Insurance Agents supposed to pay first Premium?



Ok , When i buy a new Insurance Policy, Money Back Policy etc.. the Agent is supposed to pay the first Premium, but iam not sure if they pay the entire first premium or some percentage.If somebody can throw some light on this aspect, would appreciate it.

Insurance Agents supposed to pay first Premium?
Rate these answers

7 Replies to “Insurance Agents supposed to pay first Premium?”

  1. its depends on how you negotiated with him. many people negotiate for full premium and many do not ask any payment from agent. normally people who want a good service and expect agent to give best service do not insist on agent paying the first premium but some negotiate Between full payment to certain% of payment.




  2. It is illegal for an agent to pay ANY part of a clients insurance premium, whether the policy is a new one , or has been on the books for years. For an agent to pay the premium, it is called rebating.

    There is also a limit as to the value of any gifts an agent can give his clients as a gesture of thanks.

    Rebating puts an unfair disadvantage against other agents who may be competing for the same business. This is why it is illegal, so an agent cannot “buy” the business, and keep other agents from out of competition.

    I don’t know what you mean when you say “Money Back Policy”. There are “Return of Premium” Term policies, but the return of premiums paid is at the end of the term period, if the insured is still living, which may be 10, 20, or 30 years, depending on the contract

    Another type of policy would be a Whole Life or Limited Pay Life, which accumulates a cash or loan value. Depending on the amount of premium, and the age at when the policy was issued, and how long it was paid on, it is possible to get all the premiums back in the form of a cash surrender.

    Don’t trust an agent who promises to give you any part of your premium back in order to get your business. He/she is a dishonest person to do that.


  3. I think you are asking about the check that the insurance agent sends to the insurance company for the first month of premium, after you paid him. If that is what you are asking, the agent keeps a % of the premium. It’s his fee for setting up the policy, meeting with you, etc. Some agents have authority to retain a percentage of the first months premium, and issue their agency check for the rest, and send into the actual insurance company along with other policies written during the same time period


  4. I don’t understand why many people are under the impression that insurance agent is supposed to pay the first insurance premium, No there is Absolutely no layed down rule. In fact, this is illegal according to IRDA(insurance regulatory and development authority).
    Logically why some one should pay his bread and butter to some bodys life? Are you going to pay the benefit at the end of the term of policy to the agent?
    No body will give the benefit to other person, so forget of rebate by the agent.


  5. As per insurance act 1938 section 41 no agent can offer any rebate to the proposer. It’s an offence. But at present most of the agent offers rebate to the prospective customer & generally it is the First premium(yly installment) commission along-with the bonus payable to the agent. No agent will offer 100% rebate if he does so than it will be charity. So if you are buying a money back plan you can expect 20 to 30% rebate for your annual premium.





Leave a Reply

Your email address will not be published. Required fields are marked *