I am a 1099 employee. When I sell a policy, regardless of how it is paid for, ie financed, paid in full, or monthly payments, my employer retains my commission and only pays me as the premium is paid. In the case of premium financing, the agency is paid the entire commission when the down payment is made. I only get paid as the insured makes the monthly payments. I’m only paid the full commission when the policy is paid in full. Can anyone tell me if this is legal?

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That is because the agency only gets paid by the carrier based on the premium received. So the agency gets paid monthly --> you get paid monthly. If they get paid in full --> you get paid in full. They can't pay you commission that they dont have yet,

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Not necessarily true for all carriers/lines of business. If we have a direct bill policy we pay all of the commission after the down payment is made regardless of the payment plan.

It is completely legal and smart business for both of you. As another commenter pointed out, if the policy cancels and the agency gets charged back then they have to charge you back commissions. If you haven't earned enough to cover the chargeback you then have to write them a check. It also keeps your monthly income more stable because if they paid you upfront and there was a chargeback you might not get a check for a few months till they recoup the return commission.

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It happens both ways and is legal. If you don't like it, sign up with a broker where you buy your own leads and commissions come directly from the insurance carrier. The benefit from monthly payments is when the customer cancels the policy after 6 months you don't have to pay all the commission you were paid back to the carrier. It can get messy and expensive.

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If the policy is cancelled that agency is getting a chargeback. I totally understand why they’d pay as earned

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some companies pay on a monthly basis while others pay in full the next month. Do speak with your employer because they might have different contracts depending on the agents.

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