Do insurance agents receive higher commissions when they sell a deferred annuity policy comparred to an immediate annuity.
thanks
insurance question
Re: insurance question
Depends on the insurer. I'm sure there's a story that goes along with that question!Gordon wrote:Do insurance agents receive higher commissions when they sell a deferred annuity policy comparred to an immediate annuity.
thanks
Please note: NO duty is owed to the reader. Comments are for educational and general informational use only.
-
- Posts: 125
- Joined: Fri May 15, 2009 12:00 pm
- Location: Virginia Beach, VA
- Contact:
Gordon,
It depends, but generally speaking yes. I'm assuming your only asking about fixed deferred and fixed spia. Variable is a different beast. Generally, commissions for fixed deferred contracts range from 1-10+% and SPIA's are usually 1-3% for most carriers. Both can have the commissions reduced if the client is older than 75,80, or 85 depending on the carrier. So I guess the short answer is yes.
The one thing to remember is that with a fixed annuity the commission is paid by the insurance company but not directly from your premium. Now, before everybody thinks that I've lost my mind, obviously the insurance company wouldn't pay the agent if you didn't write the check. The insurance company profit and the agent commission are included in the products design. An example would probably make the most sense.
EX (All numbers hypothetical, not based on current rates or a specific product, etc.) Person buys a $100,000 fixed deferred 5 year annuity paying a rate of 3.9%. Let's say the agent gets 4% or $4,000. Client's first statement will show $100,000 and they will be paid 3.9% per year, or $3,900. So where'd the commission come from? From the amount above 3.9% that the insurance company is earning from whatever the $100,000 is invested in.
That may beyond what you were asking, but fixed contracts differ from variable in the way they pay commissions. The only reason I bring it up is that when you look at fixed annuities, the stated rate is what you will be getting (unless it's an EIA and no need to dig into that right now). Other than the commission determining what product the agent offers, the amount doesn't affect the products performance (except during the design phase). If this doesn't make any sense let me know.....
Hope that helped, Paul
It depends, but generally speaking yes. I'm assuming your only asking about fixed deferred and fixed spia. Variable is a different beast. Generally, commissions for fixed deferred contracts range from 1-10+% and SPIA's are usually 1-3% for most carriers. Both can have the commissions reduced if the client is older than 75,80, or 85 depending on the carrier. So I guess the short answer is yes.
The one thing to remember is that with a fixed annuity the commission is paid by the insurance company but not directly from your premium. Now, before everybody thinks that I've lost my mind, obviously the insurance company wouldn't pay the agent if you didn't write the check. The insurance company profit and the agent commission are included in the products design. An example would probably make the most sense.
EX (All numbers hypothetical, not based on current rates or a specific product, etc.) Person buys a $100,000 fixed deferred 5 year annuity paying a rate of 3.9%. Let's say the agent gets 4% or $4,000. Client's first statement will show $100,000 and they will be paid 3.9% per year, or $3,900. So where'd the commission come from? From the amount above 3.9% that the insurance company is earning from whatever the $100,000 is invested in.
That may beyond what you were asking, but fixed contracts differ from variable in the way they pay commissions. The only reason I bring it up is that when you look at fixed annuities, the stated rate is what you will be getting (unless it's an EIA and no need to dig into that right now). Other than the commission determining what product the agent offers, the amount doesn't affect the products performance (except during the design phase). If this doesn't make any sense let me know.....
Hope that helped, Paul
Money is not your life. It is simply the means to the life that you want.
Re: insurance question
In General, the more comparable insurance products are amongst insurers, the more competative the price has to be and the lower the commission.Gordon wrote:Do insurance agents receive higher commissions when they sell a deferred annuity policy comparred to an immediate annuity.
thanks
It is easy to price shop a $100,000 SPIA or $500,000 of 20 year level term life insurance. Its much more difficult to compre two LTCI or VA products that have an array of different features.
BruceM