Commissions Paid to Agents

For their services agents receive commissions and the method of paying them usually assumes one of two forms. One consists in paying a high commission, varying let us say from 30 to 50 percent, on the first year's premium and a small percentage of, say, 5 percent, (called a renewal commission) on subsequent premiums for a designated number of years. This method is particularly well adapted to those who aim to write permanent business, since renewal commissions mean an increasing income from year to year to the agent who exerts himself in the procurement of insurance which will remain on the books of the company. The other method consists of paying a somewhat higher commission on the first year's premium than is allowed under the first method, the agent receiving no renewals on subsequent premiums. This plan, it is apparent, is apt to be desired by those who consider the present more important than the future and who desire to receive a higher income at once in preference to waiting for the accumulating commissions that are received under renewal contracts.