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What is the Maximum Sales Load That an Insurance Agent is Allowed By Law?

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What could be the maximum sales load an insurance agent is allowed by law in the United States or the United Kingdom?

Recently, one of our followers on Quora requested to know what the maximum sales load an insurance agent is allowed by law in the United States. By this, it depicts that agents are involved in insurance fraud, which is untrue.

Firstly, on behalf of all the reliable insurance agents out there, we would like to apologize for this kind of question that tends to insult the integrity of insurance agents by assuming that they charge their clients an extra fee when they work with them as opposed by the industry rules and regulations.

However, as a matter of granting clarity to all questions posed before us, especially if you desire to become a State Farm insurance agent, we are still going to give the best answer to what the highest sales load insurance agents are allowed by law. But before then, let’s look at what a sales load is.

What is a Sales Load?

A sales load is a commission or sales charge applied at the time of the initial purchase of an insurance policy or annuity. Adding a sales load on your client’s policy as an insurance agent is illegal except in Texas and should be reported.

In Texas, agents are allowed to collect a commission and charge a fee from their customers when they want to buy an insurance policy. However, this sales load must be fully disclosed to the customer, and not hidden inside the main premium. This transparency has helped a lot of your insurance agents get more clients.

Texas is one of the few states that allow the agent to collect a commission. In this UK, sales load is illegal. Any attempt to put yourself in a position where your interest and duty conflict goes against the Insurance Distribution Directive, IDD.

Sales charge (sales load) is one of the most popular insurance frauds perpetrated by agents.

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The Maximum Sales Load is Not Determined By the Insurance Agent

Insurance brokers or agents have nothing to do with the sales charge. It’s the responsibility of the insurance provider to determine what they’d like to pay their agent in line with government regulation. 

Whatever insurance sales load paid by the company to her agent doesn’t come directly from the pocket of the insured. As an insurance agent, it is not your client’s duty to pay your sales charge. The insurance company pays for it. 

Any insurance agent that does otherwise in a state where it is not allowed might have their license revoked just like they did to Mark Diamond, of Scottsdale, Arizona when his license was withdrawn for an annuity fraud scheme.

However, this does not mean that the client should not be aware of all of the fees and charges that may be involved in various types of insurance products. But the agent has nothing to do with these charges. Any agent trying to influence it will only be risking too much. This is definitely not one of those challenges underwriters face because we have more people of integrity in this industry than anywhere else.

It doesn’t matter whether you purchase your insurance policy after getting an affordable quote online or through an insurance agent near you, you will pay exactly the same price for an insurance product you chose. 

Even if you buy directly from the insurance carrier you will pay the same price. The insurance company is just spending the commission dollar on its own distribution system. Selling insurance through agents is one of the ways insurers make money. In states where it is allowed, most insurers say that it is cheaper to them when agents find the customers by themselves and receive the commission directly from the client.

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How Much Can I Make As an Insurance Agent?

According to the U.S. Bureau of Labor Statistics, an insurance agent makes an average of $50,600 per year as of 2018. The position’s pay can vary drastically, with the lowest 10% earning less than $27,500, and the highest 10% earning more than $125,610. This gives further credence to the strategic ways insurance providers make money.

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