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We have been doing a little survey on the commission rates of financial advisors and we have come to a conclusion that Insular Life seems to be one of the most generous companies when it comes go giving commissions to its agents and managers. Here’s why we think so.
Disclaimer: For those who dispute our claims, rates and statements in this blog please send us an email at admin@aetosfph.com for clarification.
So here’s why Insular Life has highest commission rates for agents and managers:
Scenario 1 Agent Income:
(Data Below Updated As of June 3, 2020)
Suppose the new agent recruit sold P20,000 per year Multiple Pay VUL plan (lifetime paying or limited premium holiday), this is how much the agent will earn:
Year1: P20,000 x 30% = P6,000 First Year Commission + 50% Monthly Bonus (P3,000) + 10% Yearly Bonus (P600) = P9,600 Total Year 1 Earnings
*Insular Life is unique versus other companies because it provides a bonus of 50% to agents per month as well as a yearly bonus of 10% on top of the 30% commissions
Year 2: P20,000 x 20% = P4,000 Second Year Commission + 50% Persistency Bonus (P2,000) = P6,000 Total Year 2 Earnings
*As you can see, Insular Life is also one of the few companies that provides a persistency bonus of 50% on the second year onwards. Other companies do not usually give bonuses on the second year onwards.
Year 3: P20,000 x 15% = P3,000 Third Year Commission + 50% Persistency Bonus (P1,500) = P4,500 Total Year 3 Earnings
Year 4: P20,000 x 10% = P2,000 Fourth Year Commission + 50% Persistency Bonus (P1,000) = P3,000 Total Year 4 Earnings
Total Earnings for the agent for this Plan is = P9600 + P6000 + P4500 + P3000 = P23,100
Scenario 1 Manager Income:
Override is the commission that managers get from their agent’s commission. Think of it as their reward for training and recruiting their agent. The unit manager is entitled to 35% + 10% overrides or 45% First Year Commission Overrides plus 40% Overrides on all Renewal Commissions. The associate unit manager on the other hand earns 25% override income plus 20% Override on all Renewal Commissions. The unit manager and the AUM may also receive a 100% override on their own personal sale.
Thus on
Year 1: Agent First Year Commission P6,000 x 45% manager override rate = P2,700 override income of manager for training and taking care of the agent
Year 2: Agent Second Year Commission P4,000 x 40% manager renewal override rate = P1,600 override income of manager for year 2
*Another benefit being with Insular Life is that it provides manager overrides on the second year onwards. Other insurance companies only gives on the first year overrides for managers.
Year 3: Agent Third Year Commission P3,000 x 40% manager renewal override rate = P1,200 override income of manager for year 3
Year 4: Agent Fourth Year Commission P2,000 x 40% manager renewal override rate = P800 override income of manager for year 4
Total override income of manager on sale of his agent = P2,700+ P1,600+ P1,200 + P800 = P6,300
Scenario 2 Agent Income:
Let’s say the agent sold another Multiple Pay VUL for P240,000 per year (lifetime paying or limited premium holiday) here is how much the agent will earn:
Year1: P240,000 x 45% = P108,000 First Year Commission + 50% Quarterly Bonus (P54,000) + 10% Yearly Bonus (P10,800) = P172,800 Total Year 1 Earnings
Year 2: P240,000 x 20% = P48,000 Second Year Commission + 50% Persistency Bonus (P24,000) = P72,000 Total Year 2 Earning
Year 3: P240,000 x 5% = P12,000 Third Year Commission + 50% Persistency Bonus (P6,000) = P18,000 Total Year 3 Earnings
Year 4: P240,000 x 5% = P12,000 Fourth Year Commission + 50% Persistency Bonus (P6,000) = P18,000 Total Year 4 Earnings
Year 5: P240,000 x 5% = P12,000 Fifth Year Commission + 50% Persistency Bonus (P6,000) = P18,000 Total Year 5 Earnings
Total Earnings for the agent for this Plan is = P172,800 + P72,000 + P18,000 + P18,000 + P18,000 = P298,800
Scenario 2 Manager Income:
Unit Manager is still entitled to 45% Override thus:
Year 1: Agent First Year Commission P108,000 x 45% manager override rate = P48,600 override income of manager for training and taking care of the agent
Year 2: Agent Second Year Commission P48,000 x 40% manager renewal override rate = P19,200 override income of manager for year 2
Year 3: Agent Third Year Commission P12,000 x 40% manager renewal override rate = P4,800 override income of manager for year 3
Year 4: Agent Fourth Year Commission P12,000 x 40% manager renewal override rate = P4,800 override income of manager for year 4
Year 5: Agent Fifth Year Commission P12,000 x 40% manager renewal override rate = P4,800 override income of manager for year 5
Total override income of manager on sale of his agent = P48,600+ P19,200+ P4,800 + P4,800 + P4,800 = P82,200
Additional benefits on top of the benefits above:
*A new agent is given P17,250 as cash assistance to be able to purchase a laptop/mac/tablet for their presentation. So far we have not found any company that gives this benefit to their new recruits.
