What Is Advance Commission? Definition

Why it matters

Advancing pays agents faster, often a few months of commission up front on a new policy. The risk is a chargeback if the policy lapses or is canceled inside the advance period. Terms vary by carrier and product. Read the schedule so you know how much is advanced and for how long.

Source: blog.pia.org

Where we use this term

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Related terms

As-earned Commission: As-earned commission is paid only as the customer pays each premium, rather than in a lump sum up front. It carries little chargeback risk but pays more slowly.
Commission Advance: A commission advance is an early payment of commission before the premiums it relates to are collected. It is the same idea as advance commission and can be reclaimed if the policy ends.
Chargeback: A chargeback is when a carrier takes back part of an agent's commission because a policy lapsed, was canceled, or was rescinded within a set period after issue.
Unearned Commission: Unearned commission is commission an agent received for premium that was not ultimately paid or kept. The carrier may take it back through a chargeback.
Earn-out Period: An earn-out period is the time over which advanced commission is considered fully earned. If the policy ends inside this period, a chargeback may apply to the unearned part.

All 241 terms

Why it matters

Where we use this term

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