Incentives Dictate Outcomes

Mar 24

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According to Annuity.org*, commissions paid to salespeople for selling annuities range from 1% to 8% of the initial premium. Some annuities also pay the salesperson additional commissions for every year the policy remains in force.

Meanwhile, InsuranceProBlog.com** states that whole life insurance commissions average 55% of the first-year premium, followed by 1% to 5% of yearly ongoing premiums.

Typical Commissions by Annuity Type*

Single Premium Immediate Annuity: 1% to 3%
Multi-Year Guaranteed Annuity (MYGA): 1% to 3%
Deferred Income Annuity: 2% to 4%
Fixed Index Annuity: 6% to 8%

Whole Life Insurance Commission Rates**

Whole life insurance commission rates typically average about 55% of the base whole life premium in the first year.

Now, here’s my question:

Your "advisor" is insurance licensed and receives commissions from the insurance company for selling annuities and cash-value life insurance.

What is the likelihood that your financial plan will include one (or more) of these products?

This is why you should only work with an advice-only financial planner. The advice-only model removes the conflicts of interest associated with product sales and A.U.M. based fees (a.k.a. "forever fees") charged by salespeople. The advice-only model for financial planning empowers clients to be their own best advocate.

*https://www.annuity.org/annuities/fees-and-commissions/

**https://theinsuranceproblog.com/life-insurance-commission-a-great-evil-according-to-the-internet/