4. Your 1st year of life insurance premiums goes to your broker as commission.

What typical insurance agents would say about this? 

Today is a beautiful day, right?

The Fact is:

Life insurance plans are front-end-loaded insurance plans.

Do you know what does that means?

This means that most of the commission received by an agent is settled in the first year.

For term life insurance, in general, agents receive within 70% to 90% of the first-year premiums, and 5% to 10% of the premiums from the 2nd to 10th years.

And for whole life insurance policies, which require much larger costs, agents receive between 50% to 85% of the first year’s premiums, also 5% to 10% of the following nine years.