The short answerChecked Nov 11, 2026
First-year commission is the commissionable premium times your contract level. On IUL the base is the target premium, with any excess paid at a lower rate. The advance is the share paid at issue, and a lapse inside the advance window turns the unearned part into a chargeback. Term commonly pays 60% to 80% in year one.
Industry data checked November 10, 2026. Published ranges, not what this agency pays.
Contents (6)
What does each result mean?
Each line answers one question an agent asks the week a policy issues. How much is this case worth, how much arrives now, how much arrives later, and how much could be taken back.
| Result | What it tells you |
|---|---|
| First-year commission | The full year one figure if the client pays all twelve months |
| Paid at issue | The advance, cash on the first statement after issue |
| Paid as premium arrives | The rest of year one, paid month by month |
| Renewal each year | What a persisting policy pays in each of years 2 to 10 |
| Owed back on the lapse | The chargeback a lapse in the chosen month creates |
Formulas in Show the math. Checked November 10, 2026.
Where do the default numbers come from?
Every default is a published figure from an outside source, or a plainly labeled example. They are industry data, mostly from sellers of contracts or leads, who have reason to quote high. Replace them with your own schedule as soon as you have it.
| Product | Published first-year range | Published renewal range | Source |
|---|---|---|---|
| Term life | 60% to 80% of premium | Smaller in later years | NerdWallet1 |
| Whole life and universal life | 70% to 120% of target | 2% to 5% | Kadence5 |
| Final expense | 80% to 120% of annualized premium | 3% to 5% | InsureLeads2 |
| IUL example | 85% of a $1,000 target | Not stated | Redbird Agents4 |
Industry data checked November 10, 2026. Kadence cites Stallion Leads and describes what insurers pay the agency of record, which sits above the writing agent. Each range shifts with the insurer, the product and your level. None of them is an offer from this agency.
Why does IUL use a target premium?
Because the insurer pays its full first-year rate only up to a premium level it defines. Redbird Agents describes target premium as a carrier-defined amount commonly used to calculate first-year compensation, and gives the example of a $1,000 target at 85 percent producing $850.4 Premium paid above target earns a different rate that varies by carrier and product. That is why the calculator leaves the rate above target blank until you enter one from a real schedule. A client who pays well over target can make the commission look smaller than the premium suggests.
What happens when a policy lapses?
The calculator assumes commission is earned evenly as the twelve monthly premiums arrive. A lapse after month m means m twelfths are earned, and any advance above that comes back. That matches the worked case InsureLeads published, a $600 premium at 110 percent with a 75 percent advance and a month four lapse, which leaves $220 earned and $275 owed.3
Real contracts can be harsher. Some insurers use graded schedules or reverse the full amount for any lapse inside the window.2 Windows commonly run 12 months, and some extend to 24.5 The calculator only models year one. The full mechanics are on advances and chargebacks.
What does this calculator leave out?
It shows one policy from the writing agent's side. It does not include the overrides the tiers above you keep, production bonuses, lead costs, taxes or the days between sale, issue and the first premium draft. Lead costs change the picture most. Run them through the lead cost per placed policy calculator. To see how a level is shared up the chain, read contract levels, overrides and vesting.
Questions people ask
How do I calculate life insurance commission?
Multiply the commissionable premium by your contract level. For term, whole life and final expense that base is usually the annual premium. For IUL and other universal life it is usually the target premium, with a separate rate above target.
Is the advance extra money?
No. It is part of the same first-year commission, paid early. If the policy lapses before the premium covers it, the unearned part comes back.
Why does my statement not match the calculator?
Your insurer's schedule, the product version, the base it pays on and any chargebacks on other policies all change the number. Read the commission type and adjustment lines on the statement first.
Sources (5)
- NerdWallet, Life insurance agent commissions, May 18, 2026. nerdwallet.com
- InsureLeads, Final expense commission, March 31, 2026. getinsureleads.com
- InsureLeads, Final expense agent, license, underwriting and real pay, August 10, 2026. getinsureleads.com
- Redbird Agents, The professional's guide to indexed universal life insurance, October 12, 2026. redbirdagents.com
- Kadence, Advanced vs as-earned commissions in life insurance, July 30, 2026. startkadence.com
