Whether you are a recent college graduate, a student nearing the end of your studies looking at future employment options, or someone looking to make a career change, you may be considering sales. A career in sales can be extremely rewarding. The big question is, “What do I want to sell?
One option is insurance sales. What you now want to ask, of course, “How much do insurance brokers make?” and “What kind of insurance should I sell?”
We’ll discuss both below.
One reason why selling health insurance is attractive is because it offers you high earning potential. You earn a commission on each sale – and you have the potential of an added bonus.
If you work as an independent broker, you’re in charge of your own schedule and there’s no limit to how much you can make. You have greater flexibility than many other sales jobs.
Health Insurance sales is also attractive because you are rewarded by helping your clients find something they need – or in some cases are required to have. If your focus is property and casualty (P&C) insurance, there’s a built-in market with more than 283 million registered cars and trucks in the U.S. (That’s more than a quarter billion – with a “b” – vehicles.) There are also 127 million households in the U.S., in homes, condominiums, and apartments, many of which annually purchase homeowner’s or renter’s P&C coverage.
Health insurance is also something a lot of people need – and most do not really understand. While folks no longer face an Individual Mandate in the federal Affordable Care Act (ACA), health insurance is required under California’s personal health care mandate. And, of course, employers with 50+ full-time employees have a mandate to offer health insurance to employees. That requirement applies in both California and Nevada. If an Applicable Large Employer (ALE) fails to offer health insurance, as required, the business could be subject to penalties. KFF, formerly the Kaiser Family Foundation, published an article on potential employer penalties earlier this year.
Health Insurance Sales Opportunities
KFF says that in 2022, more than half of the country (55%) had group or individual health coverage, while more than one-third (35.8%) of Americans received health care through public health programs like Medicare and Medicaid. That means there’s a built-in market for individual and family health insurance – and for group medical for those businesses required to offer insurance. There are also thousands of other employers that voluntarily offer health insurance coverage to their employees.
Life Insurance is also a market niche with significant potential. According to 2024 research released by LIMRA, a life insurance research, learning, and development organization, 42 percent of adults – 102 million people – say they need or need more Life Insurance. More importantly, 37 percent said this year they intended purchase coverage within 12 months.
Another rapidly growing insurance market is Ancillary sales. At the group level, Ancillary includes Vision, Dental, Disability, Chiropractic, and supplemental products like Hospital Indemnity, Critical Illness, Accident, and other coverage.
Earnings Comparison – How Much Do Insurance Brokers Make?
Indeed.com says that as of September 2024, the average salary for an insurance broker in California is $77,605 per year. In Nevada, as of August 2024, the average salary was 9% greater: $84,569.
ZipRecruiter says the California average salary for an insurance broker is $87,256 per year, while in Nevada it’s $80,773.
Compensation varies geographically and broker experience. It may also be influenced by specific circumstances; for example, whether you work for yourself, as a representative of a financial institution, or in an agency (owned by someone else). For some brokers, comp may be exclusively commissions; for others, it may include bonuses and/or profit sharing.
Life Insurance broker compensation varies based on the coverage selected, policy type, and the company (insurer). Often, for brokers who sell Individual & Family Plans (IFP), the first-year commission could be in the range of 40-100% of the first-year’s premium. Smaller commissions may be offered in subsequent years.
In contrast, for Small Group and Large Group coverage, commissions for Life area smaller – perhaps 5-15% — but it may be paid in all years.
P&C brokers who sell auto and homeowners’ coverage typically earn a commission based on the paid premium for a client’s selected coverage. Rates vary significantly, but often are in the 5-25% range. A reduced amount may apply to renewed business. If you develop a solid book of business, you could earn a robust income for many years selling P&C.
Health insurance policy commissions have come down in recent years on many individual and family policies, but Kaiser Family Foundation data says the national compensation average in 2021 was $16.93 per member per month (pmpm) for all sales (individua and group). Comp for Small Groups substantially beat Large Group comp ($26.38 pmpm vs. $9.26 pmpm) but is offset by greater enrollment numbers in larger groups.
If you focus on selling group health insurance, you’ll be working with employers to help them find coverage for their business, employees, and, frequently, eligible family members. In this group consultant role, as the commission information above shows, you have the potential to earn more than you might with IFP sales, since you are earning commission on every member in the group.
The Difference Between Captive vs. Independent Agents
If you work as a captive agent for a carrier or an independent marketing organization (IMO), you may earn a base salary and a commission on your sales. If your work as an independent agent, your income is most likely to be exclusively commissions.
You may enjoy additional support from your IMO or general agency, including presentation, enrollment, or other assistance. For example, a captive agent could earn 10 percent commission on the sale of P&C, while an independent agent could earn 15 percent on a comparable policy. That may seem like an insignificant difference; however, if you write a half-million dollars in premiums during the year, the difference is $25,000.
An independent agent’s commission agreement could offer the same commission for the first three years coverage is in force (for example, 15 percent in all three years). In contrast, a captive agent could have a declining commission agreement, earning 10 percent in the first year, followed by a reduced amount (say six percent in years two and three). Some companies may also offer bonus opportunities on first-year group health business when sold in combination with Dental, Vision, and Life coverage.
Geography Affects Insurance Broker Salaries
Because premiums for health insurance vary regionally, and because commissions are typically based on premiums, the commissions you could earn will be influenced by the area in which you live and do business.
In the most recent KFF compensation analysis cited above, California brokers earned more than the national average — $39.36 pmpm in the California Small Group marketplace. That compares to $26.38 pmpm nationally and $23.50 in the Nevada marketplace. In the Large Group marketplace, Nevada commission was $11.71 pmpm, as compared to $7.26 pmpm in California and $9.26 pmpm nationally. It is worth noting, though, that Small Group applies to groups of up to 100 employees in California. Large Group in Nevada starts at 51+ employees.
What Type of Insurance Sales Should You Get Into?
While there’s talk about the potential replacement of the ACA if former president Donald Trump is re-elected and returns to Washington, DC, in 2025. There are those in Congress who say there’s a lack of consensus on timing or a likely replacement. Whatever happens, individual consumers, families, and business owners and managers will continue to need help sorting out all of their options: You could be their source of information on P&C, Medical, Ancillary, and more. Pick your niche, get your license, and start down the path to a new career. Partnering with a General Agency can help you. To learn more, call 800-869-6989, or get started by completing our online form.
