LIC has decreased commission of Agents, Check new commission and monthly income

LIC has decreased commission of Agents, Check new commission and monthly income
LIC has decreased commission of Agents, Check new commission and monthly income
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The Life Insurance Corporation (LIC) of India, a state-owned entity, has recently reduced its first-year agent commission from 35% to 28% due to the implementation of revised surrender value norms. This change was reported by sources familiar with the matter in Business Standard. In contrast, the commission for renewal premiums has increased by 7.5%, rising from 5% to 12.5%. Furthermore, the minimum sum assured on revised policies has been elevated from ₹1 lakh to ₹2 lakh, effective from October 1.

These changes come in the wake of a directive from the Insurance Regulatory and Development Authority of India (IRDAI), which issued a master circular in June 2024. The new norms are designed to enhance payouts for customers who exit their policies prematurely and took effect on October 1.

New Surrender Value Norms

According to the revised regulations, life insurers must now provide an enhanced special surrender value (SSV) after the completion of the first policy year, provided the customer has paid one full year’s premium. Previously, insurers did not offer any payouts for policies surrendered within the first year. Additionally, the norms allow for a discount rate in calculating the paid-up value for SSV to be up to 50 basis points higher than the yield on 10-year government securities.

Impact on Agents

A source explained, “LIC has reduced first-year commissions to 28%, including a bonus. Without the bonus, the commission has dropped from 25% to 20%. The commission for renewal premiums has now increased to 7.5%.”

Experts in the life insurance industry had anticipated that companies would revise their distributor payout structures or internal rates of return to offset the margin impacts resulting from the new norms. A senior insurance distributor commented, “With the revised commission structure, agents will have to work harder to achieve their Million Dollar Round Table status, which requires earning ₹8 lakh in commission in the first year. Consequently, they will need to sell more policies. Additionally, chief life insurance advisors may also see a reduction in incentives.”

Additional Changes in Products and Premiums

The LIC official further noted that the sum assured has been raised to ₹2 lakh from the previous ₹1 lakh, with premiums for LIC’s products also seeing an increase of 8-9%.

LIC Agents Data: Monthly Salary and Income of LIC Agents

There are a total of 1,390,920 LIC agents in India. State-wise data is as follows:

Himachal Pradesh:

Andaman & Nicobar Islands:

Uttar Pradesh:

Maharashtra:

West Bengal:

Tamil Nadu:

Karnataka:

Rajasthan:

Madhya Pradesh:

NCR of Delhi:
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