Insurance agent commissions in India have two components: a higher first-year commission (paid when a new policy is sold) and a much lower renewal commission (paid in subsequent years as long as the policy stays active).
Historically, life insurance commissions ranged roughly 15%–35% in the first year for traditional plans (lower for ULIPs), with health and general insurance typically in the 10%–20% first-year range.
However, there’s an important 2026 update every agent should know: IRDAI no longer publishes fixed, product-wise commission caps.
Since its Expenses of Management (EOM) regulatory shift, each insurer now sets its own board-approved commission structure within an overall expense cap—meaning your actual commission depends entirely on which insurer and product you’re selling, not a single industry-wide chart.
Here’s what this means for your income, in plain language.
The Big Regulatory Shift: Why There’s No Single “Commission Chart” Anymore
If you’ve seen an old “IRDAI commission chart” online showing fixed percentages by policy type, it’s worth understanding why that’s now outdated.
For years, commission was governed by fixed caps — including a well-known historical rule capping commission at 7.5% of the first year’s premium and 2% of renewal premium for certain policy types, with later revisions allowing up to 35% for long-tenure traditional policies.
That changed with IRDAI’s move to an Expenses of Management (EoM) framework. Under this regime, insurers are no longer bound to fixed, IRDAI-published commission slabs per product.
Instead, each insurer sets its own board-approved commission policy, as long as total commission and expenses stay within an overall EoM cap set for that insurer.
In practice, this means an insurer with more room in its EoM cap could offer up to 100% of first-year premium as commission on a specific product, while another insurer might structure things very differently — commission charts genuinely vary by insurer today, not just by product type.
What this means for you as an agent: the days of a single, universal commission percentage for “life insurance” or “health insurance” are over.
Your actual rate depends on your specific insurer’s policy, the exact product, and sometimes even the distribution channel you’re selling through.
How Commission Actually Works: First-Year vs. Renewal
Regardless of the exact percentage, the underlying structure remains consistent across insurers:
| Commission Type | When It’s Paid | Typical Pattern |
| First-Year Commission | When a new policy is sold and the first premium is paid | Highest percentage — this is the bulk of your income from a new sale |
| Renewal Commission | Each subsequent year the policyholder continues paying premiums | Significantly lower percentage, but paid year after year as long as the policy stays active |
This structure exists to reward agents for helping clients stay insured long-term, not just for closing the initial sale—though in practice, most agents still find first-year commission dominates their short-term income, while renewal commission builds into a more stable, passive base over time.
Typical Commission Ranges by Insurance Type (Indicative)
Since exact rates vary by insurer, treat the ranges below as general, historically informed indicators rather than a guaranteed rate card—always confirm current rates directly with your specific insurer’s product brochure or your appointment letter.
| Insurance Type | Typical First-Year Commission Range | Typical Renewal Commission Range |
| Traditional Life Insurance (participating/non-participating) | 15% – 35% | 2% – 7.5% |
| ULIPs (Unit Linked Insurance Plans) | 2% – 10% | 1% – 5% |
| Health Insurance | 10% – 20% | 5% – 10% |
| Motor Insurance | 10% – 19% | Often re-earned annually at a similar rate |
| Group Insurance | Often a flat, one-time commission | Frequently no renewal commission at all |
These ranges reflect commonly cited historical norms and publicly available estimates as of 2026.
Since IRDAI’s EoM framework allows insurer-specific commission structures, always verify current rates directly with your insurer.
Worked Examples: What You’d Actually Earn
Numbers help make the structure concrete. Here’s an illustrative calculation using mid-range assumptions:
| Policy Type | Annual Premium (Rs) | 1st-Year Rate | 1st-Year Earning (Rs) | Renewal Rate | Renewal Earning/Year (Rs) |
| Traditional Life Policy | 50,000 | 25% | 12,500 | 5% | 2,500 |
| ULIP | 1,00,000 | 5% | 5,000 | 2% | 2,000 |
| Health Insurance | 25,000 | 15% | 3,750 | 7.5% | 1,875 |
| Motor Insurance | 15,000 | 15% | 2,250 | – | Re-earned annually at a similar rate |
The compounding insight: a single traditional life policy sold today, if it stays active for 15 years, could generate roughly ₹12,500 in year one and then approximately ₹2,500 every year after — meaning a well-serviced book of even 50–100 active policies can build into a meaningful, largely passive renewal income over time.
