The average income of a life insurance agent is a bit tricky to pin down. The income potential fluctuates depending on the agent’s location, their experience level and certifications, the types of policies they sell, how many policies they sell, and how they operate.
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What Life Insurance Agents Do
How Life Insurance Agents Earn Income
Average Pay For Life Insurance Agents
Highest Paying States
Best Cities to Work
Life Insurance Agent FAQ
Find Out Your State’s Licensing Requirements
What Life Insurance Agents Do
A career as a life insurance agent is a lucrative choice for a person with any type of background. But what do they do?
Life insurance agents, in general, are salespeople. They prospect for potential clients, sell life insurance policies and annuities, maintain relationships with their clients, and help clients and beneficiaries through the claims process. Their clients may be individuals or groups, like an employer group.
If an agent wants to sell variable annuities and variable life insurance policies – insurance projects that use investment funds – they must also obtain a securities license . Specifically, the Series 6 license. .
How Life Insurance Agents Earn Income
Most of a life insurance agent’s earnings will come from commissions. For every policy sold, the insurance agent earns a large upfront commission. This rate can range from 40% to 100% of the first-year premium, the amount the policyholder pays for the policy. The rate is set by the insurance company, and each state has its own commission limits.
After the first year, the insurance agent will receive additional commissions for each year the policy is renewed. These commissions are usually under 5% of the annual premium. The size of these commissions depends on the policy type, which state the policy is being written, and which life insurance company is being represented.
Whether the agent is an indepenent agent or captive agent also affects how the agent is paid. Independent agents can sell policies for multiple insurance companies and will only earn income through commissions. Captive agents only sell policies for one insurance company, and depending on the company, may be paid a base salary, commissions, and receive benefits. If they receive a base salary, their commission percentage is typically lower.
How Much Can a Life Insurance Agent Make Per Year?
A life insurance agent’s income potential is uncapped. Some of the highest earners make well over six figures each year, while others choose to work as part-time insurance agents to earn some extra cash.
Average Pay For Life Insurance Agents
As of February 2024, here are the estimated average annual wages for life insurance agents per state:
State/Jurisdiction | Average Salary |
Alabama | $81,743 |
Alaska | $89,189 |
Arizona | $84,042 |
Arkansas | $67,607 |
California | $79,073 |
Colorado | $85,839 |
Connecticut | $80,194 |
Delaware | $81,387 |
D.C. | $91,053 |
Florida | $67,391 |
Georgia | $76,149 |
Hawaii | $86,445 |
Idaho | $75,463 |
Illinois | $79,227 |
Indiana | $85,817 |
Iowa | $80,123 |
Kansas | $74,636 |
Kentucky | $71,177 |
Louisiana | $73,556 |
Maine | $94,207 |
Maryland | $78,890 |
Massachusetts | $89,692 |
Michigan | $71,122 |
Minnesota | $84,248 |
Mississippi | $79,283 |
Missouri | $76,394 |
Montana | $82,776 |
Nebraska | $77,410 |
Nevada | $84,331 |
New Hampshire | $89,409 |
New Jersey | $89,308 |
New Mexico | $84,458 |
New York | $100,025 |
North Carolina | $74,064 |
North Dakota | $88,125 |
Ohio | $82,079 |
Oklahoma | $74,964 |
Oregon | $88,228 |
Pennsylvania | $91,606 |
Rhode Island | $81,721 |
South Carolina | $75,625 |
South Dakota | $83,288 |
Tennessee | $78,364 |
Texas | $74,792 |
Utah | $78,123 |
Vermont | $98,397 |
Virginia | $80,492 |
Washington | $74,725 |
West Virginia | $70,748 |
Wisconsin | $87,888 |
Wyoming | $87,404 |
(Salary rates from ZipRecruiter, Feb 2024. Estimated using employer job postings and third-party sources.)
Highest Paying States For Life Insurance Agents
Here are the top 15 highest-paying states based on the average annual reported income:
New York | $100,025 |
Vermont | $98,397 |
Maine | $94,207 |
Pennsylvania | $91,606 |
D.C. | $91,053 |
Massachusetts | $89,692 |
New Hampshire | $89,409 |
New Jersey | $89,308 |
Alaska | $89,189 |
Oregon | $88,228 |
North Dakota | $88,125 |
Wisconsin | $87,888 |
Wyoming | $87,404 |
Hawaii | $86,445 |
Colorado | $85,839 |
Best Cities For Life Insurance Agents
Here are the best cities for life insurance agents to find success, based on the city’s size, job availability, cost of living, and earning potential.
Birmingham, AL - $95,630
Saginaw, MI - $91,880
Des Moines, IA - $72,930
Jackson, MS - $88,330
Grand Island, NE - $75,280
Springfield, OH - $75,130
Hartford, CT – $78, 520
Springfield, IL – $83,020
Savannah, GA - $92,210
Tampa, FL – $63,130
(Data gathered by AdvisorSmith advisorsmith using the Bureau of Labor and Statistics)
Ready to start a career with unlimited earning potential? Start on the life insurance pre-licensing course that meets your state’s requirements.
How Do I Become a Life Insurance Agent?
Before you can have a license to sell life insurance, you’ll need to pass your state’s licensing exam. The exam tests you on insurance terms, product details, and state and national insurance law, so it’s important you prepare by taking a life insurance pre-licensing course. Check out this guide for how to become an insurance agent for more information.
Do Insurance Agents Make a Base Salary?
Some insurance companies will pay life insurance agents a base salary, but most will work as 1099 contractors and earn their primary income on commission.
When an agent has a base salary, they are most likely captive agents and will earn lower commission rates. They may be incentivized to sell certain types of life insurance policies for the company, rather than the life insurance policy that may be most suited to the applicant.
How Much Can Insurance Agents Make Per Policy?
Each policy, company, and state will have different commission rates. The size of the policy dramatically affects the commission rate you can earn. For example, say you sell a $100,000 policy, and you earn 50% commission on the first year’s premium. If the insured pays $2,000, then your commission will be $1,000. If instead you sold a policy that was $500,000 and the insured pays $8,000, you’ll earn $4,000 with the 50% commission rate.
Remember, depending on the company and policy, your commission rates could be up to 90% or even 100% of the first year’s premium.
How Hard is it To Be a Life Insurance Agent?
While there’s ample opportunity for financial gain, being a life insurance agent comes with challenges. The first and largest challenge is perhaps the high rejection rate. You’re going to hear no more often than you’ll hear yes, and all successful agents know to keep moving forward.
Building a network, marketing, and self-discipline are all required to get your footing in the industry. But, besides your typical sales skills, life insurance also requires soft skills compassion, transparency, and empathy. Your clients are preparing for the worst outcome, and their beneficiaries will have suffered the loss of a loved one when they make a claim.
Can Agents Sell Life Insurance in More Than One State?
Yes, if a life insurance agent is properly licensed, they may sell life insurance products in more than one state. They must first earn a life insurance producer license in their state of residence. After that, they can apply for nonresident licenses in other states.
How Can I Become a Life Insurance Agent?
Check out what it takes to become an insurance agent.
Find Your State’s Insurance Licensing Requirements
To see what the requirements for a life insurance license are in your state, visit our license requirements pages. These pages break down the pre-licensing requirements, the state exam, and how to apply for your resident license.
