Page 15 - Lasting Mark : Life Book 2025

COMPENSATION

Issued/Paid Application - The total number of applications that were submitted and issued (approved) by the
insurance carrier and the commission has been paid to the agent.
Ex: 25 Application for $18,345 (Month Total) = 25 Submitted Applications
25 Submitted Applications x 88% Placement Rate = 22 Issued/Paid Applications

Placement - The percentage of submitted applications that get issued/paid.
Ex: 25 Applications for $18,345 (Month Total) = 25 Submitted Applications
25 Submitted Applications / 22 Issued/Paid Applications = 88% Placement Rate

Persistency Rate - The percentage of issued/paid applications that remain in force within the first 9 months of the policy.
Ex: 22 Issued/Paid Applications - 4 Canceled applications = 18 Active Policies
18 Active Policies / 22 Issued/Paid Applications = 81% Persistency Rate

As Earned Commissions - Commission that is paid out each month to the agent for the first year of the policy.
Ex: $480 Commission / 12 months = $40 As Earned Monthly Commission
Month 1 = $40, Month 2 = $40, Month 3 = $40, and so on...

Advance Commissions - Commissions paid out to the agent on the assumption the policy will remain active.
Advance commissions can be 9 months of commissions (75%) or 6 months (50%).
Ex: $480 Commission x 75% = $360 Advance Commissions
$480 Commission x 25% = $120 Back End Commissions
Month 1 Advance = $360

Back-End Commissions - The remaining months of commissions beyond the advanced amount. Back-end
commissions are paid as earned over months 10,11, and 12 (25%) or months 6-12 (50%) as long as the policy
remains in force.
Ex: $480 Commission x 75% = $360 Advance Commissions
$480 Commission x 25% = $120 Back End Commissions / 3 Remaining Months = $40
Month 10 = $40, Month 11 = $40, Month 12 = $40

Chargebacks - This occurs when a policy has been canceled within the first 9 months of the effective date. The
amount of commission that will be charged back is the difference between the agent’s advanced amount and
the agent’s as earned amount. The chargeback amount will be deducted from your next commission from that
particular carrier.
Ex: $480 Commission x 75% = $360 Advance Commissions (9 Months)
Policy Canceled After Month 6

9 Month Advance $360
- 6 Months as earned $240
3 month chargeback = $120

Renewal Commissions - The commission paid for a specific number of years after the first policy year. The amount
of years after the first year that a renewal is paid varies by company, but it is usually a significant number of years.
Ex: Monthly Premium $50 x 12 (Months) = $600 AP

Commission Rate = 80% (First Year)
Renewal Commission Rate = 2% (Years 2-10)
$600 AP x 2% (Renewal Commission Rate) = $12 (Years 2-10)

DOING LIFE WITH LASTING MARK | 15