Why Renewal Commission Matters More Than It Looks
New agents often fixate on first-year commission because it’s the bigger, more immediate number — but renewal commission is what separates a sustainable insurance practice from a constant hustle for new sales.
Since renewal commission is paid only while a policy stays active, agents who focus on genuine client service and persistence (helping clients keep paying premiums and stay properly covered) build a compounding income base, while agents chasing volume without follow-up often see their renewal book erode as policies lapse.
Factors That Affect Your Actual Commission
Your real-world commission depends on more than just the product category:
- Which insurer you’re appointed with — since each sets its own board-approved commission policy under the EoM framework
- The specific product — traditional life, ULIP, term, health indemnity, and benefit-based health products can all carry different rates even within the same insurer
- Distribution channel — individual agents, corporate agents, brokers, and digital/PoSP channels are often structured differently
- Premium payment mode — single-premium vs. regular-premium policies can carry different commission structures
- Persistency-linked incentives — many insurers now layer additional bonus incentives on top of base commission for agents with strong renewal/persistency rates
POSP vs. Full Agent Commission: Is There a Difference?
If you’re comparing the POSP (Point of Sale Person) route against becoming a fully licensed individual agent, commission structures do tend to differ: POSP arrangements are often structured around volume and persistency-based incentives on a limited set of standard products, while a full IRDAI-licensed agent typically has access to a broader product range with a more traditional first-year/renewal commission split.
If you’re deciding between the two paths, compare the commission structures your target insurer offers for each route, since these vary by company.
Common Mistakes That Reduce Insurance Agent Income
- Chasing first-year commission exclusively, without building the renewal book that provides long-term, compounding income
- Not tracking policy persistency, missing early warning signs when clients are at risk of letting a policy lapse
- Assuming commission rates are fixed industry-wide, and not comparing structures across insurers before choosing who to represent
- Neglecting client servicing after the sale, which directly threatens renewal commission on every policy sold
- Overlooking persistency-linked bonus incentives, which many insurers offer on top of base commission but require proactive tracking to claim
Frequently Asked Questions
Does IRDAI still publish a fixed commission chart for insurance agents?
No, not in the way it used to. Since IRDAI’s shift to the Expenses of Management (EoM) framework, individual insurers set their own board-approved commission structures within an overall expense cap, so rates now vary by insurer and product rather than following one universal chart.
Which type of insurance pays the highest first-year commission?
Traditional life insurance policies (participating and non-participating) generally offer the highest first-year commission percentages, historically in the 15%–35% range, compared to ULIPs and general insurance products.
Why is ULIP commission lower than traditional life insurance commission?
ULIPs are subject to overall charge structure regulations that limit how much of the premium can go toward distribution costs, so their commission percentages are typically lower than those of traditional life insurance products.
Do insurance agents earn commission every year on a policy?
Yes, for most individual policies — agents earn a lower renewal commission each year the policyholder continues paying premiums, as long as the policy remains active. Some group insurance policies, however, pay only a one-time commission with no renewal component.
How can I find out my exact commission rate for a specific insurer?
Since rates are no longer standardised across the industry, the most reliable way is to check your specific insurer’s product brochure, your agent appointment letter, or ask your insurer directly for their current board-approved commission structure.
Final Takeaway
Insurance agent commission in India isn’t the fixed, universal percentage it once was—it now depends heavily on which insurer you represent and its specific board-approved commission policy under IRDAI’s Expenses of Management framework.
What hasn’t changed is the underlying incentive structure: a strong first-year commission rewards new sales, while a smaller but recurring renewal commission rewards genuine client retention.
The agents who build the most sustainable, long-term income are the ones who treat renewal commission — not just the first sale — as the real foundation of their insurance agent business.