1. What is Life Insurance Commission?

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

2. How Commission is Calculated

The standard commission formula is:

Where:

• \( Premium \) — Policy premium amount in Malaysian Ringgit (MYR)
• \( Agent\ Rate \) — Commission rate (decimal value between 0 and 1)

Explanation: The commission is directly proportional to both the premium amount and the agent's commission rate.

3. Importance of Commission Calculation

Details: Accurate commission calculation ensures fair compensation for agents and proper financial planning for insurance agencies.

4. Using the Calculator

Tips: Enter the policy premium in MYR and the agent's commission rate as a decimal (e.g., 0.25 for 25%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are typical commission rates in Malaysia?
A: Commission rates vary but typically range from 20% to 40% of the first year's premium, with lower rates for renewal premiums.

Q2: Are commissions taxable in Malaysia?
A: Yes, insurance commissions are considered taxable income and must be declared to LHDN.

Q3: How often are commissions paid?
A: Most insurers pay commissions monthly, though some may have different payment schedules.

Q4: Do all policies pay the same commission rate?
A: No, rates may vary by product type, policy duration, and the agent's performance level.

Q5: Can commission rates be negotiated?
A: Standard rates are usually fixed, but top-performing agents may qualify for higher rates.