Do Life Insurance Agents Get Residual Income?

Do Life Insurance Agents Get Residual Income?

A career as a life insurance agent has many pluses: being your own boss, making your own work schedule, and earning upfront and renewal commissions. Renewal commissions are the same as residual income because it pays you for services you have already performed, as in selling a life insurance policy that renews.

Insurance agents make money off of commissions they generate from selling insurance. There are two types of commission:

  1. First-year commission
  2. Renewal commission

Agents can have commissions charged back for policies that decline or cancel. If the agent is also on an advance from the company, they may receive less of their commission until they’ve paid back the advance.

Learn more about life as a Globe Life agent

Find out why this might be your best choice.

Let's Go

First-Year Commissions

When a policyholder signs a new insurance contract, the agent receives a percentage of the policy cost commonly known as the first-year commission. It is a percentage amount based on the first year’s total premium amount of the policy. This is usually a larger percentage than the renewal commission paid on the same insurance policy.

Renewal Income

Renewal income is a commission that is linked to premium payments. When the insurance policy is renewed, the agent receives a percentage of the premium. Insurance policies can be renewed annually, usually the 13th month after the anniversary date of the initial signing of the insurance policy. While this is the typical renewal frequency it can depend on the type of insurance policy purchased. If it’s a 10-yr term policy, for example, it will be renewed in 10 years.

Renewals create continual income for the agent as long as the premiums are paid regularly, or the policy is fully paid. This is referred to as residual income. Agents should service what they sell. Great service helps with referrals, which helps you build your business.


Agents can make additional money with bonuses. Bonuses are a popular way for insurance companies to incentivize insurance agents with sales campaigns, recruitment of new agents, and quarterly sales goals. Unlike policy renewals, bonuses are based on sales performance over a certain period of time and are not continual payments. Some examples of bonuses awarded are for the following reasons:

  1. Meeting or exceeding weekly and monthly production goals;
  2. Personal recruiting of new agents signed on;
  3. Writing quality business that stays on the books;
  4. Management bonuses based on producing agents in their hierarchy; and
  5. Promoting new agents into management positions.

Leadership roles

If you build a team or decide to work your way up and own your own agency, you can earn more money. An agency is also a great place for new agents to be mentored, and a place where successful teams build income for their future.