1. What is Insurance Premium Commission?

Insurance premium commission is the payment made to insurance agents or brokers for selling insurance policies. In Malaysia, commissions are typically calculated as a percentage of the gross premium paid by the policyholder.

2. How Does the Calculator Work?

The calculator uses the commission formula:

Where:

• \( Gross\ Premium \) — Total premium amount in Malaysian Ringgit (MYR)
• \( Commission\ \% \) — Commission rate as a decimal (e.g., 0.25 for 25%)

Explanation: The commission is simply the product of the gross premium amount and the commission rate.

3. Importance of Commission Calculation

Details: Accurate commission calculation is essential for insurance agents to understand their earnings and for companies to properly compensate their sales force while maintaining profitability.

4. Using the Calculator

Tips: Enter the gross premium amount in MYR and the commission rate as a decimal (e.g., 0.15 for 15%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical commission rate in Malaysia?
A: Commission rates vary by product and company but typically range from 15% to 40% of the gross premium for first-year commissions.

Q2: Are commissions taxed in Malaysia?
A: Yes, insurance commissions are considered taxable income under Malaysian tax law.

Q3: Do commission rates change over time?
A: Yes, first-year commissions are typically higher than renewal commissions, which might range from 2% to 10% in subsequent years.

Q4: Are there caps on commissions in Malaysia?
A: Bank Negara Malaysia (BNM) regulates insurance commissions, particularly for investment-linked products, to ensure fair practices.

Q5: How often are commissions paid out?
A: Payment frequency varies by company but is typically monthly or quarterly after the premium is collected.