Life insurance is like any type of commission-based career. If you have good work ethics and sell large amounts of financial products, you'll make considerable compensation. In the first year of your career, the company may offer a stipend salary that reduces as you start earning commissions. After that, your compensation comes from the amount of commission or fees you earn.
Starting a Career
Prudential, like most other companies, realizes that a new employee has several hoops to jump through before she receives any income from commissions. The first is licensing. If you don't have an insurance license and/or securities license, you can't sell the products offered by Prudential. The second is that of time. It takes time to prospect, make a sale, get a policy issued and receive compensation. To solve those problems, the company offers a 26-week training period where you receive a stipend salary as you accrue commissions.
Products
The type of Prudential products available for you to sell varies by the types of licenses you have. The first license you sit for is normally the life and health license. This allows you to sell products such as health insurance, life insurance, fixed annuities and disability insurance. The new variable products and mutual funds require a Series 6 NASD license if you want to sell those. Prudential requires their agents to secure the license. You can substitute a series 7 license that covers all products for a series 6. Some states require a series 63.
Commissions and Renewals
Once you finish your training period, you'll make your money in two ways, commissions and renewals. You receive a commission on every product you sell but only receive renewals on insurance products or new investments into annuities. Renewals are a small percentage of the annual premium paid by the client and normally last 10 years. If you sell mutual funds, you'll receive a portion of the 12B-1 fees, based on a fraction of a percent of the total amount of client investments you manage.
Build Your Income
As you develop clients, you'll also ask for referrals to find new clients. Every six months to a year, you'll meet with clients to see if needs change. In these meetings, you may find a need for more insurance or investments. The renewals, 12B-1 payments and new commissions make up your annual income after the first year. The more you sell, the more you make with no cap at the upper end of the income level.
Commission Scale
The commission on life products varies based on the type of product. The high end of the commission scale is whole life products, which can be 50 percent of the first year premium or higher. Term life products vary also. Industry wide, some commission scales are as low as 9 percent or high as 45 percent. If you sell mutual funds, you'll receive a percentage of the load, which varies based on the fund and share class.
