As you prepare to launch your own franchise, it’s natural to have questions about your potential income. You’re likely wondering how insurance agents make money and what your salary expectations should be, and these details will be important as you decide whether this career path is right for you.
Insurance agents get paid in different ways, usually through salary or commission. Let’s look at ways to create revenue as a new entrepreneur and maximize your earnings with a franchise partnership.
Insurance Agent Income Models
Two income models determine how much you make as a franchise owner: salary or commission.
Salaries are regular fixed payments from your employer during your scheduled pay period. The upside of having a salary is that it offers stability and potential bonuses and incentives, but your paycheck will stay at a set amount with no increase or decrease.
Commission structures lead to more varied paychecks. However, insurance agents make money based on the number of policies they sell and their respective premiums. Typically, you receive a percentage of the premiums you sell. The more policies you sell with high premiums, the more you can earn.
The benefit of this model is that you get more flexibility with how and when you work and unlimited earning potential tied directly to your performance and sales achievements. However, this option has more fluctuation than fixed models and you may have periods with much lower income.
As you decide what kind of insurance agent commission structure you want, the best option ultimately depends on your goals, risk tolerance, and work ethic. Working with a franchisor can help you determine the right setup for your business to meet your career aspirations.
Factors that Affect Your Income as an Insurance Agent
Many variables affect how insurance agents make their money. Let’s explore some of these things, including the kinds of coverage you sell, your experience, policy renewals versus new sales, and preventing errors and chargebacks.
The Products You Sell
The type of products you sell significantly impacts your compensation. In fact, commission rates vary for auto, home, health, and life products, so as you go through this process, ask your potential franchise partner what their structure looks like to ensure it’s a good fit for you.
The average commission for auto products is between 10% and 20% of each policy’s total premium. Sometimes, you can receive as much as 20% with specialty products for high-risk or non-standard policies.
For home coverage, these rates are 10%-15% of the annual premium cost. Health coverage earns 3% – 5%, while life protection ranges from 40% – 100% of the annual premium amount, plus an additional 2% – 10% for life policy renewals.
While auto products tend to have lower earning percentages, life insurance franchises are booming. It’s important to balance the types and quantities of policies you sell, and working with a franchisor can teach you these nuances and create a strategy to maximize your profits.
Your Experience Level
Your experience matters in the insurance industry. Seasoned agents have established relationships with insurance carriers. The longer you are in this business, the more you may receive preferential rates and access to exclusive products that can increase your chances of having a larger paycheck.
Even if you are just starting out, cultivating strong ties with carriers can help build the foundation for opportunities down the road. Partnering with a franchisor gives you access to these established relationships, so you can access better rates and products to help you succeed sooner.
Renewals vs. New Sales
Renewal commissions come from your existing clients’ policy renewals. Since you already put in the work on the front end to secure the sale, renewals are one of the simplest ways to create a steady stream of pay later—and this can come in handy during the slower seasons.
Meanwhile, new sales offer significant upfront earnings through new client acquisition. Your potential franchisor can teach you how to maximize the number of new sales you make so you generate more income streams now and later.
The balance between securing new business and nurturing existing client relationships is key to optimizing your revenue, and working with your franchise partner will help you create your sales strategy.
Errors and Chargebacks
Premiums, errors, and chargebacks are integral to how insurance agents get paid. Partnering with a franchisor will help you learn how these factors interact so you can work efficiently and effectively to earn more.
Your partner should offer training programs and support that help to empower you and minimize errors during the sales process, optimize premiums, and limit chargebacks to increase your chances of long-term profitability.
Strategies to Maximize Your Earnings
Now that you know the factors affecting your paycheck, let’s explore some actionable strategies to elevate your income potential:
- Focus on High-Commission Products: Focus on selling products with higher rates to maximize your earnings.
- Long-Term Client Retention Strategies: Cultivating relationships with your clients now secures recurring revenue streams when they renew their policies or send referrals—both important for generating recurring, long-term income.
- Sales Volume Bundling: Increasing your sales volume by bundling complementary products or services can unlock additional revenue options. Your franchise partner can show you how to create more opportunities like these to bring home more in your paycheck.
- Diversification: Creating multiple income streams and mitigating risk with a diverse portfolio ensures you stay resilient in fluctuating market conditions. As you decide which brand is best for you, look for companies with a wide range of products, especially in profitable niche markets for your business, as this creates even more income streams for you.
There are variables at play that can affect your returns. The more effort you put in, the more it will pay off—literally and metaphorically—in the insurance sector. When you partner with the right franchisor, they can teach you where to put your best efforts to reach your vision.
Make Your Money Dreams Come True with the Best Insurance Franchisor for You Today!
Partnering with Freeway Insurance is your best move because we give you the expertise, training, and ongoing support you need to receive your desired compensation. We have quality carrier relationships, a diverse product portfolio, and high-commission solutions that empower you to take control of your career.
If you’re ready to partner with an award-winning team that prioritizes your success like no other, get started online or call us at (877) 822-3024.
