Reading a commission schedule: street level, advance rate, and what as-earned really means

Commission schedules are written to be skimmed. Read this one slowly.

Contract level. Expressed as a percentage of first-year premium, commonly in the 100 to 120 range for FE at what people call street level, with higher levels for agencies. The level is set by your IMO and is the single biggest driver of what you earn per policy. Two agents writing the same $60-a-month policy at 100 percent and 115 percent earn $720 and $828 in first-year commission.

Advance rate. The percentage of that first-year commission the carrier fronts you at issue. 75 percent is common; 50 and 100 exist. The rest is paid as premiums come in. Higher advance means more cash now and a bigger chargeback if the policy lapses early.

As-earned. No advance; you're paid a month's commission each month as the premium is collected. Slower ramp, no chargeback exposure. Many agents move to as-earned after a year or two once their book pays the bills.

Renewals. A smaller percentage in years two and beyond, sometimes for a fixed number of years, sometimes for the life of the policy. Renewals are how agents build income that doesn't reset in January. Ask whether renewals are vested and when.

Chargeback schedule. How much of the advance comes back if the policy lapses in month 1, 6, 9, 12. Every carrier is a little different; the schedule is in the contract, not the recruiting deck.

Overrides. If you recruit, the spread between your level and your agents' levels is your override. It's also the reason some uplines put you at a low level: the spread is their income.

The question to ask. "What's my level, what's the advance, what's the chargeback period, and are renewals vested?" Four numbers. If the person recruiting you can't give all four, that's your answer.

What's a fair street level for FE right now in your experience?