Commissions are a vital aspect of selling insurance. Insurance agent compensation is normally tied to commissions payable on policy premiums. This means the agent earns a percentage of the premium paid by the policyholder. Calculating these premiums is necessary if the agent wants to know how much he will be paid. As an agent, you can't make a business plan without knowing your pay and what your potential is in your line of insurance business.

Things You Will Need

  • Calculator

  • Rate sheet

Determine your street level commission. Street level commission is the base commission amount paid by the company you work for. This is normally expressed as "base commission" or "street level commission" on the rate sheet you receive from your insurance company or General Agent.

Determine your override. A General Agent is the marketing arm of an insurance company. These General Agents (called "GA"s) might pay you an override. An override is an additional commission paid to you to compensate you for marketing and other overhead expenses you incur in the normal course of doing business. This additional commission amount may be significant and is often negotiable.

Calculate your commission. Take the premium paid on an insurance policy and multiply it by your base commission amount. Then, take the premium and multiply it by your override amount. Add the two together. This represents your total commission. Some insurers and General Agents only pay the override on your base level commission, so you would calculate your base level commission and then multiply the resulting number by your override percentage. The sum of these numbers represents your total commission on the policy.