As we can see from the table above, whole life and investment link insurance policies have the highest commission rates. In addition, an insurance agent would receive renewal commission for the next 5 years after he closes a sale. This means that as long as the policy is being renewed, the insurance agent will be able to get additional commissions for the next 5 years (albeit at a lower rate). For accident products, the commission rate is a flat rate of up to 30% and is payable throughout the premium-paying term. If I were an insurance agent, I will definitely put my focus on accident products.
Assuming a person buys an accident insurance policy with annual premium of $300. The insurance agent will receive $90 (30% of annual premium) as commission. As long as his client renews the policy every year, the insurance agent will get $90 yearly without even doing anything. This is their form of 'passive income' in the insurance world.
Let's now assume the insurance agent sells 2 accident policies with annual premium of $300 every week. After 3 years, he would have sold 312 accident policies. The renewal commissions from these 312 accident policies he sold in the past 3 years would amount to $28,080 per year or $2,340 per month. This means that the monthly 'passive income' for the insurance agent is $2,340 after 3 years and this is based on the assumption of selling just 2 accident products per week.
Despite the high commission rates of insurance policies, I will still need insurance to protect the financial well-being of my family and myself. In my opinion, a person should have at least an upgraded Medishield plan which covers 100% of the medical bills(including co-insurance and deductible) and an income replacement insurance which provides a regular stream of income during the period of disability. Having said that, the type of insurance a person needs really depends on his/her preference and family situation.