Compensation

First-year Commission

First-year commission is the commission paid on premiums collected in the first policy year. It is usually the largest part of life insurance commission on a new sale.

Why it matters

Many carriers pay a high percentage in year one and a lower one later. If the policy lapses early, the carrier may take back part through a chargeback. Agents should track the earn-out period. The rate depends on product, carrier, and contract level. Example: a policy that lapses in month three may lose most of the advanced amount.

Source: law.cornell.edu

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