is not the case or you have sufficient sources that would take care of their financial needs, then you should further think about this.

2. Purpose of Life Insurance

You have to decide the primary purpose of life insurance, whether this is insurance or the investment. If your purpose is insurance then you should go for term insurance plan.

In the case of insurance cum investment, you should go for endowment or money back plans. But if you ask my opinion, I would suggest you, go with term insurance and invest the rest of money into pure investment plans like PPF investment or equity, mutual funds etc.

3. Value of Life Coverage

Wisely calculate, how much money would be sufficient for your family to meet their all expenses. Include household expenses, children’s education & marriage expenses and some amount of the medical emergency.

This is not easy to calculate exact figure but you have to decide an approximate amount of life coverage.

Also, check – LIC policy table no 832

4. Your Present Financial Condition

A regular premium has to pay at regular interval as per the policy terms. Ask these following question to yourself.

How much premium can you pay as per your present financial condition?

Choose those plan that would not pay any financial burden on your shoulder. If you are not in the condition to bear the high premium of endowment plans then you should buy a term policy.

Also, Read Best investment plan in India

5. Tenure of Policy

Tenure or time period of the insurance policy also pay a very significant role. The retirement age minus current age is considered as the ideal tenure of the policy.

You can choose the tenure until the age you would fulfill all financial needs of your family.

6. Select add-on’s wisely

Add-on is a feature of adding some additional service like accidental insurance or health insurance with the life insurance. Insurance companies charge additional for providing add-ons.

Sometimes making an add-on becomes more expensive than the two separated plans. So before adding an additional service compare the premium amount with the separated plans.

7. Compare Policies

Life Insurance companies offer a number of policies having different features. Consider all the policies and compare the policy features with your requirement then finalize the one.

In most of the case, the agents try to indulge your decision towards some specific policy because of their personal benefit. Be aware of such a condition.

8. Check Policy Online

Every insurance company provide online buy policy facility and at discounted rates. Selling over online saves the agent commission and bring down the overall cost of the policy.

So always compare the product which agents sold with the online available products.

write your views in comments.

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