*Insular Life life insurance benefit of P3M, daily hospital allowance of P5,000, plus medical expense reimbursements, retirement benefits and more
*On top of what Insular Life gives, we at Aetos Insurance Agency also gives free health card from Insular Healthcare on top of the existing life and health benefits of Insular Life
*Also during calamities, Insular Life usually gives free cash assistance like during the COVID pandemic they gave free P8,000 per agent.
One of the probable reason is that the company is a proudly 100% Filipino company and all of the salaries it pays to its employees are probably based on Philippine standards because they don’t have employees who reside out of the country. Second probable reason would be that it is the only mutual benefit company in the Philippines. Meaning, it does not have any stockholders because the owners of Insular Life are its clients both externally and internally:employees and agents (who have a policy). Thus, it does not have to give dividends to private stockholders unlike stock corporations making Insular Life less prone to pressures from stockholders who want to make a lot of income per client in order to receive high dividends from the stock company. There could be other reasons but we will reserve that on our next blog.
INLIFE ADVISOR CAN SELL OTHER PRODUCTS:
Further an InLife agent is the only agent that can offer all types of insurance products and thus increasing possible income:
- Health Card from Insular Health Care (Subsidiary of Insular Life) – Commission rate is as high at 15% every year
- Car, Property and other Non Life Insurance from Mapfre Insular (Subsidiary of Insular Life) – Commission rate is also competitively high
- Group Insurance – Sell an insurance policy with only one master policy for all employees which is much cheaper than individual plans. Insular Life also gives high commission rates for group insurance sales.
HIGH RISK HIGH RETURN JOB
It could be tempting to say that Insurance Agents are earnings so much. However, note that the life of an insurance agent is brought about by many rejections and frustrations. First we do not earn a fixed salary essentially making us no work no pay, it is just reasonable to earn more than regular employees or else there will be no reason for people to join this profession. Second, the commissions above are based both a lifetime paying plan and a limited pay plan. Thus if the client got a life time paying policy at age 43 and plans to continue paying until age 65. This means that the agent will need to assist clients and answer their questions for 22 years (65 yrs old – 43 yrs old).
In scenario 1 above the client needs to pay P20,000 per year x 22 years or a total of P440,000 premium until age 65.
However the commission received is only P23,100. Which means P23,100 / P440,000 = 5.25%. Meaning the company gave only 5.25% of the total amount paid by the client which is P440,000. This amount is considerably decent for sales people as real estate brokers earn around 5% per sale as well. The commission rates for insurance agents may look big on the onset but it entails a lot of responsibility to take care of the client until the client essentially dies where the agent will also help in the claims process.
So at the end of the day, being a financial advisor is like having a business. You have to have that entrepreneurial spirit. Indeed it is the highest paying hard work and the lowest paying easy work – and either way you choose your income.
CONCLUSION
As you can see Insular Life could be considered one of the most generous insurance companies in the Philippines because of the reasons I stated above.
Thanks for reading our blog. Get in touch if you have more questions or want to verify the commission rates above. Simply email admin@aetosfph.com or text 0905-FINANCE or 0905-3462623.
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