All About LIC Agents and Their Commissions
LIC agents earn commissions based on the type and term of the policy sold, with higher percentages in the first year and renewal commissions in subsequent years. To become an agent, one must be at least 18 years old, have completed the 10th standard, undergo training, and pass the IRDAI examination.
In India, there are plenty of people who make a living as LIC agents. India's largest life insurer Life Insurance Corporation of India (LIC) sells most of its insurance products through its agents.
Unlike the private insurers in the industry, LIC does not primarily rely on bancassurance or corporate agents to push its insurance products. LIC's network of individual agents is the largest in any insurance business in the country. In order to become an LIC agent, an individual has to clear an examination and undergo a specific selection process.
LIC agents make money through commissions on the policies they sell to their clients. Commissions are calculated on the premiums paid by policyholders. There is a specific slab on the commissions that can be earned by policyholders. The commission they earn is not a one-time payment. Additional commissions can be earned as premiums are paid by policyholders for the subsequent years. Before we focus on the commissions that can be earned by LIC agents, let's take a look at the process involved in becoming an LIC agent.
How to become an LIC agent?
The primary responsibility of an LIC agent is to provide assistance to prospective buyers and help them choose the right insurance products suitable for their specific requirements. Anyone who has completed 18 years of age and passed their 10th standard can become an LIC agent. The steps involved in becoming an LIC agent can be listed as follows:
- Step 1: Visit the nearby LIC office and check with the officials regarding the process involved in becoming an agent. The branch officials will provide you with the necessary forms to fill up.
- Step 2: Once you have successfully applied for the position, you profile will be registered in the company's agency portal.
- Step 3: Upon registration, you must have to take 25 hours of mandatory agency training offered by the company. You also have the option to take this training online at your own convenience.
- Step 4: Once your training is complete, you must take a pre-recruitment examination held by the insurance governing body Insurance Regulatory and Development Authority of India (IRDA).
- Step 5: After you have successfully cleared your examination, you can apply for a license with the LIC.
- Step 6: The company will verify your application and provide you with the appointment letter and identity card. This makes you eligible to be an LIC agent and approach prospective customers.
Benefits of being an LIC Agent
The benefits of being an LIC agent is given below:
- A Fulfilling Career: As a life insurance agent, you'll have the opportunity to help individuals achieve their dreams by meeting their financial objectives.
- Join a Winning Team: By becoming a part of LIC, you can become the nation’s top team of life insurance agents.
- Competitive Compensation: LIC offers one of the industry’s most attractive remuneration packages, designed to secure your present and future income. You have the flexibility to set your own financial goals, with the potential for unlimited earnings that can last throughout your career.
- Entrepreneurial Freedom: As an agent, you’ll experience the autonomy of being your own boss. You’ll have the liberty to select your clients, manage your work, and control your income—all without the need for any initial capital investment.
- World-Class Training: LIC’s industry-leading training programs sets them apart. Whether or not you have prior sales experience, their comprehensive and multidimensional training—delivered by expert in-house trainers—will turn you into a life insurance sales specialist.
- Career Agency System Commitment: LIC’s dedication to the Career Agency System ensures long-term support throughout your career. Based on your performance, you can even explore management opportunities within the organization.
- Comprehensive Infrastructure: LIC provides state-of-the-art facilities at every branch, providing you with the technology, tools, and personnel necessary to establish and grow a thriving business in the long term.
- Diverse Products and Services: You’ll be able to offer clients a wide variety of over 50 product combinations, tailored to meet their specific financial needs.
- Sales and Marketing Support: You will be provided with cutting-edge sales and marketing resources. The sales strategies, promotions, and marketing materials we provide will help you elevate your business to new levels.
- Unmatched Financial Stability: On partnering with LIC, both you and your clients will benefit from the company's unparalleled financial strength and security, ensuring peace of mind for the future.
Commissions earned by LIC agents
The commissions earned by LIC agents are influenced by various factors such as type of policies, policy term, premium paying term, etc. The commissions earned during the first year of a policy will be significantly higher than the commissions earned during the subsequent years. Once a policy is issued, agents will earn commissions during the entire premium payment term. The tentative commissions that can be earned under different types of policies can be given as follows:
Premium paying term | 15 years and above | 10 years to 14 years | 5 years to 9 years | 2 years to 4 years |
Commission for the first year (on premiums) | 25% | 20% | 10% | 5% |
Commission for the second and third year (on premiums) | 7.5% | 7.5% | 5% | 2.25% |
Commission from the fourth year onwards (on premiums) | 5% | 5% | 5% | 2.25% |
Premium paying term | As per plan | 12 years |
Commission for the first year (on premiums) | 15% | 15% |
Commission for the second and third year (on premiums) | 10% | 8% |
Commission from the fourth year onwards (on premiums) | 6% | 6% |
Premium paying term | 9 years and above | 5 years to 9 years | 2 years to 4 years |
Commission for the first year | 10% | 7.5% | 5% |
Commission from second year onwards | 5% | 5% | 2% |
Premium paying term | More than 4 years | 2 years to 4 years |
Commission for the first year | 7.5% | 5% |
Commission from the second year onwards | 2% | 2% |
*In single premium pension plans, the commission is 2% of the single premium.
In addition to the commission, LIC also offers various rewards and bonuses for its agents. These rewards are based on the performance of the agent, and it may vary from one individual to another.
Conclusion
LIC has a long list of policies in its lineup. Choosing the ideal plan from this list may become hectic if you don't have any understanding of various insurance terms. An agent can analyse your needs and provide valuable suggestions based on it. The commissions earned by LIC agents is a reward for the policy advice and service they provide to their clients. If you wish to make a career as an LIC agent, you may contact the company directly and enquire about the process. There are many agents who provide this service on a part-time basis in addition to their regular jobs. A career as an LIC agent may provide you with the flexibility you are always looking for in a job.
FAQs on All About LIC Agents and Their Commissions
- What is the commission that LIC agents receive?
In addition to receiving 7.5 percent of the premiums paid by policyholders in the second and third years (per standard tables and terms), the agent also receives a renewal commission of 5% on each year's premium beginning in the fourth year.
- What is the highest pay a LIC agent may get?
The average annual compensation for a Life Insurance Corporation of India (LIC) agent in India is Rs.3.6 lakh for workers with one to thirty years of experience. The annual salary range for a LIC Agent at Life Insurance Corporation of India is Rs.60,000 to Rs.7 lakh.
- Do LIC agents make money?
Senior managers may receive a salary of Rs.25,000 or more per month, depending on their level of seniority. The monthly remuneration of LIC agents varies between Rs.30,000 and Rs.50,000. If you choose a company that offers competitive benefits and commission, your LIC agent income might be quite substantial.
- Do LIC employees receive pensions?
The agent's minimum monthly contribution is Rs.500, and after that, it is multiplied by Rs.500. The pension that the member agent is entitled to will depend on his age upon vesting, the total amount of contributions made to his account, and the annuity rates in effect at that time.
- Is commission from LIC taxable?
Yes, in accordance with the requirements of the Income Tax Act, the assessee may deduct any expenses paid in order to earn the commission as long as the AO is satisfied. This applies only if the assessee maintains detailed accounting.